Negligent Valuation

Property Litigation - March 2012

The volatile property development sector has led to increased pressure on surveyors. The problem arises in relation to the valuation of distressed property where there are:

forced sales revaluation as part of renewed or restructured lending for exiting property portfolios mezzanine lending with a mortgage lender agreeing to take a higher risk Valuers face substantial difficulty in attempting to arrive at a market value in circumstances where very little market exists. The conventional valuation process involves the consideration of transactions which compare with the current property transaction (i.e. is truly "comparable" in terms of being recent, of a similar/same location and of similar/same property characteristics).

However the market is currently so suppressed that there are little or no comparables available for some locations. Often a valuation is needed immediately and the parties can not/will not wait for the market to improve to provide comparable evidence. The financial crisis has tested the mettle of the valuation industry. There have been numerous cases where valuers have been criticised for looking at circumstances which would not have been known at the valuation date or where valuers have relied on hindsight and not actual comparable transactions (MrJustice Lewison in Marklands v Virgin Retail [2008]).

The case of Paratus AMC Ltd v...