Reliance by mortgagor on mortgagee’s survey
Reliance by mortgagor on mortgagee’s survey

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

  • Reliance by mortgagor on mortgagee’s survey
  • Personal liability
  • Mortgagee’s liability
  • Remortgages/further advances
  • Buy-to-let
  • Power of sale

In Smith v Eric S Bush, the House of Lords held that a valuer who reports on a property for a prospective mortgagee, knowing that a prospective purchaser is likely to rely on his report when deciding whether or not to buy the property, owes a duty of care to that purchaser.

Knowledge, on the part of a valuer, that a purchaser is likely to rely on his valuation, is more likely to be implied where the property valued is comparatively cheap. There is less likelihood that the purchaser will commission a separate valuation. However, reliance may be implied in relation to more expensive properties where the evidence and circumstances warrant it (eg to avoid additional cost of mortgagee’s valuer, a purchaser instructs his own valuer, who had surveyed the property previously, to carry out the valuation; the purchaser then relies on valuer’s insurance reinstatement valuation figure rather than his own).

A purchaser can rely on a valuer’s report, even if it is not shown to him, where it is reasonable for him to assume from the mortgage offer that the property has been valued at no less than the amount in the offer.

Personal liability

In Merrett v Babb, the Court of Appeal held that a valuer owed a personal duty of care to the mortgagor for a negligent valuation report.