Mortgage Company conveyancing panel conditions re Outstanding Rights of Common Indemnity Insurance
Nationwide and Skipton, like many lenders, have their own requirements when it comes to outstanding rights of common indemnity insurance. This page sets out to enlighten property law firms on the various lender approved list of panel lawyers where the title to be charged incorporates outstanding rights of common. It is not a alternative for checking the Council of Mortgage Lenders’ handbook requirements for each bank, be it Santander, Birmingham Midshires or Halifax. 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?
Barnsley BS and Yorkshire Building Society as with most mortgage companies, requirements are that where outstanding rights of common indemnity insurance is to be taken out:
- the outstanding rights of common indemnity insurance policy must not incorporate terms which you know would invalidate or prejudice the interests of the bank
- the minimum level of cover for the policy must satisfy the requirements for the bank (See Part II Handbook requirements )
- you must reveal to the insurer all relevant information which you have acquired
- your firm must send 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 additional insurance could be mandatory if there is additional lending against the mortgaged property
- the outstanding rights of common indemnity insurance policy must be in favor of the mortgage company and, if possible, in favour of the borrower and any next owner or lender. If the mortgagor will not be protected by the outstanding rights of common indemnity insurance policy, the borrower must be advised accordingly.
- your practice are responsible for approving the terms of the outstanding rights of common policy on behalf of the lender
- the outstanding rights of common indemnity insurance policy should be effected without charge to the lender
- your firm is duty bound to spell out to the borrower that the borrower must adhere to any conditions of the outstanding rights of common indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the insurance
| Lender | Requirement |
|---|---|
| Bank of Scotland | The value of the property. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Hodge | An amount equal to 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, the borrower(s) and any successor in Title. |
| Hodge Equity Release | An amount equal to 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, the borrower(s) and any successor in Title. |
| Holmesdale Building Society | 110% |
| ITL Mortgages | Minimum of the value of the property. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Metro Bank | The open market value of the property according to the valuation report. |
| Mortgage Express (No 2) | |
| National Westminster Bank | An amount equal to the value of the property. |
| Perenna | The higher of the purchase price or valuation. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Whistletree | The value of the property |
Non lender-specific considerations
The extent of the terms for outstanding rights of common indemnity insurance are identified in the policy document. Property lawyers are obliged to direct the borrower to the outstanding rights of common indemnity insurance policy document. Outstanding Rights of Common Contingency insurance is devised to grant indemnity in respect of the risks set out in the policy schedule - so it is essential check the document to determine that it is as it should be. The lifetime of this non-investment insurance agreement is in perpetuity unless otherwise stated in the outstanding rights of common indemnity insurance policy. Adequacy in this regard should be checked.Important characteristics and benefits of outstanding rights of common 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. Outstanding Rights of Common indemnity insurance Policies should be checked for the following- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the outstanding rights of common policy.
- 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 outstanding rights of common policy, to the extent that such costs are rendered abortive by court decision.
- The out of pocket expenses 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.
- Market value reduction resulting from the successful enforcement of the risks specified in the outstanding rights of common policy.
- Cover for compensation incurred in any proceedings in respect of the risks specified in the outstanding rights of common policy, as well as solicitors charges.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
You also need to be sure that the answers on the application form are accurate. However remote the likelihood of a claim on the mortgage company insurance policy might be you can certain 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. Content on this webpage is for general information for Regulated law firms in England and Wales on the the bank approved 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 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 above information is in relation to properties in England and Wales.