Property Price Busters: Who You Gonna Sue?
- AuthorPaul Hajek
According to a recent survey by law firm Porter Reynolds Chamberlain (RPC), Estate Agents and Surveyors, that’s who.
RPC reports that there were 25 commercial and residential High Court cases against estate agents and surveyors in 2009 compared to just a single claim in the previous 5 years.
There are an estimated 2000 further potential claims in the pipeline
The natural fallout from a recession is the desire from those whose assets have fallen dramatically, to try and blame someone for their misfortune.
This happened in the last recession in the 1990’s when surveyors and valuers faced claims for professional negligence for “overstating” the value of commercial and residential property.
Yet, the assumption that where a property’s price crashes, that the surveyor who valued the property must be to blame is incorrect.
The law requires actual proof that the Surveyor was negligent
And there is also an important difference between this recession and the last.
Large losses have been linked to the buy to let market, which essential did not exist in the 1990’s
Lenders such as Bradford & Bingley and GMAC encouraged people to invest in buy to let properties. The lenders then securitised these loans (akin to a pyramid selling) selling the loans (good and bad) to other institutions.
When the crash came, some unfortunate Lenders were left with these over valued portfolios with no hope of recovering some of their loans.
Some commentators have argued that the recklessness of sub prime Lenders in particular was a major contributor to the property price crash
So for now the rise in litigation against surveyors and valuers will continue
But Surveyors when faced with reckless behaviour by the Lenders are quite right to fight back