Lender conveyancing panel requirements re Deed of Enlargement Indemnity Insurance
Bank of Scotland and RBS, in common with many banks, set their own requirements when it comes to deed of enlargement indemnity insurance. The purpose of this page to assist property law solicitors on the different mortgage company solicitors panel where the title for the the property to be mortgaged includes deed of enlargement. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it Coventry BS, Skipton or Santander. The information on this page is not focused on deed of enlargement indemnity insurance requirements.
Need help with deed of enlargement indemnity insurance from your lender?
Yorkshire Bank Home Loans and Barnsley BS like the majority of mortgage companies, requirements are that where deed of enlargement indemnity insurance is effected:
- you are responsible for approving the terms of the deed of enlargement policy on behalf of the bank
- your firm must explain to the mortgagor that the borrower is obliged to comply with any conditions of the deed of enlargement indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- the deed of enlargement indemnity insurance policy needs to be in favor of the mortgage company and, wherever possible, in favour of the borrower and any subsequent registered proprietor or lender. Where the mortgagor will not be covered by the deed of enlargement indemnity insurance policy, the borrower must be advised accordingly.
- your practice must disclose to the insurer all relevant information which you have acquired
- your firm must provide a duplicate of the deed of enlargement indemnity insurance to the borrower and explain to the mortgagor why the deed of enlargement indemnity insurance policy was effected and that a further policy may be required if there is further borrowing against the mortgaged property
- the deed of enlargement indemnity insurance policy must be effected without charge to the lender
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- the deed of enlargement indemnity insurance policy should not contain conditions that you know would invalidate or prejudice the interests of the lender
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| 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. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Holmesdale Building Society | 110% |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| National Westminster Bank | An amount equal to the value of the property. |
| Scottish Widows | The value of the property. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
General Deed of Enlargement indemnity insurance points to consider
The full terms, conditions and exclusions for deed of enlargement indemnity insurance are set out in the policy document. Conveyancing solicitors should direct your non-lender client to the deed of enlargement indemnity insurance policy itself. The intention of deed of enlargement indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to determine that it is in order. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the deed of enlargement indemnity insurance policy. Again, please check that this is as you expected.Deed of Enlargement indemnity insurance: Important characteristics and benefits:
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Deed of Enlargement indemnity insurance Policies should be checked for the following- Market value reduction due to the successful enforcement of the risks specified in the deed of enlargement insurance.
- The out of pocket expenses of altering or demolishing 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.
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the deed of enlargement policy.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the deed of enlargement insurance, to the extent that such costs are rendered abortive by court decision.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Reimbursement for compensation incurred in any action in respect of the risks specified in the deed of enlargement indemnity insurance, as well as incurred costs and expenses.
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 not be valid.
Further considerations for deed of enlargement indemnity insurance
There may be consequences arising from the enforcement of the risks identified in the deed of enlargement policy which are not adequately covered by financial compensation. 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.