Bank conveyancing panel conditions re Deed of Enlargement Indemnity Insurance
Nationwide and Barclays, as with many banks, dictate their own specific instructions when it comes to deed of enlargement indemnity insurance. The content herein aims to help property law solicitors on the different mortgage company conveyancing panel where the title for the the property to be mortgaged incorporates deed of enlargement. Solicitors should still check the CML handbook requirements for each bank, be it Natwest, Barnsley BS or Yorkshire Bank Home Loans. The information on this page Is not to be read as deed of enlargement indemnity insurance advice.
Need help with deed of enlargement indemnity insurance from your lender?
Virgin Money and Godiva Mortgages like many banks, obligations require that where deed of enlargement indemnity insurance is effected:
- the deed of enlargement indemnity insurance policy needs to be in favor of the mortgage company and, wherever possible, for the benefit of the borrower and any future owner or lender. Where the borrower will not be covered by the deed of enlargement indemnity insurance policy, you must advise the borrower of this fact.
- the minimum level of cover for the policy must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the deed of enlargement indemnity insurance policy should not contain terms which you know would void or compromise the interests of the mortgage company
- your firm must approve the terms of the deed of enlargement policy on behalf of the bank
- the deed of enlargement indemnity insurance policy must be placed on risk without expense to the lender
- you is duty bound to point out to the borrower that the borrower must adhere to any conditions of the deed of enlargement indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the policy
- your practice must supply a duplicate of the deed of enlargement indemnity insurance to the mortgagor and explain to the borrower why the deed of enlargement indemnity insurance policy was effected and that a further policy may be required if there is additional borrowing against the security of the property
- your firm is required to reveal to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Birmingham Bank | Please contact Head of Operations to discuss (Jackie Burchill) |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Cynergy Bank | The market value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Godiva Mortgages | Minimum of the value of the property. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Investec | The open market value of the property according to the valuation report. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Molo Finance Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgages. |
| National Westminster Bank | An amount equal to the value of the property. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
Deed of Enlargement Contingency Insurance : Reflections
The extent of the terms for deed of enlargement indemnity insurance are identified in the policy paperwork. Conveyancing solicitors are obliged to direct your non-lender client to the deed of enlargement indemnity insurance policy paperwork. The intention of deed of enlargement indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so it is essential check the document to ensure it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Deed of Enlargement indemnity insurance: Significant characteristics and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the deed of enlargement indemnity insurance schedule. Deed of Enlargement indemnity insurance Policies are likely to cover the following- Cover for compensation incurred in any action in respect of the risks specified in the deed of enlargement policy, as well as fees of a legal nature.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the deed of enlargement insurance.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the deed of enlargement policy, to the extent that such costs are rendered abortive by court decision.
- Market value reduction due to the successful enforcement of the risks specified in the deed of enlargement policy.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- The out of pocket expenses of altering or taking down all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the deed of enlargement policy will be invalidated.
Deed of Enlargement Indemnity Insurance has limitations - Further considerations
Deed of Enlargement Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that deed of enlargement indemnity cover will not necessarily be the right solution. Information contained within this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most deed of enlargement Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above is in relation to properties in England and Wales.