Bank conveyancing panel requirements re Obstruction of Right of Way Indemnity Insurance

HSBC and Barclays, in common with most banks, have their own specific instructions when it comes to obstruction of right of way indemnity insurance. This page is designed to help residential conveyancing solicitors on the various mortgage company solicitors panel where the title for the the property to be mortgaged incorporates obstruction of right of way. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, be it Barnsley BS, RBS or Halifax. The content on this page is not focused on obstruction of right of way indemnity insurance requirements.

Need help with obstruction of right of way indemnity insurance from your lender?

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Godiva Mortgages and Birmingham Midshires in common with most mortgage companies, obligations require that where obstruction of right of way indemnity insurance is to be put on risk:

• you is obliged to disclose to the insurer all relevant information which you have obtained
• the obstruction of right of way indemnity insurance policy should be effected without expense to the lender
• the obstruction of right of way indemnity insurance policy must not contain conditions that you are aware would invalidate or compromise the interests of the bank
• your practice is duty bound to spell out to the mortgagor that the borrower is obliged to adhere to any conditions of the obstruction of right of way indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the insurance
• the obstruction of right of way indemnity insurance policy must be in favor of the mortgage company and, if possible, for the benefit of the mortgagor and any next owner or bank. If the mortgagor will not be protected by the obstruction of right of way indemnity insurance policy, you must advise the mortgagor of this fact.
• your firm must approve the terms of the obstruction of right of way policy on behalf of the bank
• you must provide a copy of the obstruction of right of way indemnity insurance to the mortgagor and explain to the mortgagor why the obstruction of right of way indemnity insurance policy was effected and that additional insurance could be necessary if there is further borrowing against the mortgaged property
• the limit of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )

As to the level of cover for the obstruction of right of way indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Paragraph 9.2 of the CML handbook PII requirements for mortgage companies:

General Obstruction of Right of Way indemnity insurance points to consider

The full terms, conditions and exclusions for obstruction of right of way indemnity insurance are identified in the policy document. Conveyancing Practitioners are obliged to direct the borrower to the obstruction of right of way indemnity insurance policy paperwork. Obstruction of Right of Way indemnity insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so it is essential check the document to ensure it is as it should be. The lifetime of this non-investment insurance agreement is in perpetuity unless otherwise stated in the obstruction of right of way indemnity insurance policy. Again, please check that this is as you expected.

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Important characteristics and benefits of obstruction of right of way Contingency insurance :

Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Obstruction of Right of Way indemnity insurance Cover normally includes

• Cover for compensation incurred in any action in respect of the risks specified in the obstruction of right of way insurance, as well as solicitors charges.
• All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
• Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the obstruction of right of way indemnity insurance, to the extent that such costs are rendered abortive by court decision.
• Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the obstruction of right of way indemnity insurance.
• Diminution in value resulting from the successful enforcement of the risks specified in the obstruction of right of way indemnity insurance.
• The cost of altering or destroying all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.

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As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the obstruction of right of way policy will be invalidated.

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Supplemental considerations for obstruction of right of way indemnity insurance

There may be consequences arising from the enforcement of the risks identified in the obstruction of right of way insurance which are not adequately covered by financial compensation.

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The above information covers to properties in England and Wales.