When valuing a property for mortgage purposes, there is an inherent obligation on the surveyor to inspect and value the right property.
This might seem obvious, but it took the Court of Appeal decision in Platform Funding Ltd v Bank of Scotland (PLC) (formerly Halifax PLC) to confirm this. A borrower misled the valuer into inspecting the wrong property. When the property was subsequently repossessed and sold, there was a shortfall which the claimant sought to recover from the valuer. The defendant argued that the valuation could not be construed as giving an unqualified assurance that the valuer had inspected the property to which the report related.
The Court of Appeal found that in the standard surveyor's retainer to inspect and value a specific, identified property, there is an inherent unqualified obligation to inspect and value the correct property. Inspection and valuation of a different property is a breach of contract, despite the surveyor exercising reasonable skill and care. By certifying that the property had been inspected, when it had not been, the valuer was in breach of a contractual warranty and so liable.
Things to consider
Ensure that a property is sufficiently and correctly identified in the instructions to value in order to impose an unqualified obligation on the surveyor. The surveyor will then be liable to the lender despite fraud being perpetrated on him by a borrower. It will be up to the surveyor to pursue the borrower for an indemnity in the unlikely event that it would be worth it.