Negligence in property valuation

The following Property Disputes practice note provides comprehensive and up to date legal information covering:

  • Negligence in property valuation
  • Margin of error
  • Damages
  • Property defects
  • Lenders
  • Contributory negligence
  • Limitations on liability—exclusions and restrictions

Negligence in property valuation

This Practice Note deals with the extent of a valuer’s liability to buyers, sellers and mortgagees for inaccurate valuations, including the margin of error permitted to valuers, the measure of damages, contributory negligence of claimants and attempts to exclude liability. It does not cover the liability of a valuer acting in an expert determination or arbitration. For details of arbitration and expert determination generally, see: Arbitration, expert determination and mediation for property disputes lawyers—overview.

A valuer estimates or assesses the worth or value of, or fixes a price for, a property. A valuer owes a duty to take care in valuing property, which is normally an express or implied term of their contract but also arises in the tort of negligence (for more information in respect of the duty more generally, see Practice Note: When does a valuer’s liability arise?). As a result a valuer can be liable to a buyer, seller or mortgagee client, but may also be liable to third parties such as:

  1. a home buyer, even where the valuer is appointed only by the lender, where the buyer relies on the valuer’s report

  2. a mortgagor, where the valuer undervalues a property for a mortgagee exercising its power of sale

Margin of error

Valuation is not an exact science. A valuer is not guilty of negligence simply because another valuer produces a

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