Rights to Light Indemnity Insurance Lender conveyancing requirements
Barnsley BS and HSBC, in common with most mortgage companies, set their own requirements when it comes to rights to light indemnity insurance. The content herein aims to help property law solicitors on the numerous lender solicitors panel where the title to be charged incorporates rights to light. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, be it Lloyds TSB, Barclays or Virgin Money. The content on this page is not focused on rights to light indemnity insurance requirements.
Need help with rights to light indemnity insurance from your lender?
Nationwide and Yorkshire Bank Home Loans like the majority of mortgage companies, obligations require that where rights to light indemnity insurance is to be taken out:
- you is duty bound to spell out to the mortgagor that the borrower must comply with any conditions of the rights to light indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
- the limit of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
- you is required to disclose to the insurer all relevant information which you have acquired
- the rights to light indemnity insurance policy should not contain conditions which you recognise would void or prejudice the interests of the lender
- you must provide a duplicate of the rights to light indemnity insurance to the borrower and explain to the borrower why the rights to light indemnity insurance policy was effected and that additional insurance may be necessary if there is additional lending against the security of the property
- your practice are responsible for approving the terms of the rights to light policy on behalf of the bank
- the rights to light indemnity insurance policy must be in favor of the lender and, if possible, for the benefit of the mortgagor and any subsequent registered proprietor or mortgagee. If the borrower will not be protected by the rights to light indemnity insurance policy, you must advise the borrower of this fact.
- the rights to light indemnity insurance policy must be effected at no charge to the bank
| Lender | Requirement |
|---|---|
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | The value of the property. |
| Birmingham Bank | completions@birminghambank.com |
| Chelsea 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. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Habito | Higher of purchase price or valuation |
| Investec | The open market value of the property according to the valuation report. |
| JPMorgan | 110% of principal sum. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| 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. |
| National Westminster Bank | An amount equal to the value of the property. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Platform | 110% of principal sum. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| 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). |
| RBS (One Account) | An amount equal to the value of the property. |
| Yorkshire Bank | Open market value of property. |
General Rights to Light indemnity insurance points to consider
The extent of the terms for rights to light indemnity insurance are explained in the policy paperwork. Conveyancing Practitioners are obliged to direct your non-lender client to the rights to light indemnity insurance policy itself. The intention of rights to light indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so it is essential check any draft to ensure it is correct. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Rights to Light Contingency insurance: Significant aspects and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the rights to light indemnity insurance schedule. Rights to Light indemnity insurance Cover normally includes- The cost of works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the rights to light policy, 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 rights to light indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- 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.
- Cover for compensation incurred in any action regarding the risks specified in the rights to light policy, as well as incurred costs and expenses.
- Loss in market value resulting from the successful enforcement of the risks specified in the rights to light policy.
Always check what is not included in the rights to light indemnity insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Rights to Light Indemnity Insurance has limitations - Further considerations
Rights to Light Indemnity insurance isn’t a solution to all of the relevant problems. Content on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company solicitor 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 rights to light 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.