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Stuart J
Stuart J, Solicitor
Category: UK Law
Satisfied Customers: 22517
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street practice
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I have a property developer client who was lent too much money

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I have a property developer client who was lent too much money to build a house. The chartered surveyor from Berkeley Square, London valued the property "finished" at £1.75m in April 2012. The property was eventually finished this year.. long story... however guide price recommended by two estate agents came in at £1.35m/£1.4m. The sale of the property fell through last week, sale price £1.275m. The interest on the loan is £18,000 per month, added each 20th of the month. It is virtually mathematically impossible to sell the house and pay off all debts including the lender. Is the chartered surveyor acting on behalf of the bank liable to losses incurred by my client on lending that should not have occurred in the first place?

Hello, I am Law Denning and I am a practising solicitor in a High
Street practice. I have been an expert on this website in UK law since 2008.
During that time, as you appreciate, I have answered thousand's of questions from satisfied users on a variety of subjects.
Because we are all in practice with clients and court and other users, I might not always respond in
minutes, particularly evenings and weekends. Please bear with me in that case.

It is my pleasure to try and assist you with this today. Please bear with me while I gather some further information from you in order for me to be able to advise you fully.

Why do you believe it is his responsibility?
Customer: replied 3 years ago.

He is responsible to give a red book valuation for bank borrowing purposes, unfortunately, he was 40% over, and as result my client has lost substantially


What is your interest in this? Who is your client? The developer?

Is he
an experienced developer or is this the first time?

was the valuation done which valued is 1.75 million? Has the market dipped in
between the valuation being done and the property being finished?

going to be brutally honest with you and tell you that whilst the surveyor may
or may not have been negligent with regard to over valuing the property. The
actual value of it and what it can achieve in a depressed market can often be
remarkably different.

your client had no experience of this, I think that he may have a chance
against the value or the lender for irresponsible lending. However, I think
that in this case, I am sorry to have to tell you that I simply think your
client is himself a bad bargain and is now looking to offload the blame onto
someone else. That is not to say the solicitor will not take this on (and
obviously charge for the privilege) but I would be very surprised if it got to
court and I would be even more surprised if it was successful in a claim
against the surveyor.

sorry, I appreciate that this is not the answer you wanted but there is no
point in me misleading you. I have a duty to advise you truthfully and honestly
even if that answer is unfavourable.

Of course,
a different law you may take a different view because there are always two
sides to every argument. No one ever goes to court expecting to lose and yet
one side always does. Each of them has been encouraged to go by their solicitor
(who gets paid regardless) on the promise that they have a reasonable chance of

By all
means intimate a claim against the surveyor it is not one that I would be
taking to court unless the solicitor acting for me is doing it no win no fee
and my legal costs are insured, in case I lose and get a costs order against me.

I can
see that this legal battle could easily cost £50,000 if your client lost the

that answer the question? Can I help further? Can I answer any specific points?

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Customer: replied 3 years ago.

Dear Law, I'm sorry I was called to a farewell supper and had to leave you.


Everything you say makes absolute sense. I might need to reflect overnight to see if there is possible foothold or case where we can get some sort of compensation. If we can prove that my client had relied on the valuation and was seduced by the price suggested which is understandable, then of course he would have been extremely happy. He is inexperienced on valuations and lives in a "Peter Pan world" so clearly would have been reliant on these sums.

No worries. He has better claim if this is his 1st development.
If he has done several, it severely weakens what is already not an easy claim
Customer: replied 3 years ago.

Dear Law, thanks for your assistance, I'll explain this to him tomorrow. Is there any case law to support his position?

Researching extensive case law is something which barrister will charge £250 per hour for because it takes a considerable length of time. The only time that we quote case law is in it springs off the top of our head.
There is one case which I seem to remember (and I might have this wrong), one of the party’s name was Jones. They were a first-time buyer and relied on the valuation (rather than a survey) of the house they were buying. It turned out that the was a problem with the house and it wasn’t worth what the value was said. That was why the judge found in their favour and he said that if they had been experienced buyers, they would have had no claim.
It might be an idea to print off the thread and show it to your client and then you can point out that this is a completely independent view and not your own.
Please don’t forget to rate my answer positively, if you have not done already. Unless you rated positively, I don’t get paid!
The thread does remain open for us to continue. Thank you
Customer: replied 3 years ago.

Dear Law, your advise has been very helpful. I am going to suggest that the lender (it's a private lender outside of FSA regulations) take's the hit so that the creditors on the house, agents and lawyers fees can be paid. The shortfall can be made up by the surveyors insurance company. The developer is inexperienced on new builds and is numerically dyslexic. If the lender had checked his credentials thoroughly, they'd have realised he was a high risk.

You have just given me a little more information which possibly weakens his case even more. I’m sorry but I will have to mention it. It is a Private lender outside FSA regulations.
I assume that the lender does have a consumer credit licence if this is a commercial transaction and not one between friends. If it is between friends, I don’t think he has a case against the lender although there is a possible one against the value. If it is a commercial transaction and the lender has no consumer credit licence, the transaction is illegal and therefore not enforceable legally, although that does not mean that the valuer is not liable
In exactly the same way that your developer client is not experienced at this, it may be that the lender pleads inexperience also in which case, the lender may have a possible claim against the value and indeed, a bigger claim than an ordinary lender would have.
Remember that your client is presumably a private individual whereas the lender may have and the valuer will certainly have professional indemnity insurance to fight any claim. It may therefore be that your client is up against unlimited funding by an insurance company whereby they will spin any litigation out as long as possible. Your client therefore needs to consider how he is going to fund any litigation.
This is going to be an extremely complicated case before actually proceeding with any litigation, I would pay the £800 or so that it would cost to get an advice from Chancery Counsel on the likely chance of success. I would do that before wasting any money on correspondence between solicitors because solicitors do tend to play legal ping-pong with correspondence, which massages the legal costs, before actually getting straight down to the nitty-gritty.
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