Indemnity Insurance of Outstanding Rights of Common Mortgage Company conveyancing instructions
Natwest and Skipton, in common with most lenders, set their own requirements when it comes to outstanding rights of common indemnity insurance. This page is designed to help property law lawyers on the numerous mortgage company conveyancing panel where the title to be charged incorporates outstanding rights of common. Solicitors should still check the CML handbook requirements for each bank, be it Yorkshire Bank Home Loans, Lloyds TSB or Leeds Building Society. The content on this page Is not to be read as outstanding rights of common indemnity insurance advice.
Need help with outstanding rights of common indemnity insurance from your lender?
HSBC and Chelsea BS in common with the majority of mortgage companies, instructions are such that where outstanding rights of common indemnity insurance is to be taken out:
- your practice must provide a duplicate of the outstanding rights of common indemnity insurance to the borrower and explain to the mortgagor why the outstanding rights of common indemnity insurance policy was effected and that a further policy might be necessary if there is supplemental lending against the mortgaged property
- the outstanding rights of common indemnity insurance policy needs to be in favor of the bank and, wherever possible, for the benefit of the borrower and any subsequent owner or mortgage company. If the mortgagor will not be protected by the outstanding rights of common indemnity insurance policy, the mortgagor should be informed accordingly.
- the outstanding rights of common indemnity insurance policy should be effected without cost to the lender
- you must point out to the mortgagor that the borrower must adhere to any conditions of the outstanding rights of common indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the policy
- you must approve the terms of the outstanding rights of common policy on behalf of the mortgage company
- your firm is required to reveal to the insurer all relevant information which you have acquired
- the outstanding rights of common indemnity insurance policy must not incorporate terms that you know would invalidate or prejudice the interests of the lender
- the level of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bradford & Bingley | Amount of loan + 15% |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| Family Building Society | An amount at least equal to the mortgage advance. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Hodge Equity Release | 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. |
| Holmesdale Building Society | 110% |
| 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Perenna | The higher of the purchase price or valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| RBS - Direct Line | An amount equal to the value of the property. |
| Topaz Finance | 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. |
| Yorkshire 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. |
General Outstanding Rights of Common indemnity insurance points to consider
The extent of the terms for outstanding rights of common indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners should point the borrower to the outstanding rights of common indemnity insurance policy paperwork. Outstanding Rights of Common indemnity insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to determine that it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Outstanding Rights of Common Contingency insurance: Significant aspects and benefits:
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 Rights of Common indemnity insurance Policies are likely to cover the following- Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the outstanding rights of common indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Money paid with the written consent of the insurance company to free the property from the risks specified in the outstanding rights of common insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Diminution in value resulting from the successful enforcement of the risks specified in the outstanding rights of common insurance.
- Liability for damages or compensation incurred in any action regarding the risks specified in the outstanding rights of common indemnity insurance, including fees of a legal nature.
- 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.
Due diligence should extend to checking that the answers on the application form are correct. Regardless of how remote a claim on the bank insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly before any claim is paid out.
Other considerations for outstanding rights of common indemnity insurance
Outstanding Rights of Common insurance may satisfy lenders such as Accord or Virgin Money 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 bank conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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 rights of common 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 covers to properties in England and Wales.