Mortgage Company conveyancing panel conditions re Local Search Indemnity Insurance
Barclays and Barnsley BS, like most lenders, set their own requirements when it comes to local search indemnity insurance. The content herein aims to help property law practitioners on the numerous mortgage company solicitors panel where the title to be charged includes local search. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Yorkshire Building Society, Virgin Money or Chelsea BS. The information on this page is not focused on local search indemnity insurance requirements.
Need help with local search indemnity insurance from your lender?
Natwest and Santander in common with the majority of lenders, instructions are such that where local search indemnity insurance is to be taken out:
- your firm is obliged to disclose to the insurer all relevant information which you have obtained
- the minimum level of cover for the policy must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the local search indemnity insurance policy should not incorporate conditions that you know would invalidate or compromise the interests of the mortgage company
- you are responsible for approving the terms of the local search policy on behalf of the lender
- your practice must supply a copy of the local search indemnity insurance to the borrower and explain to the borrower why the local search indemnity insurance policy was effected and that additional insurance may be mandatory if there is supplemental lending against the security of the property
- the local search indemnity insurance policy must be effected at no charge to the lender
- the local search indemnity insurance policy needs to be in favor of the lender and, wherever possible, for the benefit of the borrower and any next owner or mortgagee. Where the borrower will not be covered by the local search indemnity insurance policy, you must advise the borrower of this fact.
- your practice is duty bound to explain to the mortgagor that the borrower must adhere to any conditions of the local search indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the policy
| Lender | Requirement |
|---|---|
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| 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. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Cynergy Bank | The market value of the property. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Hodge | 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. |
| JPMorgan | 110% of principal sum. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Masthaven Bank | 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. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Platform | 110% of principal sum. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Yorkshire Bank | Open market value of property. |
General Local Search indemnity insurance points to consider
The extent of the terms for local search indemnity insurance are shown in the policy document. Conveyancing solicitors should direct your non-lender client to the local search indemnity insurance policy paperwork. The intention of local search indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the schedule to ensure it is in order. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the local search indemnity insurance policy. It is well worth checking that the time frame is correct.Important aspects and benefits of local search 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. Local Search indemnity insurance Policies should be checked for the following- Liability for damages or compensation incurred in any action concerning the risks specified in the local search insurance, including solicitors charges.
- The cost of works (including professional fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the local search policy, 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
- Market value reduction due to the successful enforcement of the risks specified in the local search policy.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the local search 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.
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 local search policy will not be valid.
Local Search Indemnity Insurance has limitations - Supplemental considerations
Local Search insurance may satisfy lenders such as Accord or Bank of Scotland 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 conveyancers and solicitors in England and Wales on the the lender approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender 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 local search 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.