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Sceptics may point out that the UK housing market is showing many of
the signs of over-heating that characterised the property collapse of the
late 1980s, such as sub-sales, direct deposits, and unreported
reductions in price. If the end result is a decline in property prices then
we will presumably see another round of litigation by unhappy lenders
against supposedly negligent solicitors and valuers.
Whilst the solicitors
will probably be the first port of call in the litigation, those solicitors (or
their insurers) will undoubtedly look to the valuers for a contribution.
When bringing a claim against a valuer it is important to decide whether
the valuer played an active part in any mortgage fraud or whether he was
an unwitting participant. If the valuer has been involved in the fraud or
dishonesty by the lender, then the lender is more likely to be able to
recover the full loss, and it will not be possible for the valuer to argue
contributory negligence on the part of the lender. Plus, of course, the
lender will also have a longer limitation period (since time will only run
from the date when the lender discovered the fraud, or could with
reasonable diligence have discovered it).
In practice, of course, it is much harder to establish fraud, and most
claims against valuers will therefore be on the basis of simple
negligence. If so, the valuer will have a defence if he can argue that the
valuation was within the permissible margin of error (or ‘bracket’), plus,
of course, he may well be able to argue contributory negligence on the
part of the lender. Source: Barlow Lyde & Gilbert.
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December 2006 |
