24 January 2017
The dangers of overvaluing a development
Surveyors who valued a property development, the value of which collapsed in the 2008 financial meltdown, face a payout of more than £1 million following a decision of the Court of Appeal. The ruling has significant implications for the sector.
The claim was brought by a firm of bridging loan specialists who advanced money against a development in Berkshire based on the valuations provided by the surveyors. These proved to be optimistic, leaving the bridging loan providers nursing losses.
The loans were provided in two tranches, and the surveyors relied on a long-standing principle (the 'but for' principle), the effect of which would have been to limit the claim only to the losses resulting from the first tranche of the lending.
However, the Court of Appeal ruled that the lender's reliance on the valuation applied equally to the second tranche.
In principle, the main effect of the decision will be to increase risk for valuers and thus their professional indemnity premiums.
If you have suffered a loss resulting from a significantly incorrect valuation of a property, contact us for advice regarding what steps might be possible to obtain appropriate recompense. Call 01753 279035 or email firstname.lastname@example.org.