Mortgage Company conveyancing panel requirements re Deed of Enlargement Indemnity Insurance
Yorkshire Building Society and Halifax, as with most mortgage companies, set their own specific instructions when it comes to deed of enlargement indemnity insurance. This page sets out to enlighten property law lawyers on the various lender conveyancing panel where the title for the the property to be mortgaged includes deed of enlargement. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Barclays, RBS or Virgin Money. 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?
Coventry BS and HSBC in common with many banks, instructions are such that where deed of enlargement indemnity insurance is to be taken out:
- the limit of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
- you are responsible for approving the terms of the deed of enlargement policy on behalf of the lender
- you must disclose to the insurer all relevant information which you have acquired
- you must explain to the borrower that the borrower is obliged to comply with any conditions of the deed of enlargement indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the insurance
- your firm must supply 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 a further policy could be necessary if there is supplemental borrowing against the security of the property
- the deed of enlargement indemnity insurance policy must not incorporate conditions which you know would void or compromise the interests of the lender
- the deed of enlargement indemnity insurance policy must be placed on risk without expense to the mortgage company
- the deed of enlargement indemnity insurance policy should always be for the benefit of the mortgage company and, wherever possible, for the benefit of the borrower and any next registered proprietor or mortgage company. If the borrower will not be covered by the deed of enlargement indemnity insurance policy, you must advise the borrower of this fact.
| Lender | Requirement |
|---|---|
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Britannia | Cover to the full value of the property. |
| Clydesdale Bank | Open market value of property. |
| Cynergy Bank | The market value of the property. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| 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. |
| Holmesdale Building Society | 110% |
| ITL Mortgages | Minimum of the value of the property. |
| JPMorgan | 110% of principal sum. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| 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. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Platform | 110% of principal sum. |
| 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. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| 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. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
Deed of Enlargement Contingency Insurance : Reflections
The full terms, conditions and exclusions for deed of enlargement indemnity insurance are identified in the policy document. Property lawyers are obliged to direct your non-lender client to the deed of enlargement indemnity insurance policy itself. Deed of Enlargement indemnity insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so it’s important to check the schedule to determine that it is in order. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Deed of Enlargement Contingency insurance: Significant aspects 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 Cover normally includes- Liability for damages or compensation incurred in any action concerning the risks specified in the deed of enlargement insurance, including solicitors charges.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- 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 indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- The cost 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.
- Loss in market value resulting from the successful enforcement of the risks specified in the deed of enlargement insurance.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the deed of enlargement policy.
Due diligence should extend to checking that the answers on the application form are accurate. However remote the likelihood of a claim on the lender insurance policy might be you can rest assured that the insurer will check the details on any proposal form very carefully prior to any claim being paid out.
Supplemental considerations for deed of enlargement indemnity insurance
Deed of Enlargement Indemnity insurance isn’t a solution to all of the relevant problems. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing 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 is in relation to properties in England and Wales.