pnBlawg

the professional negligence blog

A collaboration between Rebmark Legal Solutions and 1 Chancery Lane

Mortgage valuer's duty to report plot size

To what extent is a surveyor, who provides a mortgage valuation, obliged to check on the property’s precise acreage? This question was recently considered by Lord Glennie in Phimister v DM Hall LLP [2012] CSOH 169.

The Claimant was a fisherman who, when not at sea, was a property developer. In 2007 he found a possible property (“Property”) comprising “traditional dwelling house and steading” plus diary, garages, outhouses and coal sheds, which according to the estate agents’ particulars as located on a “1.12acre plot with superb views”. After the Claimant’s offer of £240,000 was accepted by the vendors, he applied for a loan and the Defendant was instructed to provide a mortgage valuation.

The report, which stated the Defendant’s understanding that the site was 1.12 acres, valued the Property at £230,000. This figure excluded any consideration of development value. Having purchased the Property the Claimant discovered that it was only 0.66 acre with the result that he could not develop it in the way he’d anticipated.

The Claimant argued that the Defendant should have checked the size of the Property’s plot and that the smaller area severely restricted his opportunity to develop the site. This argument was never going to get anywhere given the judge’s findings that (1) the Defendant was instructed to carry out a mortgage valuation of residential property, (2) he was never told about the Claimant’s development plans, (3) the Property’s main value lay in the buildings and not in the amount of the land involved and (4) it would not have been obvious to a surveyor that the site was substantially smaller than 1.12 acres.

Lord Glennie’s decision illustrates the sort of factors that determine the scope of the surveyor’s duty. It also emphasises the point that a surveyor is not automatically negligent because his valuation contains inaccurate details. A claimant must still establish breach of a material duty.

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