Valuer's duties to borrower clarified

Traditionally if your mortgage lender instructs a valuer to value a property you intend to buy, the valuer only owes a duty of care to the lender and not to you.  That is to say, if the valuer gets it wrong then only the lender, and not you, can do anything about it.

However, in the recent case of Scullion -v- Bank of Scotland plc, the courts have decided that in some circumstances the valuer is liable to the borrower too!

In that case, the buyer of a buy-to-let property suffered a significant loss because the bank's valuer had overstated the value of the property and how much rent the borrower could expect to receive.

The judge said that he had taken into account the following factors :-

1.  That the property was a residential property and not a high value house or commercial property where it might be expected that the borrower would have had a separate survey carried out.

2.  The valuer was a professional valuer who should have known that the borrower would have seen the valuation and would have relied on it.

3.  The borrower was not a professional developer and was no different in that respect from the purchaser of a residential property to live in.

The court awarded the borrower the sum of £72,000.00 to compensate him for the fact that he was not able to let the property for an amount sufficient to cover his mortgage payments.

This is good news for the first time or infrequent property investor whose resources may not stretch to having costly surveys and valuations carried out on standard residential properties, but shouldn't be relied on by professional developers or investors whose resources (and experience) are not limited in the same way.