Mortgage Company conveyancing panel conditions re Outstanding Rights of Common Indemnity Insurance
Virgin Money and Skipton, like the majority of mortgage companies, dictate their own requirements when it comes to outstanding rights of common indemnity insurance. The purpose of this page to assist domestic conveyancing solicitors on the different bank approved list of panel lawyers where the title for the the property to be mortgaged incorporates outstanding rights of common. Solicitors should still check the CML handbook requirements for each bank, for example Birmingham Midshires, Accord or Yorkshire Building Society. The information on this page is not focused on outstanding rights of common indemnity insurance requirements.
Need help with outstanding rights of common indemnity insurance from your lender?
Chelsea BS and HSBC as with most banks, obligations require that where outstanding rights of common indemnity insurance is effected:
- the outstanding rights of common indemnity insurance policy should not incorporate terms that you are aware would invalidate or compromise the interests of the lender
- your practice are responsible for approving the terms of the outstanding rights of common policy on behalf of the mortgage company
- you must send a duplicate of the outstanding rights of common indemnity insurance to the borrower and explain to the borrower why the outstanding rights of common indemnity insurance policy was effected and that additional insurance could be necessary if there is further borrowing against the security of the property
- your firm must point out to the mortgagor that the borrower will need to adhere to any conditions of the outstanding rights of common indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the insurance
- you is required to disclose to the insurer all relevant information which you have gathered
- the level of indemnity must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- the outstanding rights of common indemnity insurance policy should always be for the benefit of the mortgage company and, if possible, in favour of the borrower and any next owner or bank. Where the borrower will not be protected by the outstanding rights of common indemnity insurance policy, the mortgagor should be informed accordingly.
- the outstanding rights of common indemnity insurance policy should be placed on risk without cost to the mortgage company
| Lender | Requirement |
|---|---|
| Aviva Equity Release | Full value of the property. |
| Bank of Ireland Mortgages | 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 |
| Barnsley 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. |
| Bradford & Bingley | Amount of loan + 15% |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Cynergy Bank | The market value of the property. |
| ITL Mortgages | Minimum of the value of the property. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Lloyds | The value of the property. |
| Magellan Homeloans | At least equal to the value of the property |
| Reliance Bank | \xA31,000,000.00 |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| Secure Trust Bank | An amount at least equal to the market value. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Yorkshire Bank | Open market value of property. |
Non lender-specific considerations
The extent of the terms for outstanding rights of common indemnity insurance are explained in the policy document. Conveyancing Practitioners should direct your non-lender client to the outstanding rights of common indemnity insurance policy paperwork. Outstanding Rights of Common indemnity insurance is designed to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check any draft to determine that it is correct. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Significant aspects and benefits of outstanding rights of common 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. Outstanding Rights of Common indemnity insurance Policies should be checked for the following- The out of pocket expenses of altering or demolishing 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.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the outstanding rights of common insurance, including fees of a legal nature.
- Diminution in value due to the successful enforcement of the risks specified in the outstanding rights of common insurance.
- Expenses for 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 outstanding rights of common indemnity insurance, to the extent that such costs are rendered abortive by court order.
- All sums paid with consent in writing from the insurance company to free the property from the risks specified in the outstanding rights of common policy.
Due diligence should extend to checking that the answers on the application form are correct. Regardless of how remote a claim on the mortgage company insurance policy might be you can rest assured that the insurer will check the details on any proposal form thoroughly prior to any claim being admitted.
Additional considerations for outstanding rights of common indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from outstanding rights of common insurance may be adequate for your client. Information contained within this webpage is for general information for conveyancers and solicitors in England and Wales on the the mortgage company solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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 outstanding rights of common Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above covers to properties in England and Wales.