Indemnity Insurance of Outstanding Rights of Common Mortgage Company conveyancing instructions

Natwest and Skipton, in common with most lenders, set their own requirements when it comes to outstanding rights of common indemnity insurance. This page is designed to help property law lawyers on the numerous mortgage company conveyancing panel where the title to be charged incorporates outstanding rights of common. Solicitors should still check the CML handbook requirements for each bank, be it Yorkshire Bank Home Loans, Lloyds TSB or Leeds Building Society. The content on this page Is not to be read as outstanding rights of common indemnity insurance advice.

Need help with outstanding rights of common indemnity insurance from your lender?

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HSBC and Chelsea BS in common with the majority of mortgage companies, instructions are such that where outstanding rights of common indemnity insurance is to be taken out:

• your practice must provide a duplicate of the outstanding rights of common indemnity insurance to the borrower and explain to the mortgagor why the outstanding rights of common indemnity insurance policy was effected and that a further policy might be necessary if there is supplemental lending against the mortgaged property
• the outstanding rights of common indemnity insurance policy needs to be in favor of the bank and, wherever possible, for the benefit of the borrower and any subsequent owner or mortgage company. If the mortgagor will not be protected by the outstanding rights of common indemnity insurance policy, the mortgagor should be informed accordingly.
• the outstanding rights of common indemnity insurance policy should be effected without cost to the lender
• you must point out to the mortgagor that the borrower must adhere to any conditions of the outstanding rights of common indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the policy
• you must approve the terms of the outstanding rights of common policy on behalf of the mortgage company
• your firm is required to reveal to the insurer all relevant information which you have acquired
• the outstanding rights of common indemnity insurance policy must not incorporate terms that you know would invalidate or prejudice the interests of the lender
• the level of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )

Regarding the extent of cover for the outstanding rights of common indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Paragraph 9.2 of the Part 2 requirements for lenders:

General Outstanding Rights of Common indemnity insurance points to consider

The extent of the terms for outstanding rights of common indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners should point the borrower to the outstanding rights of common indemnity insurance policy paperwork. Outstanding Rights of Common indemnity insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to determine that it is as it should be. The continuance 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.

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Outstanding Rights of Common Contingency insurance: Significant aspects and benefits:

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. Outstanding Rights of Common indemnity insurance Policies are likely to cover the following

• Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the outstanding rights of common indemnity insurance, 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 outstanding rights of common insurance.
• All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
• Diminution in value resulting from the successful enforcement of the risks specified in the outstanding rights of common insurance.
• Liability for damages or compensation incurred in any action regarding the risks specified in the outstanding rights of common indemnity insurance, including fees of a legal nature.
• 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.

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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 paid out.

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Other considerations for outstanding rights of common indemnity insurance

Outstanding Rights of Common insurance may satisfy lenders such as Accord or Virgin Money and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner.

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The content set out above covers to properties in England and Wales.