Solicitors want me to buy an indemnity insurance policy

shirlls

I lived with my sister and we had a joint mortgage. In 2007 she moved out and I took on a fixed term mortgage to pay off the current mortgage and give her some money and at the time it was easier to leave her name on the mortgage. In 2008 I bought a smaller house paid my sister the rest of the money she was owed and ported the mortgage to my new house, still with her name on the mortgage.

I'm now part way through the process of remortgaging with HSBC after coming to the end of the fixed term. I'm having a 5 year fee free mortgage and HSBC told me it would cost £195 + vat to have my sister’s name removed.

The solicitors phoned me yesterday to say I have to buy an indemnity insurance policy because my sister could be made bankrupt in the next 5 years and want half of my house!! I've told them this is rubbish, can they make me buy the policy?

opinions4u

If she's named on the title deeds and is made bankrupt you could end up losing your home.

shirlls

I'm having her name removed from the deeds and the mortgage

Dave_Ham

Irrelevant.

Why pay a solicitor for advice and then disregard it?

Dependent upon the details, this may be at HSBC's request and therefore they are acting on behalf of the lender and not you.

I think you can guess what it means if you do not take the insurance.

I would not think it is a huge amount either?

shirlls

The solicitor did say that HSBC haven't asked for the insurance policy and they're going to contact them to see if we can get away with not having one.

It's another £150 which I don't want to have to pay.

Yorkie1

shirlls wrote: »

I'm having her name removed from the deeds and the mortgage

This is why they are advising the policy. This looks like a disposal of her interest in the property and therefore if she does go bankrupt, the authorities can seek to retrieve this interest.

Dave_Ham

My personal opinion is that this is unlikely to go away, although £150 sounds steep.

If your Sister goes bankrupt next week, then this deed amendment would be looked into and it would look fishy. They would come after 50% of the equity pre-amendment for sure.

That is why you may want to consider paying a sensibly priced insurance.

The fact she moved out in 2007 etc. etc. would be irrelevant to the Official Receiver...

shirlls

The property she was involved in was sold in 2008 and she had her share of that property then. We're both disgusted with this situation! When we sold the property in 2008 we had to take out an indemnity insurance policy for a dormer window and I had to take out another indemnity insurance policy for the church chancel.

It seems that there's an indemnity insurance policy required for everything now and I feel I'm being ripped off!!

GMS

Where there is a transfer of equity there should be an insurance policy. It is very good advice from the solicitor.

If your sister were to go bankrupt (however unlikely it seems) then you would be pursued for her share of the property, even though you say it is not hers as she was registered as the owner. Her interest in the property is ending now, not in 2008.

If you don't want the policy then you may need to find another lender. I am sure this would cost more than the policy would.

shirlls

This isn't what I wanted to hear.

Thanks to everyone for your replies

shirlls

I've just spoken to my sister, she has just bought a new house with her boyfriend, they have less than 50% LTV. They have no other loans, just the mortgage. If they loose their jobs her boyfriends pension is more than enough to pay the mortgage so there's no way they could be declared bankrupt