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Court of Appeal finds that buy-to-let purchasers are not owed a duty by the lender's surveyor
29 June 2011
In the case of Scullion -v- Colleys the Court of appeal has found that in buy-to-let transactions the lender's surveyor owes no duty to the buyer. The Court found that there was "...no inherent likelihood that a purchaser, buying the flat for the purpose of letting it out, would rely on a valuation provided to the mortgagee.". The Court importantly noted that in buy-to-let transactions, even for lower or mid range properties, the buyer was likely "...to be richer and more commercially astute than people who buy to occupy". The Court went onto say that such class of persons "...can therefore be regarded as more likely to obtain, and more able to afford, an independent valuation or survey" and to be "..just as interest in the rental value as ...in its capital value". The Court concluded that a lender appointed surveyor could expect a borrower to obtain their own advice.
In the light of this decision it is obviously important for investment buyers not to treat the lender's surveyor's valuation as a 'safety net'. To afford themselves with protection it is clear that investors must now make sure that they seek their own advice to ensure that the investment is as solid as it appears.
Should you wish to explore a possible case for professional negligence please contact our Litigation Team for a free exploratory discussion. Alternatively, should you be thinking of purchasing a property (as an investor or otherwise), please contact our Property Team who will be happy to discuss matters with you.
Andrew Petchey, Partner, Litigation Team
