Indemnity Insurance of Obstruction of Right of Way Bank conveyancing requirements
Barclays and Nationwide, as with the majority of lenders, set their own specific instructions when it comes to obstruction of right of way indemnity insurance. This page is designed to help property law firms on the various lender approved list of panel lawyers where the title to be charged includes obstruction of right of way. It is not a alternative for checking the Council of Mortgage Lenders’ handbook requirements for each lender, be it Skipton, Accord or Godiva Mortgages. The content on this page Is not to be read as obstruction of right of way indemnity insurance advice.
Need help with obstruction of right of way indemnity insurance from your lender?
Lloyds TSB and Coventry BS like many lenders, requirements are that where obstruction of right of way indemnity insurance is to be put on risk:
- your practice must send a duplicate of the obstruction of right of way indemnity insurance to the borrower and explain to the borrower why the obstruction of right of way indemnity insurance policy was effected and that additional insurance might be mandatory if there is supplemental lending against the security of the property
- your firm is obliged to reveal to the insurer all relevant information which you have acquired
- the obstruction of right of way indemnity insurance policy should not incorporate conditions which you are aware would void or prejudice the interests of the lender
- your firm are responsible for approving the terms of the obstruction of right of way policy on behalf of the bank
- the level of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your practice is duty bound to explain to the borrower that the borrower will need to adhere to any conditions of the obstruction of right of way indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the policy
- the obstruction of right of way indemnity insurance policy must be for the benefit of the lender and, if possible, in favour of the mortgagor and any future owner or lender. Where the borrower will not be protected by the obstruction of right of way indemnity insurance policy, you must advise the mortgagor of this fact.
- the obstruction of right of way indemnity insurance policy should be effected at no charge to the bank
| Lender | Requirement |
|---|---|
| April Mortgages | An amount at least equal to the mortgage advance. |
| Aviva Equity Release | Full value of the property. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Barclays plc | Higher of purchase price or valuation |
| Bradford & Bingley | Amount of loan + 15% |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Magellan Homeloans | At least equal to the value of the property |
| Platform | 110% of principal sum. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS (One Account) | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Yorkshire Building Society | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
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 paperwork. Conveyancing solicitors should point the borrower to the obstruction of right of way indemnity insurance policy paperwork. The intention of obstruction of right of way indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so it’s important to check the document to ensure it is correct. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the obstruction of right of way indemnity insurance policy. It is well worth checking that the time frame is correct.Significant features and benefits of obstruction of right of way indemnity 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- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Market value reduction resulting from the successful enforcement of the risks specified in the obstruction of right of way policy.
- The out of pocket expenses of altering or taking down 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.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the obstruction of right of way policy, to the extent that such costs are rendered abortive by court decision.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the obstruction of right of way insurance.
- Cover for compensation incurred in any proceedings regarding the risks specified in the obstruction of right of way policy, including legal and associated costs.
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the bank insurance policy might be you can be sure that the insurer will check the details on any proposal form very carefully prior to any claim being met.
Further considerations for obstruction of right of way indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from obstruction of right of way insurance may be adequate for your client. Content on this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most obstruction of right of way Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The above information is in relation to properties in England and Wales.