Bank conveyancing panel requirements re Lack of Building Regulation Approval Indemnity Insurance
RBS and Birmingham Midshires, in common with many mortgage companies, set their own specific instructions when it comes to lack of building regulation approval indemnity insurance. This page is designed to help domestic conveyancing lawyers on the various mortgage company solicitors panel where the title for the the property to be mortgaged includes lack of building regulation approval. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, be it Accord, Barclays or Leeds Building Society. The information on this page Is not to be read as lack of building regulation approval indemnity insurance advice.
Need help with lack of building regulation approval indemnity insurance from your lender?
Being a conveyancing lawyer on a mortgage company panel you must investigate (including any further queries to clarify any issues which may arise) to ensure the premises or any works thereto has the benefit of any necessary Building Regulation Consent and that the property may be the subject of enforcement proceedings.
Where there is evidence of such a breach or matter but in your professional opinion there is no reasonable likelihood of enforcement action and, following appropriate enquiries, and you are assured that the title is good and marketable and can provide an unconditional COT, the bank may not insist on lack of building regulation consent indemnity insurance and you may proceed.
Where there is such evidence that not all building regulation approvals will be in place on completion, where you are not able to provide an unconditional COT, you should reveal this to the lender in accordance with 2.3. of the UK Finance Lenders’ Handbook P2. Each bank such as RBS or Birmingham Midshires may take a different approach.
About Lack of Building Regulation Approval Indemnity Insurance
Lack of Building Regulation Approval Cover is typically required where no proof of building regulation consent can be provided for works (or FENSA certificate for windows) that have been in existence for 12 months or more, whether a residential residence or large commercial project. The consequential losses flow from the successful enforcement action by the local authority. In a typical conveyancing scenario the seller would be expected to pay the premium for the Lack of Building Regulation Approval Indemnity Insurance, which would be taken out in the purchaser’s name as well as the mortgage company.
A lack of building regulation approval indemnity insurance policy is ordinarily less expensive than seeking retrospective approval and is without question significantly quicker. The downside is that the risk of enforcement action still remains.
Yorkshire Building Society and Natwest like the majority of banks, obligations require that where lack of building regulation approval indemnity insurance is to be taken out:
- the lack of building regulation approval indemnity insurance policy must be in favor of the lender and, wherever possible, for the benefit of the mortgagor and any next registered proprietor or lender. Where the borrower will not be protected by the lack of building regulation approval indemnity insurance policy, the mortgagor must be advised accordingly.
- the lack of building regulation approval indemnity insurance policy should be effected at no charge to the bank
- your firm must spell out to the mortgagor that the borrower must comply with any conditions of the lack of building regulation approval indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the insurance
- your firm is required to disclose to the insurer all relevant information which you have obtained
- the lack of building regulation approval indemnity insurance policy must not incorporate terms that you know would invalidate or compromise the interests of the lender
- your practice must send a duplicate of the lack of building regulation approval indemnity insurance to the mortgagor and explain to the mortgagor why the lack of building regulation approval indemnity insurance policy was effected and that a further policy might be mandatory if there is additional lending against the security of the property
- your firm are responsible for approving the terms of the lack of building regulation approval policy on behalf of the bank
- the limit of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| Bank of Ireland Mortgages | |
| Bank of Scotland | |
| Bluestone Mortgages | |
| Chelsea Building Society | |
| Clydesdale Bank | |
| Coutts Finance | |
| Coventry Building Society | |
| Ecology Building Society | |
| ITL Mortgages | |
| Intelligent Finance | |
| Keystone Property Finance | |
| Landmark | |
| Leeds Building Society | |
| MPowered Mortgages | |
| Mortgage Express | |
| NRAM Ltd | |
| Parity Trust | |
| RBS - Direct Line | |
| Zephyr Mortgages |
Non lender-specific considerations
The full terms, conditions and exclusions for lack of building regulation approval indemnity insurance are explained in the policy document. Conveyancing Practitioners should direct your non-lender client to the lack of building regulation approval indemnity insurance policy paperwork. Lack of Building Regulation Approval Contingency insurance is designed to grant indemnity in respect of the risks set out in the policy schedule - so you should check any draft to ensure it is in order. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the lack of building regulation approval indemnity insurance policy. Again, please check that this is as you expected.Important features and benefits of lack of building regulation approval 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. Lack of Building Regulation Approval indemnity insurance Policies are likely to cover the following- Diminution in value resulting from the successful enforcement of the risks specified in the lack of building regulation approval 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.
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the lack of building regulation approval insurance, to the extent that such costs are rendered abortive by court decision.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the lack of building regulation approval indemnity insurance.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the lack of building regulation approval insurance, as well as legal and associated costs.
As with any insurance policy, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the lack of building regulation approval policy will not be valid.
Other considerations for lack of building regulation approval indemnity insurance
Lack of Building Regulation Approval insurance may satisfy lenders such as Nationwide or Virgin Money 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.The content set out above covers to properties in England and Wales.