Lender conveyancing panel conditions re Deed of Enlargement Indemnity Insurance
Natwest and Barclays, like most banks, dictate their own specific instructions when it comes to deed of enlargement indemnity insurance. The purpose of this page to assist residential conveyancing lawyers on the various mortgage company solicitors panel where the title for the the property to be mortgaged contains deed of enlargement. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each lender, for example Accord, Bank of Scotland or Skipton. 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?
Yorkshire Building Society and Virgin Money like the majority of lenders, obligations require that where deed of enlargement indemnity insurance is to be taken out:
- the deed of enlargement indemnity insurance policy must be in favor of the mortgage company and, wherever possible, for the benefit of the mortgagor and any subsequent owner or lender. Where the borrower will not be protected by the deed of enlargement indemnity insurance policy, you must advise the borrower of this fact.
- you is obliged to disclose to the insurer all relevant information which you have gathered
- the deed of enlargement indemnity insurance policy should not contain terms which you recognise would invalidate or prejudice the interests of the bank
- the level of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your practice are responsible for approving the terms of the deed of enlargement policy on behalf of the mortgage company
- you must spell out to the mortgagor that the borrower will need to 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 insurance
- you must send 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 may be necessary if there is additional lending against the security of the property
- the deed of enlargement indemnity insurance policy must be placed on risk at no cost to the bank
| Lender | Requirement |
|---|---|
| Bank of Scotland Private | Not less than the Facility plus 10%. |
| Barnsley 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. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Clydesdale Bank | Open market value of property. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| 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. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Platform | 110% of principal sum. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
Non lender-specific considerations
The extent of the terms for deed of enlargement indemnity insurance are explained in the policy paperwork. Property lawyers are obliged to point your non-lender client to the deed of enlargement indemnity insurance policy document. The intention of deed of enlargement indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to ensure it is as it should be. The duration 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 aspects and benefits:
The insurance 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 are likely to cover the following- 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.
- Cover for compensation incurred in any action regarding the risks specified in the deed of enlargement insurance, including fees of a legal nature.
- Loss in market value resulting from the successful enforcement of the risks specified in the deed of enlargement indemnity insurance.
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the deed of enlargement insurance.
- Expenses for 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.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
You also need to be sure that the answers on the application form are correct. Regardless of how remote a claim on the lender insurance policy might be you can be sure 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. Content on this webpage is for general information for conveyancers and solicitors 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 mortgage company 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.