Mortgage Company conveyancing panel requirements re Possessory Title Indemnity Insurance
Yorkshire Bank Home Loans and Coventry BS, like many banks, have their own specific instructions when it comes to possessory title indemnity insurance. The purpose of this page to assist conveyancing firms on the various bank solicitors panel where the title for the the property to be mortgaged includes possessory title. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each lender, be it Birmingham Midshires, Skipton or Barclays. The content on this page Is not to be read as possessory title indemnity insurance advice.
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Nationwide and Virgin Money in common with most mortgage companies, instructions are such that where possessory title indemnity insurance is effected:
- the possessory title indemnity insurance policy should always be in favor of the mortgage company and, if possible, in favour of the mortgagor and any subsequent owner or mortgage company. Where the borrower will not be protected by the possessory title indemnity insurance policy, the borrower needs to be advised accordingly.
- the possessory title indemnity insurance policy must be placed on risk without charge to the lender
- you must explain to the borrower that the borrower is obliged to comply with any conditions of the possessory title indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
- the possessory title indemnity insurance policy should not contain terms that you are aware would invalidate or compromise the interests of the mortgage company
- the level of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- your practice must disclose to the insurer all relevant information which you have acquired
- your firm must approve the terms of the possessory title policy on behalf of the mortgage company
- your firm must provide a copy of the possessory title indemnity insurance to the borrower and explain to the borrower why the possessory title indemnity insurance policy was effected and that additional insurance might be required if there is additional lending against the mortgaged property
| Lender | Requirement |
|---|---|
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of Scotland | The value of the property. |
| Bank of Scotland Private | Not less than the Facility plus 10%. |
| 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. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Clydesdale Bank | Open market value of property. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Halifax | The value of the property. |
| Hodge | An amount equal to 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, the borrower(s) and any successor in Title. |
| 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. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Reliance Bank | £1,000,000.00 |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| RBS - Direct Line | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
General Possessory Title indemnity insurance points to consider
The full terms, conditions and exclusions for possessory title indemnity insurance are explained in the policy document. Conveyancing solicitors are obliged to point the borrower to the possessory title indemnity insurance policy paperwork. The intention of possessory title 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 as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Significant characteristics and benefits of possessory title Contingency insurance :
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. Possessory Title indemnity insurance Policies are likely to cover the following- Expenses for works (including professional fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the possessory title indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the possessory title insurance, including legal and associated costs.
- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the possessory title policy.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- 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 resulting from the successful enforcement of the risks specified in the possessory title insurance.
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 possessory title policy will be invalidated.
Further considerations for possessory title indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from possessory title 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 mortgage company solicitor 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 possessory title 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.