Bank conveyancing panel requirements re Outstanding Rights of Common Indemnity Insurance
Natwest and Halifax, in common with most mortgage companies, dictate their own requirements when it comes to outstanding rights of common indemnity insurance. This page sets out to enlighten property law solicitors on the numerous lender solicitors panel where the title to be charged contains outstanding rights of common. Solicitors should still check the CML handbook requirements for each lender, whether it be Yorkshire Building Society, Barnsley BS or Birmingham Midshires. 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?
Barclays and Godiva Mortgages as with many banks, instructions are such that where outstanding rights of common indemnity insurance is effected:
- the outstanding rights of common indemnity insurance policy must be placed on risk at no charge to the lender
- your firm is required to disclose to the insurer all relevant information which you have gathered
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your practice is duty bound to point out to the borrower that the borrower must comply with any conditions of the outstanding rights of common indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the insurance
- the outstanding rights of common indemnity insurance policy should not incorporate conditions which you are aware would void or prejudice the interests of the mortgage company
- your firm are responsible for approving the terms of the outstanding rights of common policy on behalf of the lender
- your practice must provide a duplicate of the outstanding rights of common indemnity insurance to the mortgagor and explain to the borrower why the outstanding rights of common indemnity insurance policy was effected and that additional insurance could be mandatory if there is supplemental lending against the mortgaged property
- the outstanding rights of common indemnity insurance policy needs to be in favor of the bank and, wherever possible, for the benefit of the borrower and any future registered proprietor or bank. If the borrower will not be covered by the outstanding rights of common indemnity insurance policy, you must advise the borrower of this fact.
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| 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. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| Magellan Homeloans | At least equal to the value of the property |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Mortgage Express | Amount of loan + 15% |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| National Westminster Bank | An amount equal to the value of the property. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| RBS (One Account) | An amount equal to the value of the property. |
| Zephyr Mortgages | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
General Outstanding Rights of Common indemnity insurance points to consider
The extent of the terms for outstanding rights of common indemnity insurance are shown in the policy document. Conveyancing Practitioners are obliged to 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 provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to ensure it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the outstanding rights of common indemnity insurance policy. Again, please check that this is as you expected.Significant aspects 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 Cover normally includes- Market value reduction resulting from the successful enforcement of the risks specified in the outstanding rights of common insurance.
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the outstanding rights of common policy.
- The cost 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 other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- 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 outstanding rights of common indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- Liability for damages or compensation incurred in any proceedings regarding the risks specified in the outstanding rights of common insurance, as well as fees of a legal nature.
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the outstanding rights of common policy will not be valid.
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 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 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 above information covers to properties in England and Wales.