Mortgage Company conveyancing panel requirements re Outstanding Leasehold Interest Indemnity Insurance
Virgin Money and Natwest, as with the majority of lenders, have their own specific instructions when it comes to outstanding leasehold interest indemnity insurance. This page sets out to enlighten conveyancing practitioners on the numerous lender conveyancing panel where the title for the the property to be mortgaged incorporates outstanding leasehold interest. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Bank of Scotland, Accord or Santander. The information on this page is not focused on outstanding leasehold interest indemnity insurance requirements.
Need help with outstanding leasehold interest indemnity insurance from your lender?
Godiva Mortgages and Nationwide in common with many lenders, instructions are such that where outstanding leasehold interest indemnity insurance is to be put on risk:
- the outstanding leasehold interest indemnity insurance policy should not incorporate conditions that you recognise would void or compromise the interests of the lender
- the minimum level of cover for the policy must satisfy the requirements for the lender (See Part II Handbook requirements )
- you is required to disclose to the insurer all relevant information which you have gathered
- the outstanding leasehold interest indemnity insurance policy must be for the benefit of the mortgage company and, wherever possible, for the benefit of the mortgagor and any next registered proprietor or bank. Where the mortgagor will not be protected by the outstanding leasehold interest indemnity insurance policy, you must advise the mortgagor of this fact.
- you must approve the terms of the outstanding leasehold interest policy on behalf of the mortgage company
- your practice must point out to the borrower that the borrower must adhere to any conditions of the outstanding leasehold interest indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the insurance
- your practice must send a copy of the outstanding leasehold interest indemnity insurance to the mortgagor and explain to the mortgagor why the outstanding leasehold interest indemnity insurance policy was effected and that additional insurance may be mandatory if there is additional lending against the mortgaged property
- the outstanding leasehold interest indemnity insurance policy should be effected without expense to the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Bank of Scotland | The value of the property. |
| Birmingham Bank | completions@birminghambank.com |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Bradford & Bingley | Amount of loan + 15% |
| Coventry Building Society | Minimum of the value of the property. |
| Cynergy Bank | The market value of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Harpenden Building Society | 110% of mortgage advance |
| ITL Mortgages | Minimum of the value of the property. |
| Platform | 110% of principal sum. |
| Reliance Bank | £1,000,000.00 |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| RBS- First Active | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
Outstanding Leasehold Interest Contingency Insurance : Reflections
The extent of the terms for outstanding leasehold interest indemnity insurance are shown in the policy paperwork. Conveyancing Practitioners are obliged to point the borrower to the outstanding leasehold interest indemnity insurance policy paperwork. Outstanding Leasehold Interest Contingency insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so you should check the document to ensure it is correct. The lifetime of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Significant features and benefits of outstanding leasehold interest Contingency 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. Outstanding Leasehold Interest indemnity insurance Policies are likely to cover the following- All sums paid with the written consent of the insurance company to free the property from the risks specified in the outstanding leasehold interest indemnity insurance.
- Market value reduction due to the successful enforcement of the risks specified in the outstanding leasehold interest 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 proceedings in respect of the risks specified in the outstanding leasehold interest insurance, as well as incurred costs and expenses.
- 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 outstanding leasehold interest policy, to the extent that such costs are rendered abortive by court decision.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
Always check what is not included in the outstanding leasehold interest policy e.g. does the policy cover any residence that has been altered within the year prior to the policy being put on risk? Does it cover legal costs?
Outstanding Leasehold Interest Indemnity Insurance has limitations - Additional considerations
Outstanding Leasehold Interest Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that outstanding leasehold interest indemnity cover will not necessarily be the right solution. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender 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 outstanding leasehold interest 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.