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House Claim Cheque withheld

Are my mortgage company allowed to hold onto my house insurance claim until I prove that the repairs have been done? Clare.

It depends on what the mortgage document says but the answer is probably yes.  

 

The reason why a mortgage company normally has this clause in a mortgage is that there is an obligation on the mortgage holder to insure the property, usually in the joint names of the mortgage company and themselves or alternatively have the interest of the mortgage company noted on the policy.   The logic is quite simple.  That if a claim is made in relation to the house (particularly a serious claim which involves damage to the structure) the house is devalued after that damage has been done and that will reduce the value of the security that the mortgage company holds.   This clause ensures that the mortgage company has control to make sure that the repairs have been done and the full value of the property has been restored to it’s pre-damage level.     

The issues raised in the answer to this NewsTalk listener's question are dealt with in a general way as can only be the case on live radio. Before relying on the advice given in this answer, whether you heard the broadcast or are for the first time reading the issues here please do not rely on the broad advice given. For a detailed professional opinion please consult a qualified legal advisor and for further details read our disclaimer on the Home Page.

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