Anthony Lavers

Commercial property loan valuations in the UK: implications of current trends in valuation practice and legal liability

This paper examines the legal liability implications of changes to the commercial property loan valuation process caused by the recession in the UK property market. It identifies the market background to commercial property lending and discusses the implications of the falls in value for lenders and valuers. These include the outcome of discussions between the various professional institutions representing these two groups and the increasing litigation between lenders and valuers in which professional negligence is alleged. The paper reviews the legal framework and critically examines the valuation process relating to instructions, bases and reporting in order to define a set of research questions. These are addressed via an interview survey of lenders and valuers. The findings of the study are: First, a minority of valuers continue to accept instructions from borrowers and this could lead to a conflict of interest, as lenders may rely on their report. Second, situations occur where lack of formal instructions prior to the delivery of the report casts doubt on the valuers ability to identify the needs of clients correctly. Third, it was found that valuers are providing valuations on bases which they do not think are appropriate. Valuers may incur liability if they do not inform clients of their reservations and this situation must be urgently addressed. Fourth, valuation reports are considered often to be deficient in contextual information concerning markets, which confirms the findings of earlier research in this area.

Expert valuation witnesses in the UK – problems and solutions

This paper addresses the performance, training and organisation of expert valuation witnesses in the UK. Previous research, based on analysis of professional negligence cases in the UK courts, had found that expert valuation witnesses do not always perform rationally, for example informing courts that valuations can be undertaken within acceptable tolerances of valuation accuracy, while giving expert evidence that differed by more than these tolerances. There was evidence that, while well aware of their overriding duty to the court or tribunal, expert witnesses were frequently producing client‐biased valuations. Such findings provoked questions as to whether standards would be improved by two recently proposed alterations to current practice: either the introduction of a system of compulsory training and accreditation for such witnesses, or a change from the process by which expert valuation evidence is normally presented (one expert witness for each party to a dispute) to the use of a single expert, appointed either by the parties jointly or by the court. A case analysis is performed and conclusions discussed.

Judicial attitudes to professional liability for property investment advice

Explores judicial attitudes in professional negligence cases affecting liability for property investment advice. Focuses on the standard of work required to discharge the legal duty of care and on apparent contradictions in approach by the courts. Reviews a series of cases which are taken to exhibit traditional attitudes to professional liability and studies modern cases which are irreconcilable with those attitudes. Includes liability to third party mortgagors and to third party mortgagees in an analysis of the duty of care, and considers the implications of the perceived expansion of the advisor′s professional duties, which include potential conflicts of interest and the dichotomy between the standards current among professionally qualified and unqualified practitioners. Suggests that judicial attitudes are influential in shaping the practice of property investment advice, but that this intervention is fraught with difficulties as it creates uncertainty among professional advisors about the nature of th...

A database of negligent valuation cases and literature

This paper forms part of a larger funded research project conducted jointly by the University of Reading and Oxford Brookes University. The purpose of the project was an investigation of negligent valuation and advice, in relation to commercial property lending. A major interview exercise to obtain data relating to commercial loan valuation practice was undertaken. This work, and its initial results, have been reported elsewhere and do not form the main subject matter of this paper, but are referred to. The second part of this project derived from a comprehensive literature search in the area of setting up of a data‐base of sources for research and possible commercial exploitation. It is the database, the rationale for its creation, its features, and prospects for use which are the subject matter of this paper. The paper considers the background to the most recent decisions; the importance of the case law in understanding valuers’ liability exposure; the compilation of the database; the intentions as to its operation and use; and conclusions on the extent to which the project’s objectives regarding the database have been achieved and its potential for further development in the future.

Contributory negligence involving overseas European banks in property valuation negligence cases in the UK

Examines the phenomenon of cross‐border property lending and some issues regarding lending procedures and decision‐making processes in the context of the relationship between lender and professional adviser. Commences by placing these procedures and processes in the context of the development of cross‐border European property investment and finance. The UK has been a popular destination for overseas investors and lenders over the last decade and is therefore used as a case study to examine the additional institutional risk that overseas lenders may face when operating outside of their own country and obtaining advice from home professionals. The research identified a lack of clarity in roles and relationships between lender and adviser, difficulties in communications both internally and between overseas branches and headquarters and failures in provision and interpretation of advice. Concludes by identifying the issues which may need to be addressed generally by lenders and their advisers, when lenders are operating in overseas markets.

Participation in the plan‐making process ‐ financial interests and professional representation

Summary The paper explores a range of legal and procedural issues relating to the common theme of participation by, and on behalf of, those with financial interests in the making of development plans. Particular emphasis is placed on the consequences of changes made to the Town and Country Planning Act 1990 by the Planning and Compensation Act 1991 and on their implications for participation at the draft, deposit and inquiry stages of the making of unitary development plans and local plans. The significance of the changes with regard to professional obligations is also considered. The results of a number of related research exercises carried out by, and under the supervision of, the authors are reported and compared with those published by other researchers. The results demonstrate uncertainties about the interpretation and significance of the legislative changes and indicate the extent, form and effectiveness of involvement in the plan‐making process by, and on behalf of, those with financial interests. ...