Indemnity Insurance of Lost Documents Bank conveyancing requirements
Santander and RBS, like most banks, have their own specific instructions when it comes to lost documents indemnity insurance. The purpose of this page to assist property law solicitors on the various lender approved list of panel lawyers where the title to be charged includes lost documents. It is not a alternative for checking the CML handbook requirements for each bank, be it Virgin Money, HSBC or Nationwide. The content on this page is not focused on lost documents indemnity insurance requirements.
Need help with lost documents indemnity insurance from your lender?
Barclays and Barnsley BS in common with many mortgage companies, instructions are such that where lost documents indemnity insurance is to be put on risk:
- the lost documents indemnity insurance policy should be placed on risk without expense to the lender
- the lost documents indemnity insurance policy needs to be for the benefit of the bank and, wherever possible, for the benefit of the mortgagor and any future owner or lender. If the borrower will not be protected by the lost documents indemnity insurance policy, the borrower must be advised accordingly.
- the lost documents indemnity insurance policy must not incorporate conditions that you recognise would void or prejudice the interests of the bank
- you must disclose to the insurer all relevant information which you have obtained
- your practice must approve the terms of the lost documents policy on behalf of the mortgage company
- the limit of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
- your firm must spell out to the mortgagor that the borrower will need to adhere to any conditions of the lost documents indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in respect of the insurance
- your firm must provide a copy of the lost documents indemnity insurance to the mortgagor and explain to the borrower why the lost documents indemnity insurance policy was effected and that additional insurance may be mandatory if there is supplemental borrowing against the security of the property
| Lender | Requirement |
|---|---|
| Accord Buy to Let | 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. |
| Adam & Company | The open market value of the property according to the valuation report. |
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| 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. |
| Clydesdale Bank | Open market value of property. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Habito | Higher of purchase price or valuation |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Harpenden Building Society | 110% of mortgage advance |
| Intelligent Finance | 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. |
| Investec | The open market value of the property according to the valuation report. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Mortgage Express (No 2) | |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Pepper Money | An amount equal to at least 110% of 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 and also the borrower(s). |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Ulster Bank | An amount equal to the value of the property. |
| Yorkshire Bank | Open market value of property. |
Lost Documents Contingency Insurance : Reflections
The extent of the terms for lost documents indemnity insurance are identified in the policy paperwork. Property lawyers should direct your non-lender client to the lost documents indemnity insurance policy paperwork. The intention of lost documents indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so you should check the document to determine that it is in order. The duration 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.Significant features and benefits of lost documents indemnity insurance :
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. Lost Documents indemnity insurance Policies should be checked for the following- Expenses for works (including professional fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the lost documents policy, to the extent that such costs are rendered abortive by court order.
- 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.
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the lost documents policy.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the lost documents indemnity insurance, as well as incurred costs and expenses.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Market value reduction resulting from the successful enforcement of the risks specified in the lost documents insurance.
Don't forget to consider what is not included in the lost documents indemnity insurance e.g. does the policy cover any property that has been altered within the year prior to the policy being put on risk? Does it cover legal costs?
Lost Documents Indemnity Insurance has limitations - Further considerations
There may be consequences arising from the enforcement of the risks identified in the lost documents indemnity insurance which are not adequately covered by financial compensation. Information provided 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 lost documents 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 is in relation to properties in England and Wales.