Improvement Grant Liability Indemnity Insurance Lender conveyancing requirements

Birmingham Midshires and Coventry BS, as with the majority of mortgage companies, dictate their own specific instructions when it comes to improvement grant liability indemnity insurance. This page is designed to help property law lawyers on the numerous bank conveyancing panel where the title to be charged includes improvement grant liability. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, be it Lloyds TSB, Halifax or Accord. The content on this page Is not to be read as improvement grant liability indemnity insurance advice.

Need help with improvement grant liability indemnity insurance from your lender?

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Bank of Scotland and Yorkshire Building Society like the majority of mortgage companies, obligations require that where improvement grant liability indemnity insurance is to be put on risk:

• the improvement grant liability indemnity insurance policy should always be in favor of the mortgage company and, wherever possible, in favour of the borrower and any subsequent registered proprietor or mortgage company. Where the mortgagor will not be covered by the improvement grant liability indemnity insurance policy, the mortgagor must be informed accordingly.
• you must send a copy of the improvement grant liability indemnity insurance to the borrower and explain to the borrower why the improvement grant liability indemnity insurance policy was effected and that additional insurance could be required if there is further borrowing against the mortgaged property
• your firm is obliged to reveal to the insurer all relevant information which you have acquired
• your practice must point out to the borrower that the borrower will need to adhere to any conditions of the improvement grant liability indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the policy
• the improvement grant liability indemnity insurance policy must not contain conditions which you are aware would void or compromise the interests of the mortgage company
• the minimum level of cover for the policy must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
• your practice must approve the terms of the improvement grant liability policy on behalf of the bank
• the improvement grant liability indemnity insurance policy should be effected without charge to the bank

Regarding the extent of cover for the improvement grant liability indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the UK Finance handbook PII requirements for mortgage companies:

Non lender-specific considerations

The full terms, conditions and exclusions for improvement grant liability indemnity insurance are explained in the policy document. Conveyancing solicitors should direct your non-lender client to the improvement grant liability indemnity insurance policy paperwork. Improvement Grant Liability Contingency insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to determine that it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the improvement grant liability indemnity insurance policy. Again, please check that this is as you expected.

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Improvement Grant Liability Contingency insurance: Important aspects and benefits:

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. Improvement Grant Liability indemnity insurance Cover normally includes

• Diminution in value due to the successful enforcement of the risks specified in the improvement grant liability indemnity insurance.
• Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the improvement grant liability indemnity insurance, to the extent that such costs are rendered abortive by court order.
• Liability for damages or compensation incurred in any proceedings regarding the risks specified in the improvement grant liability indemnity insurance, including fees of a legal nature.
• All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
• All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the improvement grant liability policy.
• 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.

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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 met.

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Supplemental considerations for improvement grant liability indemnity insurance

Improvement Grant Liability 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 improvement grant liability indemnity cover will not necessarily be the right solution.

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