Lender conveyancing panel conditions re Forfeiture of Superior lease Indemnity Insurance
Godiva Mortgages and Halifax, like most banks, set their own requirements when it comes to forfeiture of superior lease indemnity insurance. This page is designed to help property law practitioners on the numerous lender conveyancing panel where the title for the the property to be mortgaged incorporates forfeiture of superior lease. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Coventry BS, Lloyds TSB or Leeds Building Society. The information on this page is not focused on forfeiture of superior lease indemnity insurance requirements.
Need help with forfeiture of superior lease indemnity insurance from your lender?
Nationwide and Bank of Scotland like many mortgage companies, instructions are such that where forfeiture of superior lease indemnity insurance is to be taken out:
- your firm must spell out to the borrower that the borrower is obliged to adhere to any conditions of the forfeiture of superior lease indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the policy
- your firm is required to disclose to the insurer all relevant information which you have acquired
- your practice must approve the terms of the forfeiture of superior lease policy on behalf of the bank
- your firm must supply a duplicate of the forfeiture of superior lease indemnity insurance to the mortgagor and explain to the borrower why the forfeiture of superior lease indemnity insurance policy was effected and that additional insurance could be mandatory if there is additional lending against the security of the property
- the forfeiture of superior lease indemnity insurance policy needs to be for the benefit of the mortgage company and, wherever possible, in favour of the borrower and any next registered proprietor or mortgage company. Where the mortgagor will not be covered by the forfeiture of superior lease indemnity insurance policy, the mortgagor needs to be informed accordingly.
- the forfeiture of superior lease indemnity insurance policy must be placed on risk without charge to the mortgage company
- the forfeiture of superior lease indemnity insurance policy should not contain terms that you know would invalidate or prejudice the interests of the mortgage company
- the limit of indemnity must meet the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Aviva Equity Release | Full value of the property. |
| Bank of Scotland Private | Not less than the Facility plus 10%. |
| 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. |
| Britannia | Cover to the full value of the property. |
| Coventry Building Society | Minimum of the value of the property. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| 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. |
| ITL Mortgages | Minimum of the value of the property. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Platform | 110% of principal sum. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
| 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. |
Non lender-specific considerations
The extent of the terms for forfeiture of superior lease indemnity insurance are explained in the policy document. Property lawyers are obliged to direct your non-lender client to the forfeiture of superior lease indemnity insurance policy paperwork. The intention of forfeiture of superior lease indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to determine that it is as it should be. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the forfeiture of superior lease indemnity insurance policy. Adequacy in this regard should be checked.Forfeiture of Superior lease Contingency insurance: Important features 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. Forfeiture of Superior lease indemnity insurance Cover normally includes- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Loss in market value due to the successful enforcement of the risks specified in the forfeiture of superior lease indemnity insurance.
- Cover for compensation incurred in any action regarding the risks specified in the forfeiture of superior lease 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.
- Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the forfeiture of superior lease insurance, to the extent that such costs are rendered abortive by court decision.
- All sums paid with consent in writing from the insurance company to free the property from the risks specified in the forfeiture of superior lease insurance.
Don't forget to check what is excluded from the forfeiture of superior lease insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?
Forfeiture of Superior lease Indemnity Insurance has limitations - Other considerations
Forfeiture of Superior lease insurance may satisfy lenders such as Yorkshire Building Society or HSBC 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 provided on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company approved 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 forfeiture of superior lease 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.