Outstanding Rights of Common Indemnity Insurance Bank conveyancing requirements
Skipton and Leeds Building Society, in common with the majority of lenders, have their own specific instructions when it comes to outstanding rights of common indemnity insurance. The purpose of this page to assist conveyancing lawyers on the different lender solicitors panel where the title for the the property to be mortgaged includes outstanding rights of common. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be Virgin Money, Bank of Scotland or Yorkshire Building Society. The information on this page Is not to be read as outstanding rights of common indemnity insurance advice.
Need help with outstanding rights of common indemnity insurance from your lender?
Chelsea BS and Natwest as with most lenders, instructions are such that where outstanding rights of common indemnity insurance is to be taken out:
- the level of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- the outstanding rights of common indemnity insurance policy should not incorporate conditions that you recognise would invalidate or compromise the interests of the lender
- you is duty bound to explain to the borrower that the borrower will need to 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 relation to the insurance
- the outstanding rights of common indemnity insurance policy should always be for the benefit of the bank and, wherever possible, in favour of the borrower and any future owner or mortgagee. If the borrower will not be covered by the outstanding rights of common indemnity insurance policy, the mortgagor must be informed accordingly.
- the outstanding rights of common indemnity insurance policy should be placed on risk at no expense to the lender
- your practice is obliged to reveal to the insurer all relevant information which you have gathered
- your practice must approve the terms of the outstanding rights of common policy on behalf of the lender
- you must send a copy 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 a further policy may be required if there is additional lending against the security of the property
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Adam & Company | The open market value of the property according to the valuation report. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| 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. |
| Cynergy Bank | The market value of the property. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Dudley Building Society | Purchase price or valuation, whichever is 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. |
| ITL Mortgages | Minimum of the value of the property. |
| Lloyds TSB Scotland | The value of the property |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| 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). |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Scottish Widows | The value of the property. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| RBS- First Active | An amount equal to the value of the property. |
| Ulster Bank | 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. |
| Yorkshire 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. |
Outstanding Rights of Common Contingency Insurance : Reflections
The extent of the terms for outstanding rights of common indemnity insurance are set out in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower 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 specified in the policy schedule - so you should check the document to determine that it is as it should be. The duration 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.Important aspects and benefits of outstanding rights of common indemnity insurance :
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 are likely to cover the following- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Cover for compensation incurred in any proceedings concerning the risks specified in the outstanding rights of common insurance, including incurred costs and expenses.
- 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 sums paid with the written consent of the insurance company to liberate the land from the risks specified in the outstanding rights of common insurance.
- Loss in market value due to the successful enforcement of the risks specified in the outstanding rights of common insurance.
- The cost of works (including professional fees) for the purpose of the development started, 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.
Due diligence should extend to checking that the answers on the application form are correct. Regardless of how remote a claim on the lender insurance policy might be you can be sure that the insurer will check the details on any proposal form thoroughly prior to any claim being paid out.
Further considerations for outstanding rights of common indemnity insurance
Outstanding Rights of Common insurance may satisfy lenders such as Yorkshire Bank Home Loans or Lloyds TSB and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. 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 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 is in relation to properties in England and Wales.