Deed of Enlargement Indemnity Insurance Lender conveyancing requirements

Yorkshire Building Society and Godiva Mortgages, as 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 various bank solicitors panel where the title to be charged contains deed of enlargement. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be RBS, Barnsley BS or Lloyds TSB. 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?

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Birmingham Midshires and Barclays as with the majority of banks, requirements are that where deed of enlargement indemnity insurance is to be put on risk:

• you is duty bound to spell out to the borrower that the borrower will need 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
• the deed of enlargement indemnity insurance policy needs to be for the benefit of the lender and, wherever possible, for the benefit of the borrower and any future registered proprietor or lender. Where the borrower will not be protected by the deed of enlargement indemnity insurance policy, the mortgagor needs to be advised accordingly.
• the deed of enlargement indemnity insurance policy must be effected at no charge to the bank
• the deed of enlargement indemnity insurance policy must not contain conditions that you know would void or compromise the interests of the lender
• your firm must disclose to the insurer all relevant information which you have obtained
• you are responsible for approving the terms of the deed of enlargement policy on behalf of the mortgage company
• your firm must supply a copy of the deed of enlargement indemnity insurance to the mortgagor and explain to the mortgagor why the deed of enlargement indemnity insurance policy was effected and that a further policy might be required if there is additional borrowing against the security of the property
• the level of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )

As to the level of cover for the deed of enlargement indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the UK Finance handbook PII requirements for banks:

Deed of Enlargement Contingency Insurance : Reflections

The extent of the terms for deed of enlargement indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners should direct the borrower 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 specified in the policy schedule - so you should check the schedule to determine that it is correct. 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.

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Deed of Enlargement Contingency insurance: Important characteristics 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 should be checked for the following

• 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.
• Loss in market value due to the successful enforcement of the risks specified in the deed of enlargement policy.
• Reimbursement for compensation incurred in any proceedings regarding 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 insurance company
• The cost of works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to 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 order.
• All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the deed of enlargement policy.

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You also need to be sure that the answers on the application form are accurate. Regardless of how remote a claim on the lender insurance policy might be you can certain that the insurer will check the details on any proposal form very carefully prior to any claim being met.

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Deed of Enlargement Indemnity Insurance has limitations - Supplemental considerations

Deed of Enlargement insurance may satisfy lenders such as Leeds Building Society or Skipton 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.

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The above information is in relation to properties in England and Wales.