Contaminated Land Indemnity Insurance Bank conveyancing requirements
Nationwide and Barclays, as with many mortgage companies, dictate their own requirements when it comes to contaminated land indemnity insurance. This page is designed to help conveyancing practitioners on the different mortgage company solicitors panel where the title to be charged contains contaminated land. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it Bank of Scotland, HSBC or Accord. The content on this page Is not to be read as contaminated land indemnity insurance advice.
Need help with contaminated land indemnity insurance from your lender?
Natwest and Chelsea BS like many lenders, obligations require that where contaminated land indemnity insurance is to be put on risk:
- the level of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the contaminated land indemnity insurance policy should always be in favor of the mortgage company and, if possible, for the benefit of the borrower and any future owner or lender. Where the borrower will not be protected by the contaminated land indemnity insurance policy, the borrower should be informed accordingly.
- you must approve the terms of the contaminated land policy on behalf of the mortgage company
- your practice must provide a duplicate of the contaminated land indemnity insurance to the mortgagor and explain to the mortgagor why the contaminated land indemnity insurance policy was effected and that a further policy could be mandatory if there is additional borrowing against the security of the property
- the contaminated land indemnity insurance policy must be effected at no cost to the bank
- your practice is required to reveal to the insurer all relevant information which you have acquired
- the contaminated land indemnity insurance policy should not incorporate conditions which you are aware would void or compromise the interests of the bank
- you is duty bound to point out to the mortgagor that the borrower must adhere to any conditions of the contaminated land indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the insurance
| 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. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Barnsley 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. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Cynergy Bank | The market value of the property. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Habito | Higher of purchase price or valuation |
| Harpenden Building Society | 110% of mortgage advance |
| 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. |
| 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. |
| Investec | The open market value of the property according to the valuation report. |
| 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. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Precise Mortgages 2026 | An amount at least equal to 110% of the mortgage valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| Scottish Building Society | Amount of mortgage plus 25%. |
| Scottish Widows | 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. |
Non lender-specific considerations
The extent of the terms for contaminated land indemnity insurance are identified in the policy document. Property lawyers should point the borrower to the contaminated land indemnity insurance policy itself. Contaminated Land indemnity insurance is designed to provide indemnity in respect of the risks specified in the policy schedule - so you should check any draft to ensure it is in order. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Contaminated Land Contingency insurance: Significant features and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the contaminated land indemnity insurance schedule. Contaminated Land indemnity insurance Policies are likely to cover the following- Diminution in value resulting from the successful enforcement of the risks specified in the contaminated land policy.
- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the contaminated land policy.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Cover for compensation incurred in any action in respect of the risks specified in the contaminated land insurance, as well as solicitors charges.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the contaminated land insurance, to the extent that such costs are rendered abortive by court decision.
- The cost of altering or demolishing 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.
Always consider what is excluded from the contaminated land insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Supplemental considerations for contaminated land indemnity insurance
Contaminated Land Indemnity insurance isn’t a solution to all of the relevant problems. Information provided on this webpage is for general information for Regulated law firms 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 contaminated land 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.