The requirement for buildings insurance with a mortgage?

Lantus

Hypothetical one here.

It is (as far as I aware) a contractural requirement by almost all mortgage providers that buildings insurance be taken out alongside it. This would also be true of apartments where the managment company takes out buildings 'block' insurance.

But what if an individual lets their insurance lapse? Or if due to low funds or some other problems (like people refsing to pay the service charge from which the insurance is one element) the block insurance was allowed to also lapse?

What is the implications of this. Assuming IF a lender ever found out, what would or could they do about it? In the case of block insurance where there may be multiple lenders and multiple owners what leverage does the mortgage provider have, if any?

Your keen legal insight is as always appreicated.

kkelliher

Lantus wrote: »

Hypothetical one here.

It is (as far as I aware) a contractural requirement by almost all mortgage providers that buildings insurance be taken out alongside it. This would also be true of apartments where the managment company takes out buildings 'block' insurance.

But what if an individual lets their insurance lapse? Or if due to low funds or some other problems (like people refsing to pay the service charge from which the insurance is one element) the block insurance was allowed to also lapse?

What is the implications of this. Assuming IF a lender ever found out, what would or could they do about it? In the case of block insurance where there may be multiple lenders and multiple owners what leverage does the mortgage provider have, if any?

Your keen legal insight is as always appreicated.

what cane they do? Well in a simple form they can call in the repayment due to breech of contract as the condition on insurance is contractual.

In an everyday sence, I have a mortage now in its tenth year and I have never been asked for an up to date copy of my insurance so the bank would have no idea where I stand st present.

Lantus

kkelliher wrote: »

what cane they do? Well in a simple form they can call in the repayment due to breech of contract as the condition on insurance is contractual.

In an everyday sence, I have a mortage now in its tenth year and I have never been asked for an up to date copy of my insurance so the bank would have no idea where I stand st present.

Your right that no mortgage provider asks for any proof of insurance (another self regulating time bomb perhaps?) But IF they did find out is calling the loan in all they would realistically do? It doesn't seem like a very good deterent as I doubt anyone could afford to pay off a loan like that. Would it effectivley mean they could lose the house or the bank would sell the house and anything left after the loan was paid off was theirs? Would the provider just demand that insurance be put in place? Or something else.....

amen

Your right that no mortgage provider asks for any proof of insuranc

I don't think that is true. When you took our your mortgage you were provided to obtain insured. When you obtained that insurance you told the insurance company who you had the mortgage with.

If you did not renew your policy then I thought the Insurance Company informed the bank that the policy has non renewed and the bank would then chase the mortgagee for proof of insurance.

Wile E. Coyote

amen wrote: »

I don't think that is true. When you took our your mortgage you were provided to obtain insured. When you obtained that insurance you told the insurance company who you had the mortgage with.

If you did not renew your policy then I thought the Insurance Company informed the bank that the policy has non renewed and the bank would then chase the mortgagee for proof of insurance.

I've changed insurance providers a couple of times since my initial policy and never received anything from the bank. I always thought a copy of the new policy was automatically sent to the mortgage company in the same way mortgage protection/life insurance policies would be assigned to them.

Our man in Havana

In theory they can call in the whole loan and then repossess.

In practice nothing happens.

Gillian1

I renewed my policy this year with a different company and within 3weeks of my old policy expiring the bank had rang me to inform me that my old policy had expired and wondering was I still insured that it was a condition of the mortgage to have buildings cover. The insurance company I took new policy out with didn't forward it on to bank so I had to scan her a copy for her records.

Kosseegan

In some cases the bank will pay the premium themselves and add it to the mortgage, thus ensuring they have cover.

Lantus

Kosseegan wrote: »

In some cases the bank will pay the premium themselves and add it to the mortgage, thus ensuring they have cover.

interesting! I could see this being an option for houses but what about the trickier situation of block insurance?

Thanks to all posters so far.

Havana man. seems more like the real situation on the ground in Ireland today I'd predict. At the end of the day if the worst hppened and the property was a right off through fire for example then the owner would have a mortgage for life but no rebuild option I assume?

In that sense it seems to be more important for the owner rather than the bank as the bank will always get their mortgage money barring banktrupcy regardless of whether the house still exists or not.