Outstanding Rights of Common Indemnity Insurance Bank conveyancing requirements
Santander and Barclays, like many lenders, dictate their own requirements when it comes to outstanding rights of common indemnity insurance. The purpose of this page to assist conveyancing firms on the various lender conveyancing panel 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 lender, whether it be Yorkshire Bank Home Loans, Skipton or RBS. 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 Barnsley BS in common with most lenders, requirements are that where outstanding rights of common indemnity insurance is effected:
- 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 in favor of the bank and, if possible, in favour of the mortgagor and any next owner or mortgage company. If the mortgagor will not be protected by the outstanding rights of common indemnity insurance policy, you must advise the mortgagor of this fact.
- the outstanding rights of common indemnity insurance policy should be placed on risk without expense to the mortgage company
- the outstanding rights of common indemnity insurance policy should not incorporate conditions that you are aware would invalidate or prejudice the interests of the lender
- you must approve the terms of the outstanding rights of common policy on behalf of the bank
- your firm is obliged to reveal to the insurer all relevant information which you have obtained
- you must point out to the mortgagor that the borrower must comply with any conditions of the outstanding rights of common indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in relation to the insurance
- you must supply a copy of the outstanding rights of common indemnity insurance to the borrower and explain to the mortgagor why the outstanding rights of common indemnity insurance policy was effected and that additional insurance might be mandatory if there is further borrowing against the mortgaged property
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Barclays plc | Higher of purchase price or valuation |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Godiva Mortgages | Minimum of the value of the property. |
| Habito | Higher of purchase price or valuation |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| Holmesdale Building Society | 110% |
| Intelligent Finance | 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. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Lloyds TSB Scotland | The value of the property |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Perenna | The higher of the purchase price or valuation. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
General Outstanding Rights of Common indemnity insurance points to consider
The full terms, conditions and exclusions 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 devised to provide indemnity in respect of the risks set out 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. Again, please check that this is as you expected.Outstanding Rights of Common Contingency insurance: Significant characteristics and benefits:
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Outstanding Rights of Common indemnity insurance Policies should be checked for the following- Cover for compensation incurred in any action regarding the risks specified in the outstanding rights of common policy, as well as solicitors charges.
- Expenses for works (including professional 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 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 liberate the land from the risks specified in the outstanding rights of common indemnity insurance.
- Diminution in value resulting from the successful enforcement of the risks specified in the outstanding rights of common policy.
- The cost 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.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
Always check what is excluded from the outstanding rights of common indemnity insurance e.g. does the policy cover any property that has been altered within the year prior to the commencement of the policy? Does it cover legal costs?
Outstanding Rights of Common Indemnity Insurance has limitations - Further considerations
Outstanding Rights of Common Indemnity insurance isn’t a solution to all of the relevant problems. Information contained within this webpage is for general information for conveyancers and solicitors 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 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 covers to properties in England and Wales.