Lender conveyancing panel requirements re Deed of Enlargement Indemnity Insurance
Accord and Godiva Mortgages, in common with the majority of mortgage companies, have their own specific instructions when it comes to deed of enlargement indemnity insurance. The purpose of this page to assist domestic conveyancing solicitors on the various bank approved list of panel lawyers where the title for the the property to be mortgaged incorporates deed of enlargement. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be RBS, Nationwide or HSBC. The content 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?
Santander and Bank of Scotland in common with the majority of banks, requirements are that where deed of enlargement indemnity insurance is effected:
- the deed of enlargement indemnity insurance policy must not contain terms that you know would void or prejudice the interests of the bank
- the deed of enlargement indemnity insurance policy must be effected without cost to the bank
- the limit of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your firm is obliged to disclose to the insurer all relevant information which you have acquired
- your firm is duty bound to explain to the borrower that the borrower must comply with any conditions of the deed of enlargement indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the policy
- the deed of enlargement indemnity insurance policy must be for the benefit of the lender and, if possible, for the benefit of the borrower and any subsequent owner or mortgage company. If the mortgagor will not be covered by the deed of enlargement indemnity insurance policy, the mortgagor needs to be informed accordingly.
- you must provide a copy of the deed of enlargement indemnity insurance to the borrower and explain to the borrower why the deed of enlargement indemnity insurance policy was effected and that additional insurance might be required if there is further lending against the security of the property
- your firm must approve the terms of the deed of enlargement policy on behalf of the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Britannia | Cover to the full value of the property. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hampden | The open market value of the property according to the valuation report. |
| Hodge | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| Investec | The open market value of the property according to the valuation report. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Reliance Bank | \xA31,000,000.00 |
| 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). |
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
Non lender-specific considerations
The extent of the terms for deed of enlargement indemnity insurance are shown in the policy paperwork. Conveyancing solicitors are obliged to point your non-lender client to the deed of enlargement indemnity insurance policy paperwork. Deed of Enlargement Contingency insurance is designed to provide indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to ensure it is as it should be. The continuance of this non-investment insurance agreement 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: Significant features and benefits:
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Deed of Enlargement indemnity insurance Cover normally includes- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the deed of enlargement indemnity insurance, as well as legal and associated costs.
- The out of pocket expenses of altering or destroying 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.
- Loss in market value resulting from the successful enforcement of the risks specified in the deed of enlargement insurance.
- The cost of works (including professional fees) for the purpose of the development commenced, 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.
- Money paid with the written consent of the insurance company to liberate the property from the risks specified in the deed of enlargement insurance.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
Always consider what is excluded from the deed of enlargement indemnity insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?
Other considerations for deed of enlargement indemnity insurance
Deed of Enlargement insurance may satisfy lenders such as Birmingham Midshires or Natwest and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. Content on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank 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.