Deed of Postponement Indemnity Insurance Lender conveyancing requirements
Barnsley BS and Nationwide, in common with many lenders, set their own requirements when it comes to deed of postponement indemnity insurance. This page sets out to enlighten property law firms on the various lender solicitors panel where the title for the the property to be mortgaged contains deed of postponement. It is not a alternative for checking the CML handbook requirements for each bank, whether it be Accord, Birmingham Midshires or Halifax. The information on this page is not focused on deed of postponement indemnity insurance requirements.
Need help with deed of postponement indemnity insurance from your lender?
RBS and HSBC in common with the majority of mortgage companies, obligations require that where deed of postponement indemnity insurance is effected:
- your practice must approve the terms of the deed of postponement policy on behalf of the bank
- the minimum level of cover for the policy must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- the deed of postponement indemnity insurance policy should be effected without charge to the bank
- you must disclose to the insurer all relevant information which you have acquired
- the deed of postponement indemnity insurance policy should not contain conditions that you recognise would invalidate or compromise the interests of the bank
- the deed of postponement indemnity insurance policy should always be for the benefit of the bank and, if possible, for the benefit of the mortgagor and any future registered proprietor or mortgage company. Where the borrower will not be covered by the deed of postponement indemnity insurance policy, you must advise the borrower of this fact.
- your practice must send a copy 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 additional insurance could be required if there is additional lending against the mortgaged property
- you is duty bound to point out to the borrower that the borrower will need to comply with any conditions of the deed of postponement indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the insurance
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Clydesdale Bank | Open market value of property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Magellan Homeloans | At least equal to the value of the property |
| Mortgage Express (No 2) | |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| 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. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| RBS- First Active | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
| Yorkshire 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. |
| Zephyr Mortgages | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
Deed of Postponement Contingency Insurance : Reflections
The full terms, conditions and exclusions for deed of postponement indemnity insurance are identified in the policy paperwork. Conveyancing solicitors should direct 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 set out in the policy schedule - so it’s important to check the schedule to determine that it is in order. The duration of this non-investment insurance contract 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.Deed of Postponement Contingency insurance: Significant characteristics 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 Postponement indemnity insurance Cover normally includes- Diminution in value resulting from the successful enforcement of the risks specified in the deed of postponement indemnity insurance.
- The cost 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.
- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the deed of postponement insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Cover for compensation incurred in any action concerning the risks specified in the deed of postponement insurance, as well as incurred costs and expenses.
- 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 order.
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the deed of postponement policy will not be valid.
Deed of Postponement Indemnity Insurance has limitations - Supplemental considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from deed of postponement insurance may be adequate for your client. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank 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 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.