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  • FIRST POST
    • SouthLondonUser
    • By SouthLondonUser 21st Sep 17, 12:13 PM
    • 341Posts
    • 49Thanks
    SouthLondonUser
    Bank wants me (leaseholder) to insure the building directly, but I canít. Any advice?
    • #1
    • 21st Sep 17, 12:13 PM
    Bank wants me (leaseholder) to insure the building directly, but I canít. Any advice? 21st Sep 17 at 12:13 PM
    I own a leasehold flat. HSBC have finally approved my remortgage. Their conveyancing firm, LMS, wants me to sign a declaration that it is a condition of the mortgage that I will insure the building, and that the policy will be amended to include the lender.

    The problem is, itís the freeholderís job to insure the building; he is contractually obliged to do so by the terms of the lease, of which HSBC/LMS have a copy. When I bought the property, I remember my solicitor explicitly explained that leaseholders cannot insure the building.

    I contacted LMS by email, explaining that I cannot insure the building. Their reply was: ďyou cannot change the words of the declarationĒ. ??

    Have they just used the form for a freehold property and refuse to admit their mistake? Or do they really want me to declare that I will do something I cannot do (insure the building myself)?

    Part of me thinks I should just sign the declaration as it is and not waste any more time, because the bank wonít do anything as long as the building is insured (are they really going to sue me for not insuring it myself? Good luck with that!). Part of me thinks itís insane.

    Any advice?
Page 1
    • ACG
    • By ACG 21st Sep 17, 12:20 PM
    • 15,907 Posts
    • 8,149 Thanks
    ACG
    • #2
    • 21st Sep 17, 12:20 PM
    • #2
    • 21st Sep 17, 12:20 PM
    Call up the solicitors and explain it to them.
    Failing that, call up HSBC.

    I have had a couple of clients call me when this crops up, normally a quick call to the solicitor gets it sorted.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • amnblog
    • By amnblog 21st Sep 17, 12:53 PM
    • 10,071 Posts
    • 3,926 Thanks
    amnblog
    • #3
    • 21st Sep 17, 12:53 PM
    • #3
    • 21st Sep 17, 12:53 PM
    Give it to your Broker to sort out.

    It's what he/she is pad for.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • SouthLondonUser
    • By SouthLondonUser 21st Sep 17, 7:09 PM
    • 341 Posts
    • 49 Thanks
    SouthLondonUser
    • #4
    • 21st Sep 17, 7:09 PM
    • #4
    • 21st Sep 17, 7:09 PM
    After a few more emails, my message landed with someone who knew the difference between a pineapple and a leasehold, and I was told I do not need to complete the 'insurance declaration form'.

    Apparently an IT system that didn't send that out for leasehold properties would have been asking too much.
    • SouthLondonUser
    • By SouthLondonUser 4th Oct 17, 11:26 AM
    • 341 Posts
    • 49 Thanks
    SouthLondonUser
    • #5
    • 4th Oct 17, 11:26 AM
    • #5
    • 4th Oct 17, 11:26 AM
    The same person who told me that the form does not apply to leaseholds has now changed her mind and is telling me they need me to sign it. So, two weeks wasted for nothing.
    I had a phone call with this genius. She said they need to insure I pay the freeholder so the freeholder can insure the building. Fair enough, I said I am more than happy to represent that that is what I will do, but that's now what the form is asking, the form is asking me to insure it directly. The whole conversation was useless, because it boiled down to: that's how we do it, I cannot change it. They will refer it back to HSBC. I have also spoken to my broker, who is also contacting HSBC about this.

    I have no doubt most people sign without reading, but the paranoid pedant in me is not happy to sign something committing me to do something I cannot legally do directly.


    Oddly, I went through the process with FirstDirect 6 months ago, and it was incredibly more efficient, even though FD and HSBC are part of the same group (I didn't take the FD mortgage in the end because my circumstances changed and I now need a mortgage.

    In the end, I will probably suck it up and sign the form as it is, because every day that goes by is costing me extra money in higher interest to my current lender. But I will file a complaint against HSBC and this conveyancing firm.

    The exact wording is below. The bits I have bolded shouldn't apply to a leasehold, IMHO:
    I/We are aware that it is a condition of my/our mortgage that I/we must insure the above property for the period of
    the mortgage.

    I/We confirm all risks are covered, the policy will be amended on completion of the mortgage to include my lender
    as a joint policy holder or my lenderís interests noted.
    The conveyancer is only required to ensure completion of
    this form and will not check the policy. I/We will ensure the property is insured for at least the minimum amount
    noted on the mortgage offer.
    One could argue that "I must insure" could be interpreted to also mean paying the freeholder so he can insure it, but, still...
    • SouthLondonUser
    • By SouthLondonUser 4th Oct 17, 11:28 AM
    • 341 Posts
    • 49 Thanks
    SouthLondonUser
    • #6
    • 4th Oct 17, 11:28 AM
    • #6
    • 4th Oct 17, 11:28 AM
    I have had a couple of clients call me when this crops up, normally a quick call to the solicitor gets it sorted.
    Originally posted by ACG
    What are your leaseholder clients usually asked to sign?
    • Time2go
    • By Time2go 4th Oct 17, 12:16 PM
    • 198 Posts
    • 44 Thanks
    Time2go
    • #7
    • 4th Oct 17, 12:16 PM
    • #7
    • 4th Oct 17, 12:16 PM
    I have a mortgage with HSBC and a share of freehold (leasehold flat) they have never asked to be added to the insurance and mgmt company organise block insurnace
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