Lender conveyancing panel conditions re Contaminated Land Indemnity Insurance
Birmingham Midshires and Leeds Building Society, as with many lenders, set their own specific instructions when it comes to contaminated land indemnity insurance. The purpose of this page to assist property law lawyers on the various lender solicitors panel where the title for the the property to be mortgaged 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, Natwest or Lloyds TSB. 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?
Yorkshire Bank Home Loans and Accord like many mortgage companies, instructions are such that where contaminated land indemnity insurance is effected:
- your firm is duty bound to point out to the borrower that the borrower will need to adhere to any conditions of the contaminated land indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the policy
- your practice must provide a copy of the contaminated land indemnity insurance to the borrower and explain to the borrower why the contaminated land indemnity insurance policy was effected and that a further policy may be mandatory if there is additional borrowing against the security of the property
- the limit of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your practice must approve the terms of the contaminated land policy on behalf of the bank
- the contaminated land indemnity insurance policy should be placed on risk without expense to the bank
- you is obliged to reveal to the insurer all relevant information which you have acquired
- the contaminated land indemnity insurance policy must be in favor of the bank and, if possible, in favour of the borrower and any next owner or mortgagee. Where the mortgagor will not be covered by the contaminated land indemnity insurance policy, the borrower needs to be advised accordingly.
- the contaminated land indemnity insurance policy should not contain conditions that you are aware would void or prejudice the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| 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. |
| Aviva Equity Release | Full value of the property. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Bluestone Mortgages | 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. |
| 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. |
| ITL Mortgages | Minimum of the value of the property. |
| Investec | The open market value of the property according to the valuation report. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| National Westminster Bank | An amount equal to the value of the property. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| RBS - Virgin One | An amount equal to the value of the property. |
Contaminated Land Contingency Insurance : Reflections
The extent of the terms for contaminated land indemnity insurance are identified in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower to the contaminated land indemnity insurance policy document. Contaminated Land indemnity insurance is designed to grant indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to ensure it is as it should be. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the contaminated land indemnity insurance policy. It is well worth checking that the time frame is correct.Contaminated Land Contingency insurance: Significant aspects and benefits:
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. Contaminated Land indemnity insurance Policies are likely to cover the following- Liability for damages or compensation incurred in any action regarding the risks specified in the contaminated land insurance, as well as legal and associated costs.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the contaminated land insurance.
- The cost of 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 indemnity insurance, to the extent that such costs are rendered abortive by court order.
- 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.
- Loss in market value resulting from the successful enforcement of the risks specified in the contaminated land policy.
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 contaminated land policy will be invalidated.
Further considerations for contaminated land indemnity insurance
Contaminated Land insurance may satisfy lenders such as RBS or Godiva Mortgages 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. 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 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 above information is in relation to properties in England and Wales.