Lack of Consent Indemnity Insurance Mortgage Company conveyancing requirements
Coventry BS and Nationwide, like the majority of banks, dictate their own specific instructions when it comes to lack of consent indemnity insurance. The purpose of this page to assist property law firms on the numerous lender approved list of panel lawyers where the title for the the property to be mortgaged includes lack of consent. Lawyers are advised to familiarise themselves with the CML handbook requirements for each mortgage company, whether it be Yorkshire Building Society, Virgin Money or Yorkshire Bank Home Loans. The content on this page Is not to be read as lack of consent indemnity insurance advice.
Need help with lack of consent indemnity insurance from your lender?
Accord and Barnsley BS in common with many banks, instructions are such that where lack of consent indemnity insurance is to be taken out:
- your practice is duty bound to point out to the borrower that the borrower is obliged to comply with any conditions of the lack of consent indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- your practice must disclose to the insurer all relevant information which you have obtained
- the lack of consent indemnity insurance policy must be placed on risk at no expense to the mortgage company
- the lack of consent indemnity insurance policy needs to be for the benefit of the lender and, wherever possible, in favour of the mortgagor and any next owner or mortgagee. If the borrower will not be covered by the lack of consent indemnity insurance policy, the borrower should be advised accordingly.
- the lack of consent indemnity insurance policy must not contain conditions that you are aware would void or compromise the interests of the lender
- you must send a copy of the lack of consent indemnity insurance to the mortgagor and explain to the borrower why the lack of consent indemnity insurance policy was effected and that additional insurance may be mandatory if there is further borrowing against the mortgaged property
- your practice must approve the terms of the lack of consent policy on behalf of the lender
- the minimum level of cover for the policy must meet the requirements for the lender (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| Allied Irish Bank | At least the amount of the mortgage advance. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Bank of Scotland | The value of the property. |
| Bradford & Bingley | Amount of loan + 15% |
| Chelsea 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. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Hampden | The open market value of the property according to the valuation report. |
| Landmark | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Mortgage Express | Amount of loan + 15% |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Reliance Bank | £1,000,000.00 |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| RBS (One Account) | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
Non lender-specific considerations
The full terms, conditions and exclusions for lack of consent indemnity insurance are shown in the policy document. Property lawyers are obliged to point your non-lender client to the lack of consent indemnity insurance policy itself. Lack of Consent Contingency insurance is devised to provide indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to determine that it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the lack of consent indemnity insurance policy. It is well worth checking that the time frame is correct.Important aspects and benefits of lack of consent indemnity insurance :
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the lack of consent indemnity insurance schedule. Lack of Consent indemnity insurance Policies are likely to cover the following- 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.
- Market value reduction due to the successful enforcement of the risks specified in the lack of consent insurance.
- 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 consent indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Money paid with consent in writing from the insurance company to free the land from the risks specified in the lack of consent indemnity insurance.
- Cover for compensation incurred in any proceedings in respect of the risks specified in the lack of consent insurance, including incurred costs and expenses.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
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 lack of consent policy will be invalidated.
Further considerations for lack of consent indemnity insurance
Lack of Consent insurance may satisfy lenders such as RBS or Barclays 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 mortgage company 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 lack of consent 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 covers to properties in England and Wales.