Good Leasehold Title Indemnity Insurance Mortgage Company conveyancing requirements

Halifax and Santander, as with many mortgage companies, have their own requirements when it comes to good leasehold title indemnity insurance. The purpose of this page to assist property law solicitors on the various mortgage company solicitors panel where the title to be charged contains good leasehold title. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, be it Coventry BS, Virgin Money or Barclays. The information on this page Is not to be read as good leasehold title indemnity insurance advice.

Need help with good leasehold title indemnity insurance from your lender?

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Birmingham Midshires and Natwest like most mortgage companies, obligations require that where good leasehold title indemnity insurance is to be taken out:

• the good leasehold title indemnity insurance policy must be in favor of the mortgage company and, wherever possible, in favour of the borrower and any subsequent registered proprietor or bank. If the mortgagor will not be protected by the good leasehold title indemnity insurance policy, the borrower must be informed accordingly.
• the good leasehold title indemnity insurance policy should be placed on risk without expense to the mortgage company
• your practice is duty bound to explain to the borrower that the borrower will need to adhere to any conditions of the good leasehold title indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the insurance
• your practice must send a duplicate of the good leasehold title indemnity insurance to the mortgagor and explain to the borrower why the good leasehold title indemnity insurance policy was effected and that a further policy could be necessary if there is further borrowing against the mortgaged property
• you is obliged to reveal to the insurer all relevant information which you have acquired
• your firm are responsible for approving the terms of the good leasehold title policy on behalf of the bank
• the limit of indemnity must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
• the good leasehold title indemnity insurance policy should not contain terms that you recognise would invalidate or compromise the interests of the mortgage company

As to the level of cover for the good leasehold title indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Paragraph 9.2 of the UK Finance handbook PII requirements for banks:

General Good Leasehold Title indemnity insurance points to consider

The full terms, conditions and exclusions for good leasehold title indemnity insurance are shown in the policy document. Property lawyers should direct your non-lender client to the good leasehold title indemnity insurance policy itself. The intention of good leasehold title indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so you should check the document to determine that it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.

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Good Leasehold Title Contingency insurance: Important features and benefits:

The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the good leasehold title indemnity insurance schedule. Good Leasehold Title indemnity insurance Policies should be checked for the following

• The out of pocket expenses 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.
• Diminution in value due to the successful enforcement of the risks specified in the good leasehold title insurance.
• All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the good leasehold title indemnity insurance.
• All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
• Reimbursement for compensation incurred in any action in respect of the risks specified in the good leasehold title indemnity insurance, as well as legal and associated costs.
• Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the good leasehold title indemnity insurance, to the extent that such costs are rendered abortive by court order.

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You also need to be sure that the answers on the application form are correct. However remote the likelihood of a claim on the mortgage company insurance policy might be you can be sure that the insurer will check the details on any proposal form very carefully prior to any claim being paid out.

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Supplemental considerations for good leasehold title indemnity insurance

Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from good leasehold title insurance may be adequate for your client.

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The content set out above is in relation to properties in England and Wales.