Indemnity Insurance of Adverse Possession Bank conveyancing instructions
Natwest and Coventry BS, as with most mortgage companies, have their own requirements when it comes to adverse possession indemnity insurance. The content herein aims to help property law solicitors on the different lender approved list of panel lawyers where the title for the the property to be mortgaged includes adverse possession. It is not a alternative for checking the Council of Mortgage Lenders’ handbook requirements for each lender, whether it be Leeds Building Society, Virgin Money or RBS. The content on this page is not focused on adverse possession indemnity insurance requirements.
Need help with adverse possession indemnity insurance from your lender?
Santander and Halifax in common with the majority of mortgage companies, instructions are such that where adverse possession indemnity insurance is to be put on risk:
- you must disclose to the insurer all relevant information which you have obtained
- the adverse possession indemnity insurance policy must not incorporate conditions which you are aware would invalidate or compromise the interests of the lender
- the adverse possession indemnity insurance policy should be effected at no cost to the lender
- you are responsible for approving the terms of the adverse possession policy on behalf of the mortgage company
- you must send a copy of the adverse possession indemnity insurance to the borrower and explain to the mortgagor why the adverse possession indemnity insurance policy was effected and that additional insurance could be necessary if there is further borrowing against the security of the property
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- the adverse possession indemnity insurance policy must be in favor of the mortgage company and, wherever possible, in favour of the borrower and any subsequent owner or bank. If the mortgagor will not be covered by the adverse possession indemnity insurance policy, the borrower should be informed accordingly.
- your firm must explain to the mortgagor that the borrower will need to comply with any conditions of the adverse possession indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
| Lender | Requirement |
|---|---|
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| 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. |
| 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. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| 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. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| RBS (One Account) | An amount equal to the value of the property. |
| Topaz Finance | 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. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Yorkshire Bank | Open market value of property. |
Adverse Possession Contingency Insurance : Reflections
The full terms, conditions and exclusions for adverse possession indemnity insurance are explained in the policy document. Conveyancing solicitors are obliged to direct the borrower to the adverse possession indemnity insurance policy document. Adverse Possession indemnity insurance is designed to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to determine that it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the adverse possession indemnity insurance policy. It is well worth checking that the time frame is correct.Significant features and benefits of adverse possession 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. Adverse Possession indemnity insurance Cover normally includes- Reimbursement for compensation incurred in any action regarding the risks specified in the adverse possession policy, including legal and associated costs.
- Expenses for works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the adverse possession indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Market value reduction resulting from the successful enforcement of the risks specified in the adverse possession insurance.
- 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 property from the risks specified in the adverse possession indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
Always consider what is excluded from the adverse possession insurance e.g. does the policy cover any residence that has been altered within the year prior to the policy being put on risk? Are legal costs covered?
Further considerations for adverse possession indemnity insurance
There may be consequences arising from the enforcement of the risks identified in the adverse possession insurance which are not adequately covered by financial compensation. 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 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 adverse possession 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.