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.

Beware that casual "just go ahead"email!!

The Court of Appeal has just awarded damages of over £10,000.00 to a firm of estate agents due to a breach by the seller of a property of the agent's sole agency agreement.

The unusual feature of this case is that the agency agreement had been entered into by emails between the seller and the agents.

The agent had sent the seller an email with both their multi and sole agency terms and conditions and the email went on to state that after a certain date the seller would market the property through the agents on a sole basis.

The seller replied with an email which basically said "that's fine, look forward to some viewings".

The property was eventually sold by another agent who had previously been marketing the property on a multi agency basis.  The first agents claimed their fee.

The Seller argued that there was no contract - she said that she had not fully read the e-mail or the sole agency terms and conditions and that it had always been her intention to market the property through several agents.

The Court of Appeal decided that there was a contract brought into being by the exchange of emails and that the sale by the other agent had deprived the sole agent of the chance of earning commission on the sale.  The Court therefore awarded the agent the full amount of its lost commission by way of damages.

The seller therefore effectively paid 2 lots of estate agent's fees and was also landed with a fairly hefty legal bill!

The great thing about email is that it makes instant communication astoundingly easy.  The bad thing about email is that it makes instant communication astoundingly easy!  Be wary about landing yourself with an obligation you never intended just with a quick click on the "Send" button!