Mortgage Company conveyancing panel conditions re Outstanding Rights of Common Indemnity Insurance
Halifax and RBS, as with most lenders, have their own specific instructions when it comes to outstanding rights of common indemnity insurance. The content herein aims to help property law lawyers on the different bank solicitors panel where the title to be charged contains outstanding rights of common. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Bank of Scotland, Natwest or Virgin Money. The content 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?
Barnsley BS and Barclays in common with many mortgage companies, requirements are that where outstanding rights of common indemnity insurance is to be put on risk:
- your firm is duty bound to point out to the borrower that the borrower is obliged to comply with any conditions of the outstanding rights of common indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the policy
- the outstanding rights of common indemnity insurance policy should be effected without expense to the lender
- the outstanding rights of common indemnity insurance policy must be for the benefit of the bank and, if possible, for the benefit of the borrower and any subsequent registered proprietor or lender. Where the borrower will not be protected by the outstanding rights of common indemnity insurance policy, the borrower should be informed accordingly.
- the limit of indemnity must satisfy the requirements for the bank (See Part II Handbook requirements )
- your firm must provide a copy of the outstanding rights of common indemnity insurance to the mortgagor and explain to the mortgagor why the outstanding rights of common indemnity insurance policy was effected and that a further policy may be mandatory if there is additional borrowing against the security of the property
- your practice must reveal to the insurer all relevant information which you have acquired
- your practice are responsible for approving the terms of the outstanding rights of common policy on behalf of the mortgage company
- the outstanding rights of common indemnity insurance policy should not contain conditions that you know would invalidate or compromise the interests of the lender
| 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. |
| 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. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Hampden | The open market value of the property according to the valuation report. |
| ITL Mortgages | Minimum of the value of the property. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| Lloyds TSB Scotland | The 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). |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Masthaven Bank | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Molo Finance Buy to Let | 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 mortgages. |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Pepper Money | An amount equal to at least 110% of the purchase price or value, whichever is higher. 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). |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| TSB | The value of the property |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
General Outstanding Rights of Common indemnity insurance points to consider
The full terms, conditions and exclusions for outstanding rights of common indemnity insurance are shown in the policy document. Conveyancing Practitioners should point your non-lender client to the outstanding rights of common indemnity insurance policy paperwork. The intention of outstanding rights of common indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to determine that it is in order. The continuance 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.Outstanding Rights of Common indemnity insurance: Significant aspects and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the outstanding rights of common indemnity insurance schedule. Outstanding Rights of Common indemnity insurance Policies should be checked for the following- Loss in market value due to the successful enforcement of the risks specified in the outstanding rights of common policy.
- The cost of 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 outstanding rights of common 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 insurance company
- 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.
- All sums paid with the written consent of the insurance company to free the property from the risks specified in the outstanding rights of common indemnity insurance.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the outstanding rights of common policy, including legal and associated costs.
Don't forget to consider what is excluded from the outstanding rights of common policy 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?
Other considerations for outstanding rights of common indemnity insurance
Outstanding Rights of Common Indemnity insurance isn’t a solution to all of the relevant problems. Content on this webpage is for general information for Regulated law firms in England and Wales on the the bank conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank 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.