Lender conveyancing panel conditions re Local Search Indemnity Insurance
RBS and Leeds Building Society, like many mortgage companies, set their own specific instructions when it comes to local search indemnity insurance. This page is designed to help conveyancing solicitors on the different mortgage company conveyancing panel where the title to be charged incorporates local search. It is not a alternative for checking the CML handbook requirements for each mortgage company, for example Virgin Money, Yorkshire Bank Home Loans or Coventry BS. The information on this page Is not to be read as local search indemnity insurance advice.
Need help with local search indemnity insurance from your lender?
Barclays and Lloyds TSB in common with most banks, obligations require that where local search indemnity insurance is to be put on risk:
- the level of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- the local search indemnity insurance policy must be in favor of the mortgage company and, if possible, for the benefit of the mortgagor and any future owner or bank. If the mortgagor will not be covered by the local search indemnity insurance policy, you must advise the mortgagor of this fact.
- your practice must approve the terms of the local search policy on behalf of the bank
- your firm must disclose to the insurer all relevant information which you have gathered
- the local search indemnity insurance policy must be placed on risk without expense to the bank
- the local search indemnity insurance policy should not contain conditions that you recognise would void or prejudice the interests of the mortgage company
- your firm is duty bound to spell out to the borrower that the borrower must adhere to any conditions of the local search indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the policy
- your firm must supply a copy of the local search indemnity insurance to the mortgagor and explain to the borrower why the local search indemnity insurance policy was effected and that additional insurance could be required if there is further borrowing against the security of the property
| Lender | Requirement |
|---|---|
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| 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. |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| National Westminster Bank | An amount equal to the value of the property. |
| Platform | 110% of principal sum. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Precise Mortgages 2026 | An amount at least equal to 110% of the mortgage valuation. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Saffron Building Society | Higher of purchase price or valuation. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Zephyr Mortgages | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
Local Search Contingency Insurance : Reflections
The extent of the terms for local search indemnity insurance are set out in the policy document. Property lawyers are obliged to direct the borrower to the local search indemnity insurance policy document. Local Search Contingency insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so you should check the schedule to ensure it is in order. The duration of this non-investment insurance agreement is in perpetuity unless otherwise stated in the local search indemnity insurance policy. Again, please check that this is as you expected.Important features and benefits of local search indemnity insurance :
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Local Search indemnity insurance Policies should be checked for the following- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Diminution in value resulting from the successful enforcement of the risks specified in the local search insurance.
- The out of pocket expenses of altering or taking down 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.
- Reimbursement for compensation incurred in any action in respect of the risks specified in the local search indemnity insurance, including incurred costs and expenses.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the local search insurance.
- 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 indemnity insurance, to the extent that such costs are rendered abortive by court order.
Due diligence should extend to checking that the answers on the application form are correct. However remote the likelihood of a claim on the bank insurance policy might be you can certain that the insurer will check the details on any proposal form very carefully prior to any claim being paid out.
Local Search Indemnity Insurance has limitations - Further considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from local search insurance may be adequate for your client. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank conveyancing 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 content set out above is in relation to properties in England and Wales.