Obstruction of Right of Way Indemnity Insurance Mortgage Company conveyancing requirements

Barclays and RBS, in common with the majority of banks, dictate their own requirements when it comes to obstruction of right of way indemnity insurance. The content herein aims to help conveyancing practitioners on the different bank solicitors panel where the title to be charged includes obstruction of right of way. Lawyers are advised to familiarise themselves with the CML handbook requirements for each mortgage company, whether it be Leeds Building Society, Skipton or Yorkshire Bank Home Loans. The information on this page is not focused on obstruction of right of way indemnity insurance requirements.

Need help with obstruction of right of way indemnity insurance from your lender?

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Accord and Godiva Mortgages like most lenders, instructions are such that where obstruction of right of way indemnity insurance is to be taken out:

• you is obliged to disclose to the insurer all relevant information which you have acquired
• you must supply a copy of the obstruction of right of way indemnity insurance to the mortgagor and explain to the borrower why the obstruction of right of way indemnity insurance policy was effected and that additional insurance could be mandatory if there is additional borrowing against the security of the property
• the obstruction of right of way indemnity insurance policy needs to be for the benefit of the bank and, if possible, for the benefit of the borrower and any future registered proprietor or mortgagee. If the mortgagor will not be covered by the obstruction of right of way indemnity insurance policy, the borrower should be advised accordingly.
• your practice must approve the terms of the obstruction of right of way policy on behalf of the lender
• the obstruction of right of way indemnity insurance policy should be effected at no charge to the lender
• the obstruction of right of way indemnity insurance policy should not incorporate terms that you are aware would void or compromise the interests of the mortgage company
• the level of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
• your practice must explain to the mortgagor that the borrower is obliged to adhere to any conditions of the obstruction of right of way indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in respect of the policy

Regarding the extent of cover for the obstruction of right of way indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Paragraph 9.2 of the Part 2 requirements for banks:

Non lender-specific considerations

The extent of the terms for obstruction of right of way indemnity insurance are explained in the policy paperwork. Conveyancing solicitors should point your non-lender client to the obstruction of right of way indemnity insurance policy paperwork. The intention of obstruction of right of way indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to determine that it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the obstruction of right of way indemnity insurance policy. Adequacy in this regard should be checked.

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Important aspects and benefits of obstruction of right of way Contingency 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. Obstruction of Right of Way indemnity insurance Policies should be checked for the following

• Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the obstruction of right of way indemnity insurance.
• All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
• Reimbursement for compensation incurred in any proceedings in respect of the risks specified in the obstruction of right of way indemnity insurance, including solicitors charges.
• The out of pocket expenses 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.
• Diminution in value due to the successful enforcement of the risks specified in the obstruction of right of way indemnity insurance.
• Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the obstruction of right of way indemnity insurance, to the extent that such costs are rendered abortive by court order.

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Don't forget to consider what is excluded from the obstruction of right of way insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?

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Obstruction of Right of Way Indemnity Insurance has limitations - Other considerations

Obstruction of Right of Way insurance may satisfy lenders such as Chelsea BS or Birmingham Midshires 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.

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The above information is in relation to properties in England and Wales.