Lack of Consent Indemnity Insurance Mortgage Company conveyancing requirements
RBS and Skipton, like the majority of mortgage companies, set their own specific instructions when it comes to lack of consent indemnity insurance. The purpose of this page to assist property law practitioners on the numerous lender solicitors panel where the title to be charged includes lack of consent. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, be it Godiva Mortgages, Santander or Virgin Money. The content on this page Is not to be read as lack of consent indemnity insurance advice.
Need help with lack of consent indemnity insurance from your lender?
HSBC and Chelsea BS as with many banks, obligations require that where lack of consent indemnity insurance is to be put on risk:
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the lack of consent indemnity insurance policy should always be in favor of the lender and, if possible, for the benefit of the borrower and any subsequent owner or mortgagee. Where the borrower will not be covered by the lack of consent indemnity insurance policy, the mortgagor should be advised accordingly.
- the lack of consent indemnity insurance policy should not contain conditions that you are aware would invalidate or compromise the interests of the mortgage company
- you must spell out to the borrower that the borrower is obliged to comply with any conditions of the lack of consent indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the policy
- the lack of consent indemnity insurance policy must be effected without expense to the lender
- you must provide a copy of the lack of consent indemnity insurance to the mortgagor and explain to the mortgagor why the lack of consent indemnity insurance policy was effected and that a further policy might be mandatory if there is supplemental borrowing against the security of the property
- your practice are responsible for approving the terms of the lack of consent policy on behalf of the mortgage company
- your practice must disclose to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| April Mortgages | An amount at least equal to the mortgage advance. |
| Barnsley 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. |
| Britannia | Cover to the full value of the property. |
| Coventry Building Society | Minimum of the value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Scottish Widows | The value of the property. |
| 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. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| RBS - Virgin One | 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. |
| Ulster Bank | An amount equal to the value of the property. |
| Whistletree | The value of the property |
| Yorkshire Bank | Open market value of property. |
| 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. |
| Zephyr Mortgages | 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for lack of consent indemnity insurance are explained in the policy paperwork. Conveyancing solicitors are obliged to point the borrower to the lack of consent indemnity insurance policy paperwork. Lack of Consent Contingency insurance is designed to provide indemnity in respect of the risks set out in the policy schedule - so it is essential check any draft to determine that it is correct. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the lack of consent indemnity insurance policy. Adequacy in this regard should be checked.Lack of Consent Contingency insurance: Important characteristics 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. Lack of Consent indemnity insurance Policies should be checked for the following- 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.
- Diminution in value due to the successful enforcement of the risks specified in the lack of consent insurance.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the lack of consent indemnity insurance, as well as legal and associated costs.
- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the lack of consent insurance.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the lack of consent insurance, to the extent that such costs are rendered abortive by court decision.
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the lack of consent policy will not be valid.
Lack of Consent Indemnity Insurance has limitations - Additional considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from lack of consent insurance may be adequate for your client. Information contained within this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender approved 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 lack of consent Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The above information covers to properties in England and Wales.