MOFS Guide to Legal Indemnity Insurance - Flipbook - Page 6
For situations where the Landlord cannot be located or identified, cover is
available to provide protection in the event that the Insured is compelled
to pay arrears of rent that existed at the date of the policy or is unable
to comply with a covenant in the lease because the Landlord is missing
(for example a requirement to give notice of the purchase to the Landlord
Cover for Adverse Possession protects the Insured from claims
challenging the validity of their legal title where the Land has been
occupied for some time but the legal title is not vested in the ‘owner’.
Generally Insurers will require that the ground rent/service charges have
not been collected or demanded for a minimum of two years and that
there has been no attempt to trace the landlord within the last, say, three
to six months. That said, some Lenders modify their requirements and do
require an attempt to be made to contact the Landlord; if this is the case,
insurers will just want to know what contact was made, when, and what
responses have been received since.
If development is anticipated at the property, the landlord is absent and
the lease contains a covenant to obtain consent of the landlord to any
alterations, the risk of enforcement due to the failure to obtain consent
to the works can be covered under the terms of an Absent Landlord
indemnity policy or alternatively under a Leasehold Restrictive Covenant
indemnity policy depending upon the specific circumstances.
Insurers will look for ‘control’ or ‘enclosure’ of the Land for around six
years and confirmation that the land is unregistered, but we have often
negotiated bespoke cover where the control has been for a lesser period
and/or the Land has been registered to a known third party.
The Limit of Indemnity should represent the market value (if continued use)
or gross developed value (if the clients plan on developing). Some insurers
will also consider insuring on a ‘first loss’ basis simply to cover the market
value of the Land in question; in the event of a claim, they would look to
buy this to bring about a prompt settlement.
In addition to the general property information, insurers
may ask to see:
•A Plan of the property highlighting the area with no title / which is
•A copy of the Index Map Search of the land, if available.
•A Statutory Declaration – this is not always required but can be useful to
assist in defence of a claim and help to reduce the premium. If available,
it should state the length of time of unchallenged occupation of the
Land and the nature of the boundaries enclosing the Land.
If the land is registered to a third party, they will want to know any details
where known. Similarly, any information about the physical boundaries
of the Property (hedges, walls, fences, etc.) can be incredibly useful in
helping the insurer to understand the nature of the risk ‘on the ground’ and
similarly photographs can be useful in the same way.
Please be aware...
Adverse Possession cover is generally used as an alternative
to an application to Land Registry for Possessory Title and a
concurrent application can render an attempt to obtain terms
much more difficult.
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