Lender conveyancing panel conditions re Deed of Enlargement Indemnity Insurance
Accord and Natwest, as with the majority of lenders, dictate their own specific instructions when it comes to deed of enlargement indemnity insurance. This page is designed to help conveyancing firms on the different lender approved list of panel lawyers where the title for the the property to be mortgaged includes deed of enlargement. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, for example Barnsley BS, Skipton or Yorkshire Bank Home Loans. The content on this page is not focused on deed of enlargement indemnity insurance requirements.
Need help with deed of enlargement indemnity insurance from your lender?
Godiva Mortgages and Coventry BS in common with most mortgage companies, obligations require that where deed of enlargement indemnity insurance is to be put on risk:
- the deed of enlargement indemnity insurance policy must be in favor of the mortgage company and, if possible, in favour of the mortgagor and any next registered proprietor or mortgage company. Where the mortgagor will not be protected by the deed of enlargement indemnity insurance policy, the borrower should be advised accordingly.
- the minimum level of cover for the policy must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your firm must point out to the borrower that the borrower must comply with 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
- you must supply a copy 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 could be mandatory if there is further lending against the mortgaged property
- the deed of enlargement indemnity insurance policy must be placed on risk at no cost to the mortgage company
- you must reveal to the insurer all relevant information which you have obtained
- you are responsible for approving the terms of the deed of enlargement policy on behalf of the mortgage company
- the deed of enlargement indemnity insurance policy should not incorporate conditions which you are aware would invalidate or prejudice the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Coventry Building Society | Minimum of the value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Hampden | The open market value of the property according to the valuation report. |
| Harpenden Building Society | 110% of mortgage advance |
| Investec | The open market value of the property according to the valuation report. |
| LendInvest | An amount at least equal to the valuation of the property. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Yorkshire Building Society | 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 mortgagee. |
General Deed of Enlargement indemnity insurance points to consider
The full terms, conditions and exclusions for deed of enlargement indemnity insurance are explained in the policy paperwork. Conveyancing solicitors should point your non-lender client to the deed of enlargement indemnity insurance policy itself. The intention of deed of enlargement indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check the document to ensure it is as it should be. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Deed of Enlargement Contingency insurance: Significant features 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 should be checked for the following- The cost of works (including professional fees) for the purpose of the development started, before the commencement of 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.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the deed of enlargement policy.
- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the deed of enlargement indemnity insurance, including incurred costs and expenses.
- 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.
- Diminution in value due to the successful enforcement of the risks specified in the deed of enlargement insurance.
As with any insurance policy, 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 not be valid.
Supplemental considerations for deed of enlargement indemnity insurance
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 answer. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender 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 above information covers to properties in England and Wales.