Professional Negligence Update: Landmark decision is a blow to buy-to-let investors bringing surveyors negligence claims
A landmark decision by the Court of Appeal in Scullion –v- Bank of Scotland on 17th June 2011, has effectively cut off any potential professional negligence claims by buy-to-let investors against valuation and mortgage surveyors for overvaluing property.
The basic facts were that, in 2002, Mr Scullion purchased a buy-to-let property. A property broker organised a mortgage valuation with Colleys Surveyors (now part of Bank of Scotland) who confirmed that the value of the property was £353,000 with a rental value of £2,000 pcm. Within a short space of time though, Mr Scullion realised that, at best, he could only achieve £1,110 pcm which, given the mortgage repayments of £1,400 pcm, soon proved to be a burden on Mr Scullion.
Mr Scullion made a professional negligence claim against the surveyors. At first instance, the Court felt that this was a relatively low value transaction involving a private individual and it would be unreasonable to expect him to obtain his own valuation evidence.
The Court of Appeal, however, disagreed stating that: “Due to the investment nature of the Scullion purchase, it was not sufficiently clear that it would have been foreseeable…that Mr Scullion would rely on [Colley’s] report rather than obtaining his own advice.”
This will be a blow to small time investors (particularly those who are looking to set up their pension funds in property) but will be a huge relief to valuers and surveyors receiving instructions from mortgage and property brokers. It remains to be seen though whether Mr Scullion will appeal.
If you require further details of this case or wish to discuss any aspect of surveyors negligence or professional negligence law please feel free to contact specialist solicitor, Emma Slade.