Indemnity Insurance of Deed of Postponement Lender conveyancing instructions
Accord and Leeds Building Society, in common with many mortgage companies, have their own specific instructions when it comes to deed of postponement indemnity insurance. This page is designed to help conveyancing lawyers on the numerous lender solicitors panel where the title for the the property to be mortgaged incorporates deed of postponement. Solicitors should still check the CML handbook requirements for each bank, whether it be Coventry BS, Godiva Mortgages or Yorkshire Building Society. The content on this page is not focused on deed of postponement indemnity insurance requirements.
Need help with deed of postponement indemnity insurance from your lender?
Barnsley BS and Barclays like many mortgage companies, obligations require that where deed of postponement indemnity insurance is effected:
- the deed of postponement indemnity insurance policy should not incorporate conditions that you know would invalidate or compromise the interests of the mortgage company
- your practice must provide a duplicate of the deed of postponement indemnity insurance to the mortgagor and explain to the borrower why the deed of postponement indemnity insurance policy was effected and that a further policy could be necessary if there is additional lending against the security of the property
- the deed of postponement indemnity insurance policy must be for the benefit of the mortgage company and, wherever possible, in favour of the mortgagor and any next owner or lender. Where the borrower will not be protected by the deed of postponement indemnity insurance policy, the borrower needs to be advised accordingly.
- the deed of postponement indemnity insurance policy should be placed on risk at no cost to the bank
- your practice is obliged to disclose to the insurer all relevant information which you have obtained
- your practice must spell out to the mortgagor that the borrower is obliged to adhere to any conditions of the deed of postponement indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the insurance
- your firm are responsible for approving the terms of the deed of postponement policy on behalf of the mortgage company
- the limit of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| 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% |
| Barclays plc | Higher of purchase price or valuation |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Chelsea 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. |
| 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 |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Landmark | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| 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. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Mortgage Express | Amount of loan + 15% |
| Pepper Money | An amount equal to at least 110% of 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 and also the borrower(s). |
| Reliance Bank | \xA31,000,000.00 |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Whistletree | The value of the property |
Non lender-specific considerations
The extent of the terms for deed of postponement indemnity insurance are identified in the policy paperwork. Property lawyers should point your non-lender client to the deed of postponement indemnity insurance policy itself. Deed of Postponement indemnity insurance is designed to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to determine that it is as it should be. The duration of this non-investment insurance agreement is in perpetuity unless otherwise stated in the deed of postponement indemnity insurance policy. It is well worth checking that the time frame is correct.Significant characteristics and benefits of deed of postponement Contingency insurance :
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 Postponement indemnity insurance Cover normally includes- Market value reduction due to the successful enforcement of the risks specified in the deed of postponement insurance.
- 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.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the deed of postponement policy, to the extent that such costs are rendered abortive by court decision.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the deed of postponement indemnity insurance.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Cover for compensation incurred in any proceedings regarding the risks specified in the deed of postponement insurance, including legal and associated costs.
Always consider what is excluded from the deed of postponement policy e.g. does the policy cover any residence that has been altered within the year prior to the commencement of the policy? Are legal costs covered?
Further considerations for deed of postponement indemnity insurance
Deed of Postponement Indemnity insurance isn’t a solution to all of the relevant problems. Content on this webpage is for general information for Regulated law firms in England and Wales on the the lender 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 postponement 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.