Indemnity Insurance of Possessory Title Bank conveyancing instructions
Natwest and RBS, as with many lenders, dictate their own specific instructions when it comes to possessory title indemnity insurance. The purpose of this page to assist residential conveyancing practitioners on the various lender conveyancing panel where the title for the the property to be mortgaged contains possessory title. Solicitors should still check the CML handbook requirements for each bank, whether it be Virgin Money, Leeds Building Society or Skipton. The information on this page is not focused on possessory title indemnity insurance requirements.
Need help with possessory title indemnity insurance from your lender?
Barclays and Birmingham Midshires as with most banks, obligations require that where possessory title indemnity insurance is to be taken out:
- the possessory title indemnity insurance policy must be effected without charge to the bank
- you must provide a copy of the possessory title indemnity insurance to the borrower and explain to the borrower why the possessory title indemnity insurance policy was effected and that a further policy might be necessary if there is additional borrowing against the security of the property
- your practice is duty bound to point out to the mortgagor that the borrower is obliged to comply with any conditions of the possessory title indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the policy
- you is required to disclose to the insurer all relevant information which you have gathered
- the possessory title indemnity insurance policy must not contain terms that you are aware would void or compromise the interests of the bank
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- the possessory title indemnity insurance policy needs to be in favor of the mortgage company and, if possible, for the benefit of the borrower and any future registered proprietor or mortgagee. Where the mortgagor will not be protected by the possessory title indemnity insurance policy, you must advise the mortgagor of this fact.
- your firm are responsible for approving the terms of the possessory title policy on behalf of the bank
| Lender | Requirement |
|---|---|
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Halifax | The value of the property. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Harpenden Building Society | 110% of mortgage advance |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| NRAM Ltd | 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. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Perenna | The higher of the purchase price or valuation. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| TSB | The value of the property |
| RBS - Direct Line | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
Possessory Title Contingency Insurance : Reflections
The full terms, conditions and exclusions for possessory title indemnity insurance are set out in the policy document. Conveyancing Practitioners are obliged to point your non-lender client to the possessory title indemnity insurance policy document. The intention of possessory title indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so it is essential check any draft to determine that it is as it should be. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the possessory title indemnity insurance policy. Again, please check that this is as you expected.Important characteristics and benefits of possessory title 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. Possessory Title indemnity insurance Policies are likely to cover the following- Reimbursement for compensation incurred in any action concerning the risks specified in the possessory title insurance, including solicitors charges.
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the possessory title policy, to the extent that such costs are rendered abortive by court decision.
- The cost of altering or demolishing 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.
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the possessory title policy.
- Market value reduction due to the successful enforcement of the risks specified in the possessory title policy.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
You also need to be sure that the answers on the application form are accurate. However remote the likelihood of a claim on the lender insurance policy might be you can be sure that the insurer will check the details on any proposal form thoroughly prior to any claim being met.
Possessory Title Indemnity Insurance has limitations - Supplemental considerations
There may be consequences arising from the enforcement of the risks identified in the possessory title policy which are not adequately covered by financial compensation. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the bank solicitor 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 possessory title 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.