Indemnity Insurance on transfer of equity

Chopgate007

Just going throught a Transfer of Equity with my ex partner (not married) and the new lender is seemingly insisting on an Indemnity Insurance to protect them from any potential future claim my ex has on the property due to transfer at "undervalue" and the possibility of the transfer being "set aside".

1) the undervalue could be as little as £12,500 yet the Indemnity Insurance is banded on the new mortgage I am taking out, namely £200,000 to £500,000, and covers up to a max of £1,000,000. Does it need to be this much?

2) The TR1 form states "xxxxxxx hereby declares that She/He shall have no legal, equitable, financial or beneficial interest in the property after the date of this transfer."

Surely that covers the new lender anyway when that gets signed, negating the need for any Indemnity insurance.

The papers from the Conveyancer state:-
"We will, unless instructed otherwise by you, put on risk a suitable policy with STEWART TITLE LIMITED at the point of legal completion. Please note that we have not carried out a thorough analysis of the insurance market place in respect of this policy, it is from a single insurance undertaking. ""...


I worries me that they seem to be able to grab fee after fee off you.....
Can I take out my own insurance if it's needed? After all it looks like I have to pay for it!!

sad_ken_2

Hello. I'm in a similar situation, with the exact same text in my documents. Did you manage to shop around and find cheaper insurance, or did you just end up paying for the insurance fee as recommended by the conveyancers?

Cheers.

glaw5

Hi would appreciate any advice on this matter too.

Find it strange I've suddenly been asked for this after my remortgage application was accepted with no mention of it, even when I enquiries about possible extra charges at the outset.

Thanks for any help.

kingstreet

As a transaction could be reversed by the Insolvency Service if there is a perceived attempt to defraud creditors by selling assets at undervalue, the lender is covering itself against defending such a claim.

Hence the cover.

glaw5

Thanks for the reply KingStreet.

Is there any way to avoid having to pay for indemnity? Could a legally done settlement agreement incorporating the transfer of equity remove the need to pay for the insurance?