Indemnity Insurance of Obstruction of Right of Way Bank conveyancing requirements

Leeds Building Society and Coventry BS, like many banks, have their own requirements when it comes to obstruction of right of way indemnity insurance. The purpose of this page to assist conveyancing practitioners on the numerous mortgage company conveyancing panel where the title to be charged includes obstruction of right of way. It is not a alternative for checking the CML handbook requirements for each mortgage company, be it Godiva Mortgages, Skipton or Virgin Money. 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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Barclays and Yorkshire Bank Home Loans in common with many mortgage companies, instructions are such that where obstruction of right of way indemnity insurance is effected:

• you is duty bound to explain to the mortgagor that the borrower must comply with any conditions of the obstruction of right of way indemnity insurance policy and that the borrower should notify the lender 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 lender and, if possible, in favour of the mortgagor and any subsequent registered proprietor or bank. If the mortgagor will not be covered by the obstruction of right of way indemnity insurance policy, the borrower should be informed accordingly.
• the obstruction of right of way indemnity insurance policy should not contain terms that you are aware would invalidate or prejudice the interests of the lender
• your practice must provide 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 may be mandatory if there is additional lending against the mortgaged property
• the obstruction of right of way indemnity insurance policy should be placed on risk at no expense to the mortgage company
• you must reveal to the insurer all relevant information which you have obtained
• the limit of indemnity must satisfy the requirements for the bank (See Part II Handbook requirements )
• your practice must approve the terms of the obstruction of right of way policy on behalf of the bank

Regarding the extent of cover for the obstruction of right of way indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for lenders:

Non lender-specific considerations

The full terms, conditions and exclusions for obstruction of right of way indemnity insurance are set out in the policy paperwork. Property lawyers should point the borrower to the obstruction of right of way indemnity insurance policy itself. The intention of obstruction of right of way indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to ensure it is in order. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.

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Obstruction of Right of Way indemnity insurance: Important characteristics and benefits:

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 Policies should be checked for the following

• The cost of works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of 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 order.
• All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
• All sums paid with the written consent of the insurance company to free the land from the risks specified in the obstruction of right of way policy.
• Reimbursement for compensation incurred in any action regarding the risks specified in the obstruction of right of way indemnity insurance, as well as incurred costs and expenses.
• 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.
• Diminution in value resulting from the successful enforcement of the risks specified in the obstruction of right of way indemnity insurance.

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Always consider what is not included in the obstruction of right of way indemnity insurance e.g. does the policy cover any residence that has been altered within the year prior to the commencement of the policy? Does it cover legal costs?

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Obstruction of Right of Way Indemnity Insurance has limitations - Additional considerations

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.

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The content set out above covers to properties in England and Wales.