Proposed house sale changes question
Rainer Thonnes
k...@gemnet.demon.co.uk (kjc) writes:
> Just noticed on teletext that
> the government proposes to
> change the nature of house sale
> transactions so that the vendor
> pays the buyers survey and legal costs.
I don't think you got that quite right.
The way I understood it, the seller pays for the buyer's survey
even before a prospective buyer has turned up. In effect the
survey report appears in the shop window, so to speak. So it
isn't really the buyer's survey at all, but the seller's.
Part of the idea is to get rid of "subject to survey" offers because
the survey would already be available. This is like in Scotland where
the norm is for prospective buyers to commission a survey before
making an offer. The downside of the Scottish system is, of course,
that prospective buyers waste the cost of a survey when their offer
fails, and that the same property will get surveyed many times before
the seller gets to pick one of several offers made by blind bidding
on the closing date.
The ultimate goal is to tackle gazumping, whereby the seller pulls
out for a better offer. There's no reason why more binding contracts
should not be reached more quickly, such as with conditional contracts
as in Scotland, but by putting the survey first, time for things to
go wrong is reduced. (Actually that doesn't really make sense because
the real problem is deals taking 3 months rather than 6 weeks, yet one
can get a survey in just a few days.)
> Question: What happens if the buyer
> let's the vendor down and pull's out of the sale?
No problem, because the buyer pays his own legal costs, and in effect
the purchase price of the house includes the hidden cost of the
seller's survey and the seller's legal costs.
The real problem seems to be what happens when the surveyor slips up.
Under the present regime the surveyor is responsible to the person
commissioning the survey, and if that's the buyer, the buyer can
simply sue the surveyor. If it's the seller, the buyer cannot.
At best, the sale contract could provide a warranty by which the
seller warrants the property to be as described in his survey, and
if the buyer has to sue against that, the seller could then sue
the surveyor. Either that, or the survey deal could include an
agreement that the surveyor agrees to be accountable to the buyer
in due course. (Have I got this right?)
[cross-posted to uk.legal]
kjc
r...@dcs.ed.ac.uk (Rainer Thonnes) stating:
>In article <3640f20f...@news.demon.co.uk>,
> k...@gemnet.demon.co.uk (kjc) writes:
>> Just noticed on teletext that
>> the government proposes to
>> change the nature of house sale
>> transactions so that the vendor
>> pays the buyers survey and legal costs.
>
>I don't think you got that quite right.
Good!! Better news eh?
>The way I understood it, the seller pays for the buyer's survey
>even before a prospective buyer has turned up. In effect the
>survey report appears in the shop window, so to speak. So it
>isn't really the buyer's survey at all, but the seller's.
Hmmm... not so bad i suppose...i expect there would be expiry terms
attached to the survey's validity e.g. up to 5 years?
>
>Part of the idea is to get rid of "subject to survey" offers because
>the survey would already be available.
Yep..a good idea!
>At best, the sale contract could provide a warranty by which the
>seller warrants the property to be as described in his survey, and
>if the buyer has to sue against that, the seller could then sue
>the surveyor. Either that, or the survey deal could include an
>agreement that the surveyor agrees to be accountable to the buyer
>in due course.
I certainly hope the latter is true...the surveyor will remain
accountable to the buyer.
kjc
Stephen Maudsley
> In article <3640f20f...@news.demon.co.uk>,
> k...@gemnet.demon.co.uk (kjc) writes:
> > Just noticed on teletext that
> > the government proposes to
> > change the nature of house sale
> > transactions so that the vendor
> > pays the buyers survey and legal costs.
>
> I don't think you got that quite right.
>
> The way I understood it, the seller pays for the buyer's survey
> even before a prospective buyer has turned up. In effect the
> survey report appears in the shop window, so to speak. So it
> isn't really the buyer's survey at all, but the seller's.
>
> Part of the idea is to get rid of "subject to survey" offers because
> the survey would already be available. This is like in Scotland where
> the norm is for prospective buyers to commission a survey before
> making an offer. The downside of the Scottish system is, of course,
> that prospective buyers waste the cost of a survey when their offer
> fails, and that the same property will get surveyed many times before
> the seller gets to pick one of several offers made by blind bidding
> on the closing date.
>
> The ultimate goal is to tackle gazumping, whereby the seller pulls
> out for a better offer. There's no reason why more binding contracts
> should not be reached more quickly, such as with conditional contracts
> as in Scotland, but by putting the survey first, time for things to
> go wrong is reduced. (Actually that doesn't really make sense because
> the real problem is deals taking 3 months rather than 6 weeks, yet one
> can get a survey in just a few days.)
>
> > Question: What happens if the buyer
> > let's the vendor down and pull's out of the sale?
>
> No problem, because the buyer pays his own legal costs, and in effect
> the purchase price of the house includes the hidden cost of the
> seller's survey and the seller's legal costs.
>
> The real problem seems to be what happens when the surveyor slips up.
> Under the present regime the surveyor is responsible to the person
> commissioning the survey, and if that's the buyer, the buyer can
> simply sue the surveyor. If it's the seller, the buyer cannot.
>
> At best, the sale contract could provide a warranty by which the
> seller warrants the property to be as described in his survey, and
> if the buyer has to sue against that, the seller could then sue
> the surveyor. Either that, or the survey deal could include an
> agreement that the surveyor agrees to be accountable to the buyer
> in due course. (Have I got this right?)
I saw an interview with a representative of the trade association for
surveyors who said that the surveyor would be accountable to both buyer
and seller.
--
Stephen Maudsley mailto:Stephen....@esgem.com
Esgem Limited for electronic product design
http://www.esgem.com
Tel: +44-1453-521626 Mobile: +44-370-810991
Ian Dickson
Thonnes <r...@dcs.ed.ac.uk> writes
>
>The real problem seems to be what happens when the surveyor slips up.
>Under the present regime the surveyor is responsible to the person
>commissioning the survey, and if that's the buyer, the buyer can
>simply sue the surveyor. If it's the seller, the buyer cannot.
>
1) Change the law so that the surveyor can be held liable to both the
buyer and his mortgage company.
This will be objected to by the surveyors as they see large elements of
business vanish. It would also IIRC be a massive change of pronciple in
Uk law.
2) Make it that if the BUYERS or lenders own survey turns up a serious
(perhaps defined as costing more than £2000 to put right) issue not
declared by the seller or in the sellers survey then, if the buyer backs
out because of this the sellor pays his costs.
Either of these would ensure that sellers did their best to give fair
warts and all information about the house in the first place, and remove
any moral hazard associated with seller commisioned surveys being less
than best effort. The number of full surveys would actually increase so
I'm sure that they will support it.
--
Ian Dickson Moneyweb - http://www.moneyweb.co.uk 01242 680151
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Joel Hogarth
>In article <F20Czt.8pJ.0.sta...@dcs.ed.ac.uk>, Rainer
>Thonnes <r...@dcs.ed.ac.uk> writes
>>
>>The real problem seems to be what happens when the surveyor slips up.
>>Under the present regime the surveyor is responsible to the person
>>commissioning the survey, and if that's the buyer, the buyer can
>>simply sue the surveyor. If it's the seller, the buyer cannot.
>>
>The best option would be of the following:-
>
>1) Change the law so that the surveyor can be held liable to both the
>buyer and his mortgage company.
>
>This will be objected to by the surveyors as they see large elements of
>business vanish. It would also IIRC be a massive change of pronciple in
>Uk law.
No, the House of Lords already held that he was liable to the buyer under
the _Hedley Byrne_ principle in the case of _Smith v Eric S Bush_
>2) Make it that if the BUYERS or lenders own survey turns up a serious
>(perhaps defined as costing more than £2000 to put right) issue not
>declared by the seller or in the sellers survey then, if the buyer backs
>out because of this the sellor pays his costs.
this could be unfair... often a building society will require work (such a s
a damp proof course) where a surveyor would say that it is not really
required, and certainly not necessary just yet.
Joel
--
Ever imagined a world with no hypothetical situations?
John Boyle
Dickson <i...@iand.demon.co.uk> writes
>The best option would be of the following:-
>
>1) Change the law so that the surveyor can be held liable to both the
>buyer and his mortgage company.
>
>This will be objected to by the surveyors as they see large elements of
>business vanish. It would also IIRC be a massive change of pronciple in
>Uk law.
>
>(perhaps defined as costing more than £2000 to put right) issue not
>declared by the seller or in the sellers survey then, if the buyer backs
>out because of this the sellor pays his costs.
>
>warts and all information about the house in the first place, and remove
>any moral hazard associated with seller commisioned surveys being
>less
>than best effort. The number of full surveys would actually increase so
>I'm sure that they will support it.
At the moment the basic survey is for the lender and most lenders
allow the buyer to look at it. It gives the buyer no real info except
that it will confirm or contradict the price. More likely than not it will
call for more specialist reports. The main reason for calling for
these reports is to pass the buck onto somebody else.
Even if there was a contractual duty of care between the surveyor
and the purchaser then the basic survey tells the purchaser
nothing but many purchasers think that it gives them everything
they need to know about every brick and the condition of every
piece of wood and slate.
Therefore I think the Housebuyer's survey should be obligatory as
the 'lowest' level of survey offered. The buyer pays a fee and
develops a contractual relationship with the surveyor. The
surveyor completes a mortgage valuation for the lender at the
same time but as a separate contract.
At the moment there is no way I could rely on a survey provided by
the vendor. therefore, I would expect to pay for my own survey
anyway. Surveys are matters of judgement and if one survey
disagrees with another (which is almost bound to happen) how
would you resolve it? ....... by getting another survey of course!!!!
Can't write any more about this 'cos I'm now studying to become
an ARICS....... :-)
Seriously,
1) What you suggest means that if the vendor's survey is flawed
then the vendor has to pay up, not the surveyor.
2) The problems that are likely to be of sufficient seriousness to
cause the purchaser to withdraw are likely to be those problems
which are only defined by way of a 'specialist' report, i.e. a damp
proof company or an aboriculturist, or a nice fellow who 'knows
about roofs'. Whilst all the DPC companies I know are of the
highest probity, very cheap, and are extremely honest and efficient
in every way that either I or their lawyers can think of, they do not
have the same level of 'professional' conduct, recourse and PI
insurance as an ARICS or FRICS. So the points of contention will
be those justified by non professionally qualified people and a
matter of personal judgement, not matters of fact.
3) I have plenty of knowledge of buyer's who withdraw under the
present regime on account of 'what the surveyor said' when in fact
their withdrawal is just because they are a 'time waster'.
Joke :
Irishman saw an advert in the paper which read :
" E reg Cortina. 3 mnths MOT. 23 careful owners. £275 ono. No
timewasters please".
He telephoned the given number and said
<<Frank Carson Mode on>
"I'm lookin' at your advert in the paper, can you tell me what a
timewaster is please?"
<<FCM off>>
The advertiser politely tells him what a timewaster is.
<<FCMO>>
"Ahh, tanks very much"
<<FCMO>>
says the Irishman and rings off.
--
John Boyle
John Boyle
Hogarth <jr...@cam.ac.uk> writes
>>This will be objected to by the surveyors as they see large elements of
>>business vanish. It would also IIRC be a massive change of pronciple
>in
>>Uk law.
>
>
>the _Hedley Byrne_ principle in the case of _Smith v Eric S Bush_
Not the full story I think. This case didn't develop a principle that
the surveyor was liable for all parts of the lenders survey to the
purchaser did it? The point here is about those items in the
subject property that might be a bit wrong. The case you mention
was a serious bit of biz wasn't it?
>
>>2) Make it that if the BUYERS or lenders own survey turns up a serious
>>(perhaps defined as costing more than £2000 to put right) issue not
>>declared by the seller or in the sellers survey then, if the buyer backs
>>out because of this the sellor pays his costs.
>
>
>this could be unfair... often a building society will require work (such a s
>a damp proof course) where a surveyor would say that it is not really
>required, and certainly not necessary just yet.
IME NO surveyor would pass any comment on a DPC they will
always delegate such comments to a so-called specialist DPC
company.
--
John Boyle
John Boyle
Maudsley <Stephen....@esgem.com> writes
>I saw an interview with a representative of the trade association for
>surveyors who said that the surveyor would be accountable to both buyer
>and seller.
How would an 'open market price' be decided?
--
John Boyle
Joel Hogarth
>In article <7219rh$ddp$1...@pegasus.csx.cam.ac.uk>, Joel
>Hogarth <jr...@cam.ac.uk> writes
>>>This will be objected to by the surveyors as they see large elements of
>>>business vanish. It would also IIRC be a massive change of pronciple
>>in
>>>Uk law.
>>
>>
>>No, the House of Lords already held that he was liable to the buyer under
>>the _Hedley Byrne_ principle in the case of _Smith v Eric S Bush_
>
>Not the full story I think. This case didn't develop a principle that
>the surveyor was liable for all parts of the lenders survey to the
>purchaser did it? The point here is about those items in the
>subject property that might be a bit wrong. The case you mention
>was a serious bit of biz wasn't it?
It was, but the principle established was that a surveyor is liable in
negligence to those that he knows are reasonably relying on his report,
regardless of the fact that there is no contract with him.
The precise extent of the case has been much doubted, but it remains House
of Lords authority for the Surveyor - Purchaser relationship to create a
duty of care.
David Swarbrick
>>This will be objected to by the surveyors as they see large elements of
>>business vanish. It would also IIRC be a massive change of pronciple in
>>Uk law.
>
>
>No, the House of Lords already held that he was liable to the buyer under
>the _Hedley Byrne_ principle in the case of _Smith v Eric S Bush_
But situations are different. Contracts are re-written in the light of
such cases. The law becomes different.
--
David Swarbrick, Solicitor. Brighouse, West Yorkshire.
Tel: +44(0)1484 722531 Fax: +44(0)1484 716617
e-mail da...@swarb.demon.co.uk
http://www.swarb.co.uk/ (Office) http://www.swarb.demon.co.uk/ (Home)
Home of the law-index to 8500+ cases - 'damn fine webbery"
David Swarbrick
>
>The way I understood it, the seller pays for the buyer's survey
>even before a prospective buyer has turned up. In effect the
>survey report appears in the shop window, so to speak. So it
>isn't really the buyer's survey at all, but the seller's.
>
>Part of the idea is to get rid of "subject to survey" offers because
>the survey would already be available. This is like in Scotland where
>the norm is for prospective buyers to commission a survey before
>making an offer.
No it isn't.
>
>The ultimate goal is to tackle gazumping, whereby the seller pulls
>out for a better offer.
Which it does nothing at all to prevent.
> There's no reason why more binding contracts
>should not be reached more quickly, such as with conditional contracts
>as in Scotland, but by putting the survey first, time for things to
>go wrong is reduced. (Actually that doesn't really make sense because
>the real problem is deals taking 3 months rather than 6 weeks, yet one
>can get a survey in just a few days.)
The difference is that in England we set out to achieve simultaneous
exchange of contracts on a sale and purchase. This has huge benefits for
most clients. If you do not change that, the rest is entirely hot air.
If you do want to change that then you must accept that far fewer people
will be able to buy houses (cannot afford the risk and support bridging
loans), and that more property will have to be available for letting.
You will also have to change the attitude of English banks toward
bridging loans.
>> Question: What happens if the buyer
>> let's the vendor down and pull's out of the sale?
>
>No problem, because the buyer pays his own legal costs, and in effect
>the purchase price of the house includes the hidden cost of the
>seller's survey and the seller's legal costs.
How are the buyer going to get the right to sue on the vendor's survey?
The extra risk will be reflected in additional costs. How will the buyer
be sure a survey carried out for the seller will be straight. A few
months contact with the way estate agents do business does not suggest
great confidence in such independence.
How are those (many) people who are selling with negative, nil or nearly
nil equity going to sell?
I suspect that solicitors will very properly tell their clients to have
no truck with what is an irrelevance.
John Boyle
Hogarth <jr...@cam.ac.uk> writes
>>Hogarth <jr...@cam.ac.uk> writes
>>>>This will be objected to by the surveyors as they see large elements
>of
>>>>business vanish. It would also IIRC be a massive change of
>pronciple
>>>in
>>>>Uk law.
>>>
>>>
>>>No, the House of Lords already held that he was liable to the buyer
>under
>>>the _Hedley Byrne_ principle in the case of _Smith v Eric S Bush_
>>
>>the surveyor was liable for all parts of the lenders survey to the
>>purchaser did it? The point here is about those items in the
>>subject property that might be a bit wrong. The case you mention
>>was a serious bit of biz wasn't it?
>
>
>It was, but the principle established was that a surveyor is liable in
>negligence to those that he knows are reasonably relying on his report,
>regardless of the fact that there is no contract with him.
>
>The precise extent of the case has been much doubted, but it remains
>House
>of Lords authority for the Surveyor - Purchaser relationship to create a
>duty of care.
Fair comment.
B/Socs and other mortgagees are now even MORE careful and
forceful in pointing out that the survey is for them only and that the
purchaser MUST NOT rely on it. This aims to have the effect of
breaking the link of 'reasonable reliance' between purchaser and
lender's surveyor. This is a further development subsequent to the
case so no doubt we will both await further litigation with glee!!
As a general comment I think would be purchasers should not
rely on the case to which you accurately refer.
--
John Boyle
John Boyle
Swarbrick <da...@swarb.demon.co.uk> writes
>You will also have to change the attitude of English banks toward
>bridging loans.
>
Come on David, PLEASE expand!!
--
John Boyle
Doug Ramage
John Boyle wrote in message ...
I assumed he was referring to "open" bridging loans?
Doug Ramage
Stephen Maudsley
Didn't say in the interview.
John Boyle
Ramage <doug-...@lineone.net> writes
Well I have suggested that was what he was referring to in the
past and he denied it, but can 'open bridging' really be a good
thing? lenders' and borrowers' experiences of such things are
horrible!!
--
John Boyle
Joel Hogarth
>>No, the House of Lords already held that he was liable to the buyer under
>>the _Hedley Byrne_ principle in the case of _Smith v Eric S Bush_
>
>But situations are different. Contracts are re-written in the light of
>such cases. The law becomes different.
How is it possible to contract out of _Hedley Byrne_ liability? One of the
main points in Eric Bush was the exclusion clause, which their Lordships
laughed out of Court... I can't see a court upholding a differently worded
exclusion clause in the light of the clear precedent...
Joel Hogarth
>B/Socs and other mortgagees are now even MORE careful and
>forceful in pointing out that the survey is for them only and that the
>purchaser MUST NOT rely on it. This aims to have the effect of
>breaking the link of 'reasonable reliance' between purchaser and
>lender's surveyor. This is a further development subsequent to the
>case so no doubt we will both await further litigation with glee!!
The point is that it *is* reasonable for a party to a sale to rely on a
survey made with that sale in mind.
>As a general comment I think would be purchasers should not
>rely on the case to which you accurately refer.
I think that purchasers should be entitled to rely on a survey done with the
sale in mind, and I would argue that that is the effect of the modern law on
'nearness to contract'
anyone want to argue the other way?
Doug Ramage
John Boyle wrote in message ...
I agree. It can turn out to be a very expensive gamble.
Doug Ramage
John Boyle
Hogarth <jr...@cam.ac.uk> writes
>The point is that it *is* reasonable for a party to a sale to rely on a
>survey made with that sale in mind.
>
>>As a general comment I think would be purchasers should not
>>rely on the case to which you accurately refer.
>
>
>I think that purchasers should be entitled to rely on a survey done with the
>sale in mind, and I would argue that that is the effect of the modern law
>on
>'nearness to contract'
>
>anyone want to argue the other way?
Lets think about what the current b/soc 'survey' is. All it is, is a
request from a lender to a surveyor to report on the suitability of a
property as security for a loan. There are other questions of fact
(i.e. no of bedrooms etc.,) and the valuer is asked to estimate a
value. he is also asked to comment on any matters that may effect
the property as security. the valuer is usually told the loan amount
which the property is to secure, so the surveyor may ask for more
'special reports' for a 95% advance than for, say, a 20% advance.
I don't think this valuation IS made with the sale in mind, it is
made with 'suitability as security' in mind.
Take the case of a re-mortgage. Does the house-owner have a
right of action against a lender's surveyor who didn't spot
something they wanted to know about but which was immaterial
to the re-mortgage? i.e. low loan to value but signs that the
windows will need replacing in a few years time.
--
John Boyle
John Boyle
<doug-...@lineone.net> writes
>>>I assumed he was referring to "open" bridging loans?
>>
>>Well I have suggested that was what he was referring to in the
>>past and he denied it, but can 'open bridging' really be a good
>>thing? lenders' and borrowers' experiences of such things are
>>horrible!!
>>
>>
>>--
>>John Boyle
>
>I agree. It can turn out to be a very expensive gamble.
So why won't D Swarbrick expand on his point?
--
John Boyle
David Swarbrick
<jr...@cam.ac.uk> writes
>>>No, the House of Lords already held that he was liable to the buyer under
>>>the _Hedley Byrne_ principle in the case of _Smith v Eric S Bush_
>>
>>Not the full story I think. This case didn't develop a principle that
>>the surveyor was liable for all parts of the lenders survey to the
>>purchaser did it? The point here is about those items in the
>>subject property that might be a bit wrong. The case you mention
>>was a serious bit of biz wasn't it?
>
>
>It was, but the principle established was that a surveyor is liable in
>negligence to those that he knows are reasonably relying on his report,
>regardless of the fact that there is no contract with him.
>
>The precise extent of the case has been much doubted, but it remains House
>of Lords authority for the Surveyor - Purchaser relationship to create a
>duty of care.
Reports say that they remain copyright of the surveyor (no licence to
copy). Could a surveyor become liable for someone who relies upon an
infringing copy?
If a surveyor says he acts upon the particular instructions of the
client instructing him, and makes no promise to satisfy questions others
(buyers?) might ask
If the surveyor is an employee of the lender?
Surveys can be difficult to sue upon in the best of circumstances - they
contain three pages of comment and four pages of disclaimers.
This is an irrelevance to speed of conveyancing.
Joel Hogarth
questions could have been a tripos question, as they are all answered in
Smith v Bush itself...
David Swarbrick wrote in message ...
>>The precise extent of the case has been much doubted, but it remains House
>>of Lords authority for the Surveyor - Purchaser relationship to create a
>>duty of care.
>
>Reports say that they remain copyright of the surveyor (no licence to
>copy). Could a surveyor become liable for someone who relies upon an
>infringing copy?
It was the building society that passed the copy to the plaintiff in Smith v
Bush. This would almost certainly have been an infringing copy.
>If a surveyor says he acts upon the particular instructions of the
>client instructing him, and makes no promise to satisfy questions others
>(buyers?) might ask
The surveyor in Eric S Bush was instructed only to value the property, but
representations that certain structures were sound and would not affect the
value of the property were capable of being relied on. He is of course not
liable for anything he does not do and was not asked to do, but anything he
does say may be relied on by the purchaser.
>If the surveyor is an employee of the lender?
As was the case in the second case dealt with alongside Smith v Bush... in
which the lender was found to be liable for his employee's representations.
>Surveys can be difficult to sue upon in the best of circumstances - they
>contain three pages of comment and four pages of disclaimers.
the disclaimers were given *very* short shrift by the House of Lords in
Smith v Bush. It is perhaps more well known for the application of UCTA 1977
than it is for negligent misstatement. The debate continues as to how far it
applies outside the surveyor - purchaser relationship.
>This is an irrelevance to speed of conveyancing.
but an interesting legal point.
Joel Hogarth
>
>Lets think about what the current b/soc 'survey' is. All it is, is a
>request from a lender to a surveyor to report on the suitability of a
>property as security for a loan. There are other questions of fact
>(i.e. no of bedrooms etc.,) and the valuer is asked to estimate a
>value. he is also asked to comment on any matters that may effect
>the property as security.
Anything he says, knowing the purchaser may rely on it, he is liable for,
according to Smith v Bush. He would not be liable for anything he was not
asked to do and did not do.
> the valuer is usually told the loan amount
>which the property is to secure, so the surveyor may ask for more
>'special reports' for a 95% advance than for, say, a 20% advance.
this is not really relevant to whether he knows that the purchaser may rely
on his report. The HL stated very clearly in Eric S Bush that the building
soc was perfectly happy with its security on the loan, it was the purchaser
that was not happy. The purchaser, according to the HL is entitled to rely
on the report of a professional paid to do a particular job.
>I don't think this valuation IS made with the sale in mind, it is
>made with 'suitability as security' in mind.
it is made knowing that the purchaser may rely on it; this is even the case
despite categorical assertions that the purchaser was not to rely on it AT
all.
>Take the case of a re-mortgage. Does the house-owner have a
>right of action against a lender's surveyor who didn't spot
>something they wanted to know about but which was immaterial
>to the re-mortgage? i.e. low loan to value but signs that the
>windows will need replacing in a few years time.
no. the surveyor only has to do what he is paid to do. In the case of a
re-mortgage, it is also arguable that there is no damage, as the house-owner
would have to pay for the repairs anyway.
John Boyle
<jr...@cam.ac.uk> writes
>it is made knowing that the purchaser may rely on it; this is even the case
>despite categorical assertions that the purchaser was not to rely on it AT
>all.
I think this is the crucial phrase.
There are two things that pass through my mind,
1) It is for this reason that surveyors now won't express an opinion
on anything that really matters to the purchaser, they just call for
so called 'specialist' reports. They do express an opinion as to
value, however, and it surprises me that on those occasions
when they valuer 'downvalues' and the lender, as a result, won't
lend enough to the mortgagor, the mortgagor then says to the
broker (i.e. ME), "Damn we'll have to find a valuer that gives it a
higher value then"!!
2) lenders won't give the purchaser a copy of the report. This is
already happening with some mortgagees, all that is
communicated to the proposed mortgagor is a request for
specialist reports.
The answer, I think, is for the basic valuation to be abolished. In
future only Housebuyer's reports can be used. These develop an
undisputed contractual relationship between applicant and
surveyor.
--
John Boyle
Joel Hogarth
>1) It is for this reason that surveyors now won't express an opinion
>on anything that really matters to the purchaser, they just call for
>so called 'specialist' reports.
agreed.
>They do express an opinion as to
>value, however, and it surprises me that on those occasions
>when they valuer 'downvalues' and the lender, as a result, won't
>lend enough to the mortgagor, the mortgagor then says to the
>broker (i.e. ME), "Damn we'll have to find a valuer that gives it a
>higher value then"!!
There's a good reason for 'downvaluing'. It is a lot easier to cause
somebody damage by overvaluing a property than by undervaluing it... and the
valuer is more likely to be sued once somebody has actually lost money, than
for not allowing a sale to go through (which in most cases won't cause much,
if any actionable damage)
>2) lenders won't give the purchaser a copy of the report. This is
>already happening with some mortgagees, all that is
>communicated to the proposed mortgagor is a request for
>specialist reports.
yes. and if I was advising valuers, I'd make it a condition of the contract
that the lender does not show the report to the buyer, actionable in
confidence. However, the buyer is still likely to be told whether the house
is considered worth what he is paying for it, and he can probably still
reasonably rely on this factor.
>The answer, I think, is for the basic valuation to be abolished. In
>future only Housebuyer's reports can be used. These develop an
>undisputed contractual relationship between applicant and
>surveyor.
but also cause lots of expense for buyers when the people selling their
house pull out. A friend of mine looking for a house has had this happen
three times already, and spent a fortune on surveys.
A better scheme would be a statutory scheme providing that the seller must
have the survey done, and making the surveyor liable to the eventual
purchaser and the building society in the event of negligence.
Ian Dickson
<jo...@chartw.demon.co.uk> writes
>Seriously,
>
>1) What you suggest means that if the vendor's survey is flawed
>then the vendor has to pay up, not the surveyor.
reimburse vendor if his survey is found innaccurate, whatever.
>
>2) The problems that are likely to be of sufficient seriousness to
>cause the purchaser to withdraw are likely to be those problems
>which are only defined by way of a 'specialist' report, i.e. a damp
>proof company or an aboriculturist, or a nice fellow who 'knows
>about roofs'. Whilst all the DPC companies I know are of the
>highest probity, very cheap, and are extremely honest and efficient
>in every way that either I or their lawyers can think of, they do not
>have the same level of 'professional' conduct, recourse and PI
>insurance as an ARICS or FRICS. So the points of contention will
>be those justified by non professionally qualified people and a
>matter of personal judgement, not matters of fact.
but's is fine. My proposal is to remove moral hazard from vendors survey
in that a survey that omits mention of DPC is one thing, but one that
says see DPC specialist is another. (Timewasters are unlikely to
commission such work).
One can imagine a time in the future when the vendor dots all I's and
crosses all t's by having such additional work commissioned. Naturally
such DPC specialists will need to be liable for their statements.
Thinking out loud one can see that in time surveyors will do the full
works, (using their trusted men who know about roofs, and taking legal
responsibility for them). In the event of a dispute between vendors
survey and buyers survey it all goes to an ombudsman who decides which
survey is correct and waives the fees of the other one. (Let the
industry set up standards and pro formas to minimise this).
Personally I think that any system that paints the most conservative of
views of the house is probably a good one. And the implied higher costs
of transaction may be a good thing in macro economic terms.
>
>3) I have plenty of knowledge of buyer's who withdraw under the
>present regime on account of 'what the surveyor said' when in fact
>their withdrawal is just because they are a 'time waster'.
>
They would need to substantiate - eg a letter from the surveyor stating
that XYZ needs to be done at a likely cost of ŁC - or pay their own
costs.
One note - how long before vendors have to issue copies of flood
maps....
Charles Bryant
Joel Hogarth <jr...@cam.ac.uk> wrote:
>A better scheme would be a statutory scheme providing that the seller must
Why? Why not let buyers choose whether they want to buy without a
survey, use the sellers survey, or get their own done? The seller
could use their survey as an advantage, and estate agents could have
them done just as they commission advertisments to attract buyers.
Don Hamilton
structural report, local search, valuation and draft contract. Discusions
re the proposal suggest that the cost of preparing the pack is to be
included within the purchase price.
Is it suggested that all involved in the preparation of the 'sellers pack'
are, with the exception of the draft contract, to act in an independent
capacity with an equal duty of care to both parties and possibly to any
prospective mortgagee.
As to valuation, my own experience in the course of buying houses is that
the b.s valuation has always been marginally less than the purchase price.
Suggesting that b.s. valuers are prepared to accept the sellers intitial
valuation as a base from which to start.
Within the last two months we have had our present house valued by two
different estate agents. In the case of the first we rather foolishly, when
asked, told him a price we had in mind, hey presto it matched his valuation
to the penny. In the case of the second we refused to disclose our own
ideas of price and his valuation was 30% above that of the first. We have
since looked around at comparable properties and are satisfied that the
second valuation is reasonably near the mark.
Going by past experience I am fairly certain that had we sold at the first
agents value then any subsequent b.s. valuation would have been marginally
less than the purchase price and if we sell at a price based upon the
second valuation it will be marginally less than that. As both agents hold
themselves as experienced and competent valuers I wonder how this equates
with the duty of a mortgagee to take reasonable care in the selection of a
competent valuer.
But then perhaps my own experience is not a reliable guide.
Joel Hogarth
>>A better scheme would be a statutory scheme providing that the seller must
>>have the survey done,...
>
>Why? Why not let buyers choose whether they want to buy without a
>survey, use the sellers survey, or get their own done? The seller
>could use their survey as an advantage, and estate agents could have
>them done just as they commission advertisments to attract buyers.
because many people may want to buy the house. It is incredibly inefficient
to have so many surveys. Because of the over-used practice of gazumping.
Because the seller can easily pass the cost on to the eventual buyer in the
price. There is nothing to stop the buyer having an additional survey if he
really wants it, but somehow I don't think this would be very popular.
David Swarbrick
>>>anyone want to argue the other way?
>>
>>Lets think about what the current b/soc 'survey' is. All it is, is a
>>request from a lender to a surveyor to report on the suitability of a
>>property as security for a loan. There are other questions of fact
>>(i.e. no of bedrooms etc.,) and the valuer is asked to estimate a
>>value. he is also asked to comment on any matters that may effect
>>the property as security.
>
Joel, you beg the question about whether the purchaser is to rely upon
it. He says that this is for one client, a building society, who is
asking one set of questions. That client may not reveal the results to
someone else, the purchaser. If being asked by a purchaser, he says he
would ask and answer different questions.
Yes, many surveyors do get caught, but for example now some lenders have
their own employee surveyors, who have been found not to be responsible
to a buyer.
>>I don't think this valuation IS made with the sale in mind, it is
>>made with 'suitability as security' in mind.
>
>
>it is made knowing that the purchaser may rely on it; this is even the case
>despite categorical assertions that the purchaser was not to rely on it AT
>all.
If he is told that the purchaser will not be shown it, why should he?
The real question is what will be the cost of surveys under the new
scheme. I can only imagine that the surveyor's insurers will make them
very much more expensive than at present.
Since, despite this argument, the only one who really bothers about a
survey usually is the prospective lender, how will they be obliged to
accept such surveys? If not, why should a buyer be so obliged. If not
the buyer either, then why should a buyer pay for it - he probably would
not have got one anyway?
The report looks entirely like someone who has been given a couple of
hundred thousand to produce a report, and found that they had to say
something in any event.
David Swarbrick
<jr...@cam.ac.uk> writes
>A better scheme would be a statutory scheme providing that the seller must
>have the survey done, and making the surveyor liable to the eventual
>purchaser and the building society in the event of negligence.
But I just acted for a client who bought a house for cash, and refused
to have a survey. Indeed this is not uncommon. Many house sellers would
be quite unable to afford the cost of a survey. Very very few buyers
have even Homebuyers surveys (whatever they are now called) whatever you
tell them.
It would make it even more difficult for those who are trying to climb
out of a negative equity position to sell their houses - and another
leap in mortgage re-possessions. Frequently in such situations you enter
into delicate negotiations with a lender about deduction of legal fees
and estate agency fees for this purpose.
It would be like making it a criminal offence not to brush your teeth.
David Swarbrick
>an ARICS....... :-)
exactly
>2) The problems that are likely to be of sufficient seriousness to
>cause the purchaser to withdraw are likely to be those problems
>which are only defined by way of a 'specialist' report, i.e. a damp
>proof company or an aboriculturist, or a nice fellow who 'knows
>about roofs'. Whilst all the DPC companies I know are of the
>highest probity, very cheap, and are extremely honest and efficient
>in every way that either I or their lawyers can think of, they do not
>have the same level of 'professional' conduct, recourse and PI
>insurance as an ARICS or FRICS.
They get away with it because (in part - and tempting the 'wrath of
Joel') they do not charge
David Swarbrick
<jo...@chartw.demon.co.uk> writes
>In article <xgGNQ2Av...@swarb.demon.co.uk>, David
>Swarbrick <da...@swarb.demon.co.uk> writes
>>You will also have to change the attitude of English banks toward
>>bridging loans.
>>
>
>Come on David, PLEASE expand!!
Clients often ask 'Can I buy this house on Manoday, and complete my sale
on Friday' (a closed bridge) No problem, I say, talk to your bank
manager about how much it will cost. They come back, and say they will
move out and in on the same day.
A client comes in and say 'I want to buy a house and sell my other
later.' This does happen. I have no wish to discuss all the details, but
unless they have sufficient equity to have only one mortgage between the
two houses, they may need an open bridge. I laugh cruelly before sending
them off to the bank. One or two get such loans (in the sure and certain
hope of selling their house within a few months), then sit back and take
to living on porridge. I know one couple who did this and found they
could not sell a perfectly sensible house in a popular area for over
three years.
It is correct that banks are better than they were, but still it is
damnably expensive.
The other alternative is to sell, move into rented and then buy with
cash in your pocket. If so we need far more rented accomodation than is
available at the moment.
Our present system, with all its admitted headaches, achieves a
minimisation of risk, and some convenience. It costs rather less in
legal fees to move house here than elsewhere. It is however clear that
there are many models for house transfer, and that ours is not perfect.
I just doubt it is more imperfect than elsewhere.
By all means change the system, but one man's pink ribbon is another's
tourniquet.
David Swarbrick
<Don.Ha...@btinternet.com> writes
>As I understand the proposals the 'seller's pack' is to comprise a
>structural report,
A structural report? I will be training to be a surveyor. If we are to
get structural surveys every time a house is sold, you will be
multiplying the number of structural reports by a factor of several
hundred, each of which will be two or three times the price of present
'valuation reports', and will be more expensive again because of the
open ended liability of the surveyor.
>
>As to valuation, my own experience in the course of buying houses is that
>the b.s valuation has always been marginally less than the purchase price.
Correct experience
>Suggesting that b.s. valuers are prepared to accept the sellers intitial
>valuation as a base from which to start.
Wrong interpretation. the correct interpretation is that such valuations
are dishonest. They are not founded upon the property, but on whatever
value will leave them least open to an action for negligence.
>
>Within the last two months we have had our present house valued by two
>different estate agents. In the case of the first we rather foolishly, when
>asked, told him a price we had in mind, hey presto it matched his valuation
>to the penny. In the case of the second we refused to disclose our own
>ideas of price and his valuation was 30% above that of the first. We have
>since looked around at comparable properties and are satisfied that the
>second valuation is reasonably near the mark.
Which confirms what I suggested.
>
>Going by past experience I am fairly certain that had we sold at the first
>agents value then any subsequent b.s. valuation would have been marginally
>less than the purchase price and if we sell at a price based upon the
>second valuation it will be marginally less than that. As both agents hold
>themselves as experienced and competent valuers I wonder how this equates
>with the duty of a mortgagee to take reasonable care in the selection of a
>competent valuer.
Because valuation (even when honest) is a black art. It is not exact,
and plus or minus five or ten per cent on a bog standard house and more
on an 'individual' is proper.
John Boyle
Swarbrick <da...@swarb.demon.co.uk> writes
> they do not
>>have the same level of 'professional' conduct, recourse and PI
>>insurance as an ARICS or FRICS.
>They get away with it because (in part - and tempting the 'wrath of
>Joel') they do not charge
So if a surveyor charges a fee for a report which does not express
an opinion on anything but asks for specialist reports from
electricians, wood preservers, DPC installer, arboriculturalists,
etc., then where does this get us?
--
John Boyle
John Boyle
Swarbrick <da...@swarb.demon.co.uk> writes
>Clients often ask 'Can I buy this house on Manoday, and complete my
>sale
>on Friday' (a closed bridge) No problem, I say, talk to your bank
>manager about how much it will cost. They come back, and say they will
>move out and in on the same day.
The reason being?
>
>A client comes in and say 'I want to buy a house and sell my other
>later.' This does happen. I have no wish to discuss all the details, but
>unless they have sufficient equity to have only one mortgage between the
>two houses, they may need an open bridge.
Are you recommending an 'open bridge'?
>I laugh cruelly before
>sending
>them off to the bank. One or two get such loans (in the sure and certain
>hope of selling their house within a few months), then sit back and take
>to living on porridge. I know one couple who did this and found they
>could not sell a perfectly sensible house in a popular area for over
>three years.
Thanks for making my point for me. Are you telling me that the
bank should let them get into this situation. I can advise that
banks have lost more dosh on open ended bridging that the
clients solicitors couldn't 'see any problem with' than Mr Scarman
would get in fees from a lifetimes work.
>
>It is correct that banks are better than they were, but still it is
>damnably expensive.
eh?. I refer the gentleman to my previous post in which a similar
minded solicitor wrote in such terms and recommended his client
went elsewhere for his funding. A quick telephone call from my
branch was all that was needed to explain to said solicitor the
difference between 'cent' and 'mille' :-) ( a side joke!!)
In the old days open ended bridging was used with a roll up of
interest. This was disastrous, so therefore two alternatives arose,
'closed bridging' and 'open but with interest covered' bridging.
Many people would say that both are risk free to the lender but it is
conveniently forgotten, but not by yourself I am please to say, that
everybody thinks they will sell their house in a week or two when
in fact it will take many years or the house is sold for 70% of the
original price.
The 'charges' levied by the bank are 'fees' and 'interest'. Because
of the nature of the transaction I am sure you will agree that in
view of the undoubted high degree of risk then a commercial rate
of interest needs be charged, say 2 or 3 over. Are you saying this
is unreasonable?
Or is it the fees that are charged? Are you saying these are
unreasonable?
To lend in open ended bridging a bank needs full security and
confirmation that the end funding from the eventual mortgagee is
confirmed. therefore security costs are required which are the
same as in any other shorter term secured lending arrangement.
Just what are you suggesting should be the case and WHAT
exactly is your gripe?
>
>The other alternative is to sell, move into rented and then buy with
>cash in your pocket. If so we need far more rented accomodation than is
>available at the moment.
No. Why not rent out the existing property and buy a new one. A
decent IFA will have access to plenty of 'let to buy' schemes in
which the existing property 'stands alone'
>
>Our present system, with all its admitted headaches, achieves a
>minimisation of risk, and some convenience. It costs rather less in
>legal fees to move house here than elsewhere. It is however clear that
>there are many models for house transfer, and that ours is not perfect.
>I just doubt it is more imperfect than elsewhere.
>
>By all means change the system, but one man's pink ribbon is another's
>tourniquet.
>
You seem to be suggesting that the banks are at fault for not
offering a tourniquet to everybody. !!
Not a good enough case yet Mr S.
--
John Boyle
Joel Hogarth
>>cause the purchaser to withdraw are likely to be those problems
>>which are only defined by way of a 'specialist' report, i.e. a damp
>>proof company or an aboriculturist, or a nice fellow who 'knows
>>about roofs'. Whilst all the DPC companies I know are of the
>>highest probity, very cheap, and are extremely honest and efficient
>>have the same level of 'professional' conduct, recourse and PI
>>insurance as an ARICS or FRICS.
>They get away with it because (in part - and tempting the 'wrath of
>Joel') they do not charge
No wrath on this one, David. Perhaps a more plausible explanation is that
the judiciary are reluctant to call a builder specialising in DPCs a
'professional adviser'.
Joel Hogarth
>>>request from a lender to a surveyor to report on the suitability of a
>>>property as security for a loan. There are other questions of fact
>>>(i.e. no of bedrooms etc.,) and the valuer is asked to estimate a
>>>value. he is also asked to comment on any matters that may effect
>>>the property as security.
>>
>>Anything he says, knowing the purchaser may rely on it,
>Joel, you beg the question about whether the purchaser is to rely upon
>it. He says that this is for one client, a building society, who is
>asking one set of questions. That client may not reveal the results to
>someone else, the purchaser. If being asked by a purchaser, he says he
>would ask and answer different questions.
That was *precisely* the argument that failed in _Smith v Bush_ The
disclaimers and whatever tried to do exactly that. However, the surveyor
knows damn well that the buyer is going to be informed of at least the sum
that the property is valued at, and will be liable if he is negligent.
Why should he be able to contract out of harm caused by his doing his job
negligently?
>Yes, many surveyors do get caught, but for example now some lenders have
>their own employee surveyors, who have been found not to be responsible
>to a buyer.
Own employee surveyors were caught in _Harris v Wyse DC_ the conjoined
appeal with _Smith v Bush_
>>it is made knowing that the purchaser may rely on it; this is even the
case
>>despite categorical assertions that the purchaser was not to rely on it AT
>>all.
>
>If he is told that the purchaser will not be shown it, why should he?
He knows the purchaser will be informed of the valuation.
Otherwise ask the House of Lords in Smith v Bush. This made no difference.
David Swarbrick
<jr...@cam.ac.uk> writes
>>
>>Why? Why not let buyers choose whether they want to buy without a
>>survey, use the sellers survey, or get their own done? The seller
>>could use their survey as an advantage, and estate agents could have
>>them done just as they commission advertisments to attract buyers.
>
>
>because many people may want to buy the house. It is incredibly inefficient
>to have so many surveys. Because of the over-used practice of gazumping.
Gazumping is an entire irrelevance outside nice areas of London.
Far more frequent, and dishonest, is 'gazundering' where a buyer makes
an offer then reduces it at the last moment. The present proposal doe
snothing to address that .
>Because the seller can easily pass the cost on to the eventual buyer in the
>price.
No he can't. Vendors do not control prices. I sell a house for fifteen
thousand pounds in Halifax. A vendor spends 700 on a structural survey.
The only buyers available need 95 per cent mortgages. Is a lender going
to lend the buyer 95% of the vendors survey fee. No.
Charles Bryant
Joel Hogarth <jr...@cam.ac.uk> wrote:
>Charles Bryant wrote in message <1998-11-0...@chch.demon.co.uk>...
>>>A better scheme would be a statutory scheme providing that the seller must
>>>have the survey done,...
>>
>>Why? Why not let buyers choose whether they want to buy without a
>>survey, use the sellers survey, or get their own done? The seller
>>could use their survey as an advantage, and estate agents could have
>>them done just as they commission advertisments to attract buyers.
>
>because many people may want to buy the house. It is incredibly inefficient
>to have so many surveys.
How do you know that any surveys are done? What if I want to buy a
house from a friend and neither of us wants a survey at all? Or what
if I want a more detailed report than the government standard survey?
>Because of the over-used practice of gazumping.
I was recently advised that the practice of gazumping was too rare to
be worth taking any measures to avoid it.
>Because the seller can easily pass the cost on to the eventual buyer in the
>price.
If the buyer ends up paying for it, shouldn't he be the one who
decides whether it is necessary or not, what level of detail is
required, and which firm should do it? How can he do that if the survey
is arranged by the seller?
Joel Hogarth
>Gazumping is an entire irrelevance outside nice areas of London.
>Far more frequent, and dishonest, is 'gazundering' where a buyer makes
>an offer then reduces it at the last moment. The present proposal doe
>snothing to address that .
If so, a friend of mine must have been incredibly unlucky as she has been
gazumped 4-5 times now; she is a first time buyer and looking at inexpensive
housing in the Midlands.
A nice collateral contract has the potential to save from gazumping and
gazundering, but it is far too expensive a solution for the non-legally
trained.
Joel Hogarth
>>Because of the over-used practice of gazumping.
>
>I was recently advised that the practice of gazumping was too rare to
>be worth taking any measures to avoid it.
if we disagree on the problems, then it is not surprising we disagree on the
solutions ;-)
From the very little I have seen, it is far too common a practice for people
to put their house on the market, wait for all the surveys to be done and
the buyer gone to moderate expense, (£200-300) before changing their mind,
leaving the buyer with all that money wasted.
In German or French law the buyer would be able to reclaim the £200-300 in
this situation. I think that English law should provide for the same.
Nick Leaton
This should be the case. You won't get rid of gazumping. However, you
can set up a situation where the party that accepts the gazumping pays
the cost of the person who fails to buy. If the difference is large,
then the seller wins but it is still a discouragement to try it on.
Now, I don't know how gazundering would work.
Also, what about mortgage races?
--
Nick
Paul Burridge
>because many people may want to buy the house. It is incredibly inefficient
>to have so many surveys. Because of the over-used practice of gazumping.
>Because the seller can easily pass the cost on to the eventual buyer in the
>price. There is nothing to stop the buyer having an additional survey if he
>really wants it, but somehow I don't think this would be very popular.
I suspect this idea, in practice, would open the door to fraud.
Some sellers with sub-standard property might be tempted to
fabricate a favourable survey to show prospective buyers, using
their computer and DTP s/ware, rather than commissioning one that
would expose all the faults.
--
Noverint universi presentes et futuri
Ian Diddams
>
> I suspect this idea, in practice, would open the door to fraud.
> Some sellers with sub-standard property might be tempted to
> fabricate a favourable survey to show prospective buyers, using
> their computer and DTP s/ware, rather than commissioning one that
> would expose all the faults.
Maybe I've missed something in the thread, but surely all that would be
required is for the survey rto prominently display the surveyors name,
address etc.
Then, the "genuine" status of a survey could be easily checked (ie you
could walk into their offices and ask if it was indeed them that did the
survey), and if the survey was WAY off and effectively fraudulent, there
may be grounds for litigation.
I can already think of hypothetical situations where the fraud could
still exist (the surveyor on a house in Cornwall is listed as being from
Inverness and practically could be only be checked with a phone call...
which could be the vendor's brother etc., the "surveyor" is a real
entity, but closes down every few months and reappears as a different
company/trading name etc while selling surveys that say anything the
vendor wants, aking to dodgy MOT certificates) but it would be an easy
step in the right direction surely?
--
Didds.
Need a UK mobile phone deal? Full packages and SIM-only deals available
at low cost - mailto:di...@usa.net
Don Hamilton
<727op8$6ou$1...@pegasus.csx.cam.ac.uk>...
> That was *precisely* the argument that failed in _Smith v Bush_ The
> disclaimers and whatever tried to do exactly that. However, the surveyor
> knows damn well that the buyer is going to be informed of at least the
sum
> that the property is valued at, and will be liable if he is negligent.
>
Please excuse my butting in but I have been following your discussion with
great interest and have been quietly learning in the process.
However, as I understand Smith v Bush and Harris v Wyre Forest D.C. by
obtaining and disclosing a valuation a mortgagee does not assume
reponsibility to the purchaser for the valuation and I have seen nothing to
suggest that the valuer does.. The surveyor owes a duty of care to the
mortgagor to exercise reasonable skill and care in carrying out the
valuation.
Which I read as meaning that a duty of care only exists in regard to the
survey being part of the valuation.
While I can understand how the provision of a local search and structural
survey report could expedite the whole process I am at loss as to why the
proposed 'sellers pack' is to include a valuation. Surely, the requirement
for a valuation only comes about for purpose of a mortgage and as such is
really a matter between the buyer and a prospective mortgagee. Buyer and
seller having already agreed a price (value?) what remains is to see what
value the mortgagee places on the property as security.
Further, there are many in their later years who actually trade downward
and so do not need a mortgage valuation. Nor, I suppose, do lottery
winners..
Or is it that I'm missing something else which necessitates a valuation?.
If there is such a reason then the term 'valuation' would need to be
defined. Does it mean the market value of a house or a mortgagees
assessment of the value of the security being offered?.
David Swarbrick
<jr...@cam.ac.uk> writes
>
>
>No wrath on this one, David. Perhaps a more plausible explanation is that
>the judiciary are reluctant to call a builder specialising in DPCs a
>'professional adviser'.
>
needed doing, one that all the ground needed doing, and one thought
about it.
David Swarbrick
<jo...@chartw.demon.co.uk> writes
>In article <ouWrTeAt...@swarb.demon.co.uk>, David
>Swarbrick <da...@swarb.demon.co.uk> writes
>>Clients often ask 'Can I buy this house on Manoday, and complete my
>>sale
>>on Friday' (a closed bridge) No problem, I say, talk to your bank
>>manager about how much it will cost. They come back, and say they will
>>move out and in on the same day.
>
>The reason being?
>
>>
>>A client comes in and say 'I want to buy a house and sell my other
>>later.' This does happen. I have no wish to discuss all the details, but
>>unless they have sufficient equity to have only one mortgage between the
>>two houses, they may need an open bridge.
>
>Are you recommending an 'open bridge'?
necessary. It often proves disastrous.
>
>
>>I laugh cruelly before
>>sending
>>them off to the bank. One or two get such loans (in the sure and certain
>>hope of selling their house within a few months), then sit back and take
>>to living on porridge. I know one couple who did this and found they
>>could not sell a perfectly sensible house in a popular area for over
>>three years.
>
>Thanks for making my point for me. Are you telling me that the
>bank should let them get into this situation.
purchases. Few other jurisdictions achieve this. Because we do this the
alternates are ill developed - they are not usually needed. Ifwe move
away from this - which I do not recommend - then accept that there are a
lot of other sublte changes which will need to follow.
> I can advise that
>banks have lost more dosh on open ended bridging that the
>clients solicitors couldn't 'see any problem with' than Mr Scarman
>would get in fees from a lifetimes work.
I agree
>
>>damnably expensive.
>
>eh?
As you say, an open bridge (buying without a contract for the sale) is
risky. Accordingly banks, quite properly charge more. It is accordingly
damnably expensive.
>The 'charges' levied by the bank are 'fees' and 'interest'. Because
>of the nature of the transaction I am sure you will agree that in
>view of the undoubted high degree of risk then a commercial rate
>of interest needs be charged, say 2 or 3 over. Are you saying this
>is unreasonable?
No, just damnably expensive.
>Just what are you suggesting should be the case and WHAT
>exactly is your gripe?
None particularly except against those who think that tinkering with one
end of such a system will not affect other parts of it.
>>
>>The other alternative is to sell, move into rented and then buy with
>>cash in your pocket. If so we need far more rented accomodation than is
>>available at the moment.
>
>No. Why not rent out the existing property and buy a new one. A
>decent IFA will have access to plenty of 'let to buy' schemes in
>which the existing property 'stands alone'
Selling houses which are rented out is not easy. It is often not
profitable. What the present proposals make no allowance for is that as
well as houses selling for 150k in London there are terraces for sale at
20k in. What makes sense for one can make no sense at theother end of th
emarket.
>>
>>Our present system, with all its admitted headaches, achieves a
>>minimisation of risk, and some convenience. It costs rather less in
>>legal fees to move house here than elsewhere. It is however clear that
>>there are many models for house transfer, and that ours is not perfect.
>>I just doubt it is more imperfect than elsewhere.
>>
>>By all means change the system, but one man's pink ribbon is another's
>>tourniquet.
>>
>
>You seem to be suggesting that the banks are at fault for not
>offering a tourniquet to everybody. !!
No, I do not lay any blame at the feet of the banks, and if I may say
so, your reply reveals a mild paranoia - I have made no criticism of the
banking system. If a client is daft enough to take a huge gamble, a bank
is free to charge accordingly.
Andrew Nichols
<da...@swarb.demon.co.uk> writes
>Gazumping is an entire irrelevance outside nice areas of London.
>Far more frequent, and dishonest, is 'gazundering' where a buyer makes
>an offer then reduces it at the last moment.
chattering classes and far too many of our esteemed Law Society Council
members live. So we get yet another proposal which bears little relation
to the real world.
Gazumping (good old Yiddish word, apparently) and gazundering are
manifestations of overheated or slumped property markets in particular
areas. Tinkering with the system will do nothing to prevent these market
forces - just add to everyone's costs, not that that ever stops
regulators from giving us What's Good For Us.
--
Andrew Nichols
NB spamtrap
David Swarbrick
<jo...@chartw.demon.co.uk> writes
>In article <Y+bnHZAY...@swarb.demon.co.uk>, David
>Swarbrick <da...@swarb.demon.co.uk> writes
>> they do not
>>>have the same level of 'professional' conduct, recourse and PI
>>>insurance as an ARICS or FRICS.
>>They get away with it because (in part - and tempting the 'wrath of
>>Joel') they do not charge
>
>
>an opinion on anything but asks for specialist reports from
>electricians, wood preservers, DPC installer, arboriculturalists,
>etc., then where does this get us?
It satisfies the government that they have instituted a fundamental
reform which has improved conveyancing at a stroke.
Jon Rouse
>
> Very very few buyers
> have even Homebuyers surveys (whatever they are now called) whatever you
> tell them.
Could that because they are full of so many caveats that they are not
worth the paper they are written on.
Even when you have a report which is so full of holes that another
surveyor is willing to stand up and criticise it, you still have the
problem of making it stick in court, and as you rarely get back what it
costs its not really worth it - or so my legal adviser tells me <g>.
--
The views expressed are my own and may not represent those of my
employer
Joel Hogarth
>> That was *precisely* the argument that failed in _Smith v Bush_ The
>> disclaimers and whatever tried to do exactly that. However, the surveyor
>> knows damn well that the buyer is going to be informed of at least the
>sum
>> that the property is valued at, and will be liable if he is negligent.
>>
>Please excuse my butting in but I have been following your discussion with
>great interest and have been quietly learning in the process.
Please feel free to butt in.
>However, as I understand Smith v Bush and Harris v Wyre Forest D.C. by
>obtaining and disclosing a valuation a mortgagee does not assume
>reponsibility to the purchaser for the valuation and I have seen nothing to
>suggest that the valuer does.. The surveyor owes a duty of care to the
>mortgagor to exercise reasonable skill and care in carrying out the
>valuation.
1) the mortgagor is the purchaser and the valuer is the surveyor. You may
already recognise that, but it is confusing to use both words.
2) the surveyor has a contractual duty with the lender to value the
property, he is liable in contract for negligence in this duty to value.
3) as the surveyor knows that the purchaser may rely on his report there is
a tortious duty of care for any statements in the report that cause the
purchaser to suffer damage when he relies on it. The duty is in negligent
misstatement and may be more extensive than the contractual duty in the
sense that he may be liable for negligent statements he was not specifically
contracted to make.
4) We could argue that the surveyor knows that the purchaser will not see
the report, but even so he at least knows the purchaser will be informed of
the valuation. The surveyor is liable in tort for any loss caused to the
purchaser by relying on the valuation
5) If, as in _Harris v Wyre DC_, the surveyor is employed by the mortgagee,
then the mortgagee will be vicariously liable for the surveyor's tort.
>Which I read as meaning that a duty of care only exists in regard to the
>survey being part of the valuation.
I think we mean the same thing on this.
>Or is it that I'm missing something else which necessitates a valuation?.
>
>If there is such a reason then the term 'valuation' would need to be
>defined. Does it mean the market value of a house or a mortgagees
>assessment of the value of the security being offered?.
It is interesting that you draw this distinction. If there is such a
distinction then the House of Lords would be wrong in _Smith v Bush_. But I
think we have to say that legally they amount to the same thing, even if a
mortgagee would value the house as security rather less than a person might
pay for it. That said, why should the surveyor make that assessment for the
mortgagee? Surely the surveyor's duty is to determine the value (market
price) of the house, and it is for the mortgagee to determine how much he is
prepared to treat that property as security.
It may interest you to know that there is authority for saying that a
surveyor is not negligent unless he is 15% or more out (an
uncharacteristically specific rule for English law), so only fairly serious
omissions get caught.
John Boyle
Swarbrick <da...@swarb.demon.co.uk> writes
>>So if a surveyor charges a fee for a report which does not express
>>an opinion on anything but asks for specialist reports from
>>electricians, wood preservers, DPC installer, arboriculturalists,
>>etc., then where does this get us?
>
>It satisfies the government that they have instituted a fundamental
>reform which has improved conveyancing at a stroke.
>
in respect of a surveyor asking for specialist reports? You
suggestions do not cover this bit.
--
John Boyle
John Boyle
Swarbrick <da...@swarb.demon.co.uk> writes
David please excuse my excessive use of the snippers.
>>The reason being?
>They do not want to meet the cost.
Which was?
>>Are you recommending an 'open bridge'?
>Certainly not. Sometimes - before the days of moving agents - it is
>necessary. It often proves disastrous.
Too right!
>>Thanks for making my point for me. Are you telling me that the
>>bank should let them get into this situation.
>No. I am saying that we achieve simultaneous completions on sale and
>purchases. Few other jurisdictions achieve this. Because we do this the
>alternates are ill developed - they are not usually needed. Ifwe move
>away from this - which I do not recommend - then accept that there are a
>lot of other sublte changes which will need to follow.
>. Are you saying this
>>is unreasonable?
>No, just damnably expensive.
what do you suggest then?
>>No. Why not rent out the existing property and buy a new one. A
>>decent IFA will have access to plenty of 'let to buy' schemes in
>>which the existing property 'stands alone'
>
>Selling houses which are rented out is not easy. It is often not
>profitable. What the present proposals make no allowance for is that as
>well as houses selling for 150k in London there are terraces for sale at
>20k in. What makes sense for one can make no sense at theother end of
>th
>emarket.
The idea isn't to sell the house with the benefit of an assured
tenant, but to sell with VP two months after giving the tenant notice
(once 6 months have elapsed of course) having made sure the
AST includes a clause allowing the EA to show the punters round.
>>You seem to be suggesting that the banks are at fault for not
>>offering a tourniquet to everybody. !!
>
>No, I do not lay any blame at the feet of the banks, and if I may say
>so, your reply reveals a mild paranoia - I have made no criticism of the
>banking system.
If I may so, you reply reveals a mild amnesia :-)
What did "You will also have to change the attitude of English
banks toward bridging loans. " mean then?
Please stop the waffle :-) and tell us WHAT the English banks
must do to please you in this matter!! ;-)
>If a client is daft enough to take a huge gamble, a bank
>is free to charge accordingly.
>
Phew, that's a relief!!!
--
John Boyle
Don Hamilton
> Don Hamilton wrote in message <01a9c9af$383e5e20$LocalHost@default>...
> >> That was *precisely* the argument that failed in _Smith v Bush_ The
> >> disclaimers and whatever tried to do exactly that. However, the
surveyor
> >> knows damn well that the buyer is going to be informed of at least the
> >sum
> >> that the property is valued at, and will be liable if he is negligent.
> >>
> >obtaining and disclosing a valuation a mortgagee does not assume
> >reponsibility to the purchaser for the valuation and I have seen nothing
to
> >suggest that the valuer does.. The surveyor owes a duty of care to the
> >mortgagor to exercise reasonable skill and care in carrying out the
> >valuation.
>
> 1) the mortgagor is the purchaser and the valuer is the surveyor. You may
> already recognise that, but it is confusing to use both words.
>
the case.
> 2) the surveyor has a contractual duty with the lender to value the
> property, he is liable in contract for negligence in this duty to value.
>
> 3) as the surveyor knows that the purchaser may rely on his report there
is
> a tortious duty of care for any statements in the report that cause the
> purchaser to suffer damage when he relies on it. The duty is in negligent
> misstatement and may be more extensive than the contractual duty in the
> sense that he may be liable for negligent statements he was not
specifically
> contracted to make.
>
> 4) We could argue that the surveyor knows that the purchaser will not see
> the report, but even so he at least knows the purchaser will be informed
of
> the valuation. The surveyor is liable in tort for any loss caused to the
> purchaser by relying on the valuation
>
> 5) If, as in _Harris v Wyre DC_, the surveyor is employed by the
mortgagee,
> then the mortgagee will be vicariously liable for the surveyor's tort.
>
You will have to bear with me a little further on 3 - 5 above - assuming
we are talking of economic loss it is my understanding that the law implies
a duty of care when a party 'seeking' information from a party possessed of
a special skill trusts him to exercise due care, and that party knew or
ought to have known that reliance was being placed on his skill and
judgement.
Further, that the law adopts a restrictive approach to any extension to the
scope of the duty of care beyond the person directly intended by the maker
of the statement to act upon it.
To a lay person such as myself it would seems that the party seeking
information is the prospective mortgagee who is also the person directly
intended by the valuer to act on the valuation. That being so then I find
it difficult to understand how the duty of care could extend to the
purchaser who neither sought the valuation nor was intended by the valuer
to act upon it.
> >Which I read as meaning that a duty of care only exists in regard to the
> >survey being part of the valuation.
>
> I think we mean the same thing on this.
>
> That said, why should the surveyor make that assessment for the
> mortgagee? Surely the surveyor's duty is to determine the value (market
> price) of the house, and it is for the mortgagee to determine how much he
is
> prepared to treat that property as security.
>
I agree entirely - I cannot see that it could be claimed that a mortgage
valuation is to ascertain a bricks and mortar value, in which case what is
it meant to be other than market value..
I think that purpose of a mortgage valuation is really to condition the
market value against any building defects or such likely to affect the
value of house as security. At which point we are moving toward
distinguishing between a valuation and a survey and perhaps that is what is
required.
.
I seem to remember from a claim I assisted in way back in the past that the
Inland Revenue's concept of a valuation is based upon the price paid, or
which most likely would be paid, in a willing buyer willing seller
situation.
Have the duties and liabilities of a valuer been described outside of the
present case?
I know that there is authority where the parties have agreed a valuer to
act between them. But that wouldn't strictly apply in the present context
.
> It may interest you to know that there is authority for saying that a
> surveyor is not negligent unless he is 15% or more out (an
> uncharacteristically specific rule for English law), so only fairly
serious
> omissions get caught.
>
I wasn't aware of that - But coming back to the I.R. I do not think that
they would be so generous in their allowable variance.
In my local area there is small new estate where, against the trend, one
year old houses are failing to sell at the price paid when new. To the
extent that some owners are already facing negative equity. Which on the
face of it suggests that mortgage surveyors may well have got it wrong.
Don
Joel Hogarth
>> 3) as the surveyor knows that the purchaser may rely on his report there
>is
>> a tortious duty of care for any statements in the report that cause the
>> purchaser to suffer damage when he relies on it. The duty is in negligent
>> misstatement and may be more extensive than the contractual duty in the
>> sense that he may be liable for negligent statements he was not
>specifically
>> contracted to make.
>>
>> 4) We could argue that the surveyor knows that the purchaser will not see
>> the report, but even so he at least knows the purchaser will be informed
>of
>> the valuation. The surveyor is liable in tort for any loss caused to the
>> purchaser by relying on the valuation
>>
>> 5) If, as in _Harris v Wyre DC_, the surveyor is employed by the
>mortgagee,
>> then the mortgagee will be vicariously liable for the surveyor's tort.
>>
>You will have to bear with me a little further on 3 - 5 above - assuming
>we are talking of economic loss it is my understanding that the law implies
>a duty of care when a party 'seeking' information from a party possessed of
>a special skill trusts him to exercise due care, and that party knew or
>ought to have known that reliance was being placed on his skill and
>judgement.
Where did you get that understanding from? It looks suspiciously like the
sort of trite formula found in a revision book on tort that would have given
a mid 2.2 in a law exam a few years ago, but sadly now would not even be
worth that.
Sorry, I got carried away there, but I'm only half joking. The law
concerning claims for negligently inflicted economic loss is much more
complicated and uncertain than that, and has moved on a fair distance in the
meantime. (and I'll have to confess to being over a year out of date on the
topic myself.)
But for instuction and interest's sake let's have a look at that formula you
quoted:
The law will impose a duty of care where:
1) "a party seeking information from" not necessarily, _Spring v Guardian
Assurance_, _Henderson v Merritt_ - I think this is too narrow, perhaps, "a
party entrusts his affairs to" - this would also deal with the "trusts him
to take due care" bit: the "due care" is implied in the concept of a duty of
care.
2) "a party possessed of a special skill": the words used in _Hedley Byrne_
are still generally true, and held by a bare majority of the PC in _Mutual
Live v Evatt_. But now, _Chaudry v Prabhaukar_ is an exception, although I
prefer to think it is wrongly decided. But perhaps we can borrow from this
case and _Esso v Mardon_ to formulate, "a party professing greater skill or
knowledge concerning those affairs"
3) "and that party knew or ought to have known that reliance was being
placed on his skill and judgement." Now we have a conflict in the cases
here; best expressed by the House of Lords in _White v Jones_ as to what the
basis of 'assumption of liability' is. Disagreeing wildly on the method,
Lords Browne-Wilkinson and Goff seem to suggest that the important point is
that the defendant undertook the duty to do a particular job, whereas Lord
Mustil's powerful dissent suggests that the defendant must 'assume
liability.' It must be said that the case has not been looked upon with
approval by a very recent House of Lords in _Williams v Natural Life_,
although the 'duty to do a particular job' approach is more consistent with
_Smith v Bush_. Perhaps the answer lies in the concept, as yet of uncertain
scope, of 'nearness to contract' -which keeps cropping up in all the major
cases, even though Lord Browne Wilkinson in _White v Jones_ managed to do
away with it all together. This concept is expressed by Lord Devlin in
_Hedley Byrne_ itself as an 'application of the general conception of
proximity'. We also have to be careful of crossing the line of _Murphy v
Caparo_ - a case not dissimilar to _Smith v Bush_ which went the other way.
The difference between _Caparo_ and _Eric S Bush_ is that the report
prepared in _Caparo_ was made to an unascertained plaintiff, whereas in
_Eric S Bush_ the plaintiff was ascertainable. So, I'll try (and you are
welcome to debate it), "and the defendant assumes a duty to do a particular
job knowing that negligent performance of that job will cause loss to the
plaintiff's affairs."
Comments?
>Further, that the law adopts a restrictive approach to any extension to the
>scope of the duty of care beyond the person directly intended by the maker
>of the statement to act upon it.
the law has, as I highlight above, extended considerably ;-)
>To a lay person such as myself it would seems that the party seeking
>information is the prospective mortgagee who is also the person directly
>intended by the valuer to act on the valuation. That being so then I find
>it difficult to understand how the duty of care could extend to the
>purchaser who neither sought the valuation nor was intended by the valuer
>to act upon it.
I missed the bit that said you were a lay person... I assumed you were a
student. I hope you have fun deciphering the above, and I hope that there is
an interesting and possibly useful formulation developing there.
>Have the duties and liabilities of a valuer been described outside of the
>present case?
They would be determined with reference to the contract between the
mortgagee and the valuer, perhaps implying terms derived from the valuer's
professional body's standards.
>I know that there is authority where the parties have agreed a valuer to
>act between them. But that wouldn't strictly apply in the present context
It is quite common practice to contract to sell property in future. Such a
term would be void for uncertainty unless there was a mechanism for fixing
the price, and an appropriate valuer is the usual mechanism.
>> It may interest you to know that there is authority for saying that a
>> surveyor is not negligent unless he is 15% or more out (an
>> uncharacteristically specific rule for English law), so only fairly
>serious
>> omissions get caught.
>>
>I wasn't aware of that - But coming back to the I.R. I do not think that
>they would be so generous in their allowable variance.
Most people would be horrified to know that their valuation could be 14.9%
out and they could still do nothing about it. Building Societies, of course,
know this damn well, although they may pretend not to, and charge much
greater insurance premiums on people asking for 95%-100% mortgages.
Don Hamilton
Keating on Building Contracts 5th Edition. - Which I know must be well out
of date.
> The law will impose a duty of care where:
>
> _Eric S Bush_ the plaintiff was ascertainable. So, I'll try (and you are
> welcome to debate it), "and the defendant assumes a duty to do a
particular
> job knowing that negligent performance of that job will cause loss to the
> plaintiff's affairs."
>
> Comments?
>
Short but to the point I suspect.
Under what circumstances would a valuer charged with the task of making a
valuation for a prospective mortgagee know, or be properly deemed to know,
that a negligent valuation will cause loss to the buyers propective
affairs?
When trying to answer this I found myself having to extent a duty of care
well beyond the bounds of reasonableness. Also extending the duty to
include a prospective buyer raises quite valid argument that an equivalent
duty would also be owed to the seller.
That having been said I have just dug out an old valuation report which
carries a quite weighty disclaimer
> I missed the bit that said you were a lay person... I assumed you were a
> student.
I suppose I am in a way- even though I've passed my 3 score and 10. I used
to be a claims practitioner in the construction and building industry and I
like to keep the grey matter active if I can.
I suppose that I ought to declare that my interest in the present subject
is slightly more than being merely academic in that I was once called upon
to give evidence in an appeal as to the value of work carried out by an M
& E contractor. Not exactly the same I'll admit but as it was a wholly
independent valuation I was compelled to consider similar issues.
Don.
Joel Hogarth
>Under what circumstances would a valuer charged with the task of making a
>valuation for a prospective mortgagee know, or be properly deemed to know,
>that a negligent valuation will cause loss to the buyers propective
>affairs?
the argument goes that the buyer will know whether the valuation considers
the house adequate security for a mortgage, and he can rely on that. It is
very difficult to imagine that the valuer can get around this argument.
>When trying to answer this I found myself having to extent a duty of care
>well beyond the bounds of reasonableness.
Not really... if, like in Caparo, there was a duty to the world at large it
would be unreasonable. But here, it is clear that only the mortgagee or the
buyer is going to lose out. And if the buyer has a good income, the
mortgagee may not lose out at all, as the buyer will keep paying his
premiums. Is it reasonable to let the valuer get away with negligence
without paying anyone at all - even when he has caused the buyer harm?
In many of these cases, one way of looking at the results is that denying a
duty of care would allow a professional to be negligent, cause harm and get
off scot free.
> Also extending the duty to
>include a prospective buyer raises quite valid argument that an equivalent
>duty would also be owed to the seller.
A quite valid point. It is, however, more difficult to see how the seller
could establish loss from such a situation. And the seller may not know of
the exact valuation figure in the same way - the buyer could be willing to
pay more than the surveyor said the house was worth.
>That having been said I have just dug out an old valuation report which
>carries a quite weighty disclaimer
Nicely ineffective once the claim moves into the realms of tort... (one of
the reasons for having the law of tort in the first place is that it is too
easy for people to modify their obligations in contract)
David Swarbrick
<jo...@chartw.demon.co.uk> writes
>In article <6FbakWAT...@swarb.demon.co.uk>, David
>Swarbrick <da...@swarb.demon.co.uk> writes
>>>So if a surveyor charges a fee for a report which does not express
>>>an opinion on anything but asks for specialist reports from
>>>electricians, wood preservers, DPC installer, arboriculturalists,
>>>etc., then where does this get us?
>>
>>It satisfies the government that they have instituted a fundamental
>>reform which has improved conveyancing at a stroke.
>>
>We are going round in circles here!! What reform do you suggest
>in respect of a surveyor asking for specialist reports? You
>suggestions do not cover this bit.
I criticise for free, I create solutions which will Revolutionise and
Correct and Solve All The World's Problems At A stroke, only for a fee.
I am making no suggestionsm save that if those proposing change cannot
be bothered to show that they have the slightest understanding of what
makes the current system the way it is, their proposals for change will
be ill founded, and possibly dangerous.
The fundamental they run aay from is whether or not we want to achieve
simultaneous exchange and completion. That is the characteristic which
dominates our system. No other conveyancing system I have heard of sets
out to achieve that. It has tremendous benefits for most people, and
indeed has become a 'given' In order to achieve this, however, the
system creaks at several other points, and delay is a substantial
'creak'.
A second characteristic of our system is that we have a far higher ratio
of people who are owner occupiers. That means that far more home buyers
are buying on an absolute shoe string, and come to sell on the same
basis. People who would never dream of buying a house abroad, do buy one
here.
I you make it more expensive (as the present proposals will), you will
introduce considerable constipation in the system. Buyers will not be
able to buy, and sellers will be unable to sell - with a consequent
effect on house prices.
If we abandon simultaneous exchange, we need far more flexible systems
of renting (no commitment to a six month tenancy?) and easier access to
funds (our mortgage rates are still higher than elsewhere)
I do not think we should abandon the attempt to achieve simultaneous
exchange and completion. If we stick to that we accept as inevitable
some difficulties, and tinker at our peril.
I would be in favour - over a longer period of time of moving back to as
regime where a lower proportion of people bought houses, and there was
accordingly far more rented (probably public) housing.
David Swarbrick
<jo...@chartw.demon.co.uk> writes
>
>>. Are you saying this
>>>is unreasonable?
>>No, just damnably expensive.
>
>what do you suggest then?
>
beingasked to bear a greater risk. To call Harrods expensive is not a
criticism.
>
>>>No. Why not rent out the existing property and buy a new one. A
>>>decent IFA will have access to plenty of 'let to buy' schemes in
>>>which the existing property 'stands alone'
>>
>
>
>>Selling houses which are rented out is not easy. It is often not
>>profitable. What the present proposals make no allowance for is that as
>>well as houses selling for 150k in London there are terraces for sale at
>>20k in. What makes sense for one can make no sense at theother end of
>>th
>>emarket.
>
>The idea isn't to sell the house with the benefit of an assured
>tenant, but to sell with VP two months after giving the tenant notice
>(once 6 months have elapsed of course) having made sure the
>AST includes a clause allowing the EA to show the punters round.
>
>
>>>You seem to be suggesting that the banks are at fault for not
>>>offering a tourniquet to everybody. !!
>>
>>No, I do not lay any blame at the feet of the banks, and if I may say
>>so, your reply reveals a mild paranoia - I have made no criticism of the
>>banking system.
>
>If I may so, you reply reveals a mild amnesia :-)
>
>What did "You will also have to change the attitude of English
>banks toward bridging loans. " mean then?
entirely to the if, so I do not dare suggest that he banks have it
wrong.
>
>Please stop the waffle :-) and tell us WHAT the English banks
>must do to please you in this matter!! ;-)
I am not saying that hey should do anything - notin this conversation
anyway.
>>If a client is daft enough to take a huge gamble, a bank
>>is free to charge accordingly.
>>
>
>Phew, that's a relief!!!
That is all I have ever said.
Charles Bryant
Joel Hogarth <jr...@cam.ac.uk> wrote:
>From the very little I have seen, it is far too common a practice for people
>to put their house on the market, wait for all the surveys to be done and
>the buyer gone to moderate expense, (£200-300) before changing their mind,
>leaving the buyer with all that money wasted.
What is to stop the potential purchaser getting the vendor to sign a
document stating that in return for 1 GBP the vendor grants the
potential buyer the right to buy the property for a stated price
within a stated time?
Ian Dickson
<da...@swarb.demon.co.uk> writes
>
>I you make it more expensive (as the present proposals will), you will
>introduce considerable constipation in the system. Buyers will not be
>able to buy, and sellers will be unable to sell - with a consequent
>effect on house prices.
>
the UK economy more in line structurally with the mainland Europe and
can get away with joining the Euro without setting off a house price
boom driven by low interest rates because the transaction cost needs to
be provided by savings...
I'm not sure if I'm writing this tongue in cheek or not....
--
Ian Dickson Moneyweb - http://www.moneyweb.co.uk 01242 680151
Find your Local IFA.
"probably the UK's most comprehensive Personal Finance site" - The FT
"lots of useful information"- Which? "packed to bursting"- WWW Directory
Financial Webmasters - free site listing and link.
UK FinServ Professional?, join Finservuk-list via Moneyweb. Moderated
John Boyle
>Correct and Solve All The World's Problems At A stroke, only for a fee.
>
>I am making no suggestionsm save that if those proposing change
>cannot
>be bothered to show that they have the slightest understanding of what
>makes the current system the way it is, their proposals for change will
>be ill founded, and possibly dangerous.
>
>The fundamental they run aay from is whether or not we want to achieve
>simultaneous exchange and completion. That is the characteristic which
>dominates our system. No other conveyancing system I have heard of
>sets
>out to achieve that. It has tremendous benefits for most people, and
>indeed has become a 'given' In order to achieve this, however, the
>system creaks at several other points, and delay is a substantial
>'creak'.
>
>A second characteristic of our system is that we have a far higher ratio
>of people who are owner occupiers. That means that far more home
>buyers
>are buying on an absolute shoe string, and come to sell on the same
>basis. People who would never dream of buying a house abroad, do buy
>one
>here.
>
>introduce considerable constipation in the system. Buyers will not be
>able to buy, and sellers will be unable to sell - with a consequent
>effect on house prices.
>
>systems
>of renting (no commitment to a six month tenancy?) and easier access to
>funds (our mortgage rates are still higher than elsewhere)
>
>I do not think we should abandon the attempt to achieve simultaneous
>exchange and completion. If we stick to that we accept as inevitable
>some difficulties, and tinker at our peril.
>
>I would be in favour - over a longer period of time of moving back to as
>regime where a lower proportion of people bought houses, and there
>was
>accordingly far more rented (probably public) housing.
>
>
--
John Boyle
Joel Hogarth
>document stating that in return for 1 GBP the vendor grants the
>potential buyer the right to buy the property for a stated price
>within a stated time?
nothing, but as that is a specifically enforceable contract, the seller
would be *very* strongly advised not to sign it...
plus it would have to be drawn up pretty tightly... you have an option to
buy... but on what terms?
Don Hamilton
> Don Hamilton wrote in message <01be0d85$79ef7420$LocalHost@default>...
>
> >Under what circumstances would a valuer charged with the task of making
a
> >valuation for a prospective mortgagee know, or be properly deemed to
know,
> >that a negligent valuation will cause loss to the buyers propective
> >affairs?
>
> the argument goes that the buyer will know whether the valuation
considers
> the house adequate security for a mortgage, and he can rely on that. It
is
> very difficult to imagine that the valuer can get around this argument.
>
and I have just realised that I may not have been on the right wave length
at all - which wouldn't be uncommon:-)
The value given for insurance reinstatement purposes is only £1,000 under
the value given for the house with vacant possession. Knowing I couldn't
buy the plot of land we occupy for anywhere near a £1,000 I'm now left
wondering whether the land value is included within the valuation or not.
(It is freehold).
It looks to me that the difference of the £1,000 might merely be for
footings which,(as we are not in an earthquake zone), would not be reckoned
to be affected in a total write-off.
How should I be reading the valuation?
Don
John Boyle
Hamilton <Don.Ha...@btinternet.com> writes
>The value given for insurance reinstatement purposes is only £1,000
>under
>the value given for the house with vacant possession. Knowing I couldn't
>buy the plot of land we occupy for anywhere near a £1,000 I'm now left
>wondering whether the land value is included within the valuation or not.
>(It is freehold).
>
>It looks to me that the difference of the £1,000 might merely be for
>footings which,(as we are not in an earthquake zone), would not be
>reckoned
>to be affected in a total write-off.
>
>How should I be reading the valuation?
The VP valuation is the valuer's guess at what the house may get
if the b/soc had to sell it.
The Insurance cost is the amount it would cost to clear the site, in
the event of a 747 crashing on it i.e. a complete disaster, and then
rebuild the same house and make good any other houses that
might have been joined to it. In my part of the world detached
houses have Ins Vals less than purchase price and terraces and
semis have ins vals higher than p/price.
--
John Boyle
Rainer Thonnes
David Swarbrick <da...@swarb.demon.co.uk> writes:
> Rainer Thonnes <r...@dcs.ed.ac.uk> writes
> >
> >Part of the idea is to get rid of "subject to survey" offers because
> >the survey would already be available. This is like in Scotland where
> >the norm is for prospective buyers to commission a survey before
> >making an offer.
>
> No it isn't.
Isn't it? Please explain what I seem to have misunderstood. What little
I heard is that there is a proposal to encourage (not yet compel) the
seller to commission a survey, presumably before he is even approached
by a prospective buyer, and to arrange for the surveyor to be accountable
to the buyer for any botch-ups. Call me unimaginative if you like, but
if that isn't for the purpose of discouraging "subject to survey" offers,
why is it being proposed? What have I missed?
Or was your comment directed at "This is like in Scotland"? What I meant
is that in Scotland even now "subject to survey" offers do not generally
occur.
> >The ultimate goal is to tackle gazumping, whereby the seller pulls
> >out for a better offer.
>
> Which it does nothing at all to prevent.
Well, that's right enough. What it would prevent is the buyer pulling out
for a better purchase, by pointing out shocking defects mentioned in his
survey report (e.g. there is a hairline crack in the wash hand basin).
Perhaps, given that the buyer can pull out, the seller thinks it's OK to
pull out too, on the goose and gander principle.
What it might help to prevent is some delay and uncertainty, by having the
survey (or a survey, which ought in theory to be impartial no matter who
pays the piper, that's what surveyors have professional certification for
after all, isn't it?) available at the time an offer is made.
> The difference is that in England we set out to achieve simultaneous
> exchange of contracts on a sale and purchase. This has huge benefits for
> most clients. If you do not change that, the rest is entirely hot air.
I'm inclined to agree, but then why are they trying to encourage vendor
surveys?
> If you do want to change that then you must accept that far fewer people
> will be able to buy houses (cannot afford the risk and support bridging
> loans), and that more property will have to be available for letting.
Well it works OK everywhere else in the world, doesn't it? It seems a
nice idea in principle to achieve simultaneous exchanges but in theory
they are impossible unless the chains become rings or have a first time
buyer at one end and a last time seller at the other (or something
vaguely equivalent like people moving to/from abroad). I guess this is
why it's such a nightmare in practice. I suggest it is a pointless
goal to set out to achieve, and that the market would become more fluid
without the delays this scheme inevitably involves. This would leave
more scope for individual people who wish to achieve a nearly seamless
move to succeed.
Is there really a shortage of property available for letting? Sure, short
term lets are likely to be scarce because of the 6-month minimum for the
only kind of tenancy it appears reasonable to grant, but instead one could
try to time a house move to coincide with one's holiday abroad. Even
local holiday cottages are available and are probably competitively priced
with bridging loans, particularly outwith the popular holiday seasons.
> You will also have to change the attitude of English banks toward
> bridging loans.
What exactly is their attitude and what's wrong with it?
> >the purchase price of the house includes the hidden cost of the
> >seller's survey and the seller's legal costs.
>
> How are the buyer going to get the right to sue on the vendor's survey?
> The extra risk will be reflected in additional costs.
What extra risk is there for a surveyor compared with the situation in
which the survey is commissioned by the buyer? The survey report is
supposed to be an impartial professional opinion on the condition of a
property at a particular point in time. In principle it should not
matter who pays for it as it ought to be impartial. One possible problem,
though, would arise in the event of a property being on the market for a
long time and just not selling: an out of date report cannot comment on
damage a property might sustain after the survey date.
> How will the buyer
> be sure a survey carried out for the seller will be straight.
There is the risk of a dodgy vendor asking his surveyor pal to give his
hopeless ruin a clean bill of health. But the remedy is to put in place
the legal mechanism of transferrable accountability. Surely it's not that
difficult in principle? The vendor warrants to the purchaser that the
property is as described in the vendor's survey. If the purchaser has
cause to sue the vendor on the non-veracity of it, the surveyor who is
responsible to the vendor must then compensate the vendor to the same
extent as the vendor must compensate the purchaser. No?
> How are those (many) people who are selling with negative, nil or nearly
> nil equity going to sell?
That is and remains a problem, but should not be affected by who commissions
the survey. The report does not usually deal with equity, does it? Nor
with goodness of title. Maybe it should. That would also take some of
the leg work out of the post-offer period, and incidentally out of solicitors'
hands to boot, but good title can also go out of date.
Rainer Thonnes
Charles Bryant <n89425...@chch.demon.co.uk> writes:
>
> What is to stop the potential purchaser getting the vendor to sign a
> document stating that in return for 1 GBP the vendor grants the
> potential buyer the right to buy the property for a stated price
> within a stated time?
Nothing whatever, except the obvious reluctance of a seller to be so tied for
so small a consideration. Now if it were, say, 1% of the agreed sale price
for, say, a period of 6 weeks, it might be a more attractive proposition.
Rainer Thonnes
John Boyle <jo...@chartw.demon.co.uk> writes:
>
> At the moment the basic survey is for the lender and most lenders
> allow the buyer to look at it.
Depends what you mean by "basic". I pity the poor housebuyer who doesn't
get the proper survey done (not necessarily "full structural" but, say,
the 40 minute job (I guess this is what you call the Housebuyer's survey)
rather than the 10 minute room-counting exercise). Do the majority of
transactions really proceed on the basis of this zero-value non-survey
lender's valuation report only? When I bought my flat I did what I thought
was normal: the survey was most definitely not for the lender but for me,
though it happened also to be acceptable to the lender.
> It gives the buyer no real info except
> that it will confirm or contradict the price.
Well, ain't that worth something? I'd have hated to have paid too much.
> More likely than not it will
> call for more specialist reports. The main reason for calling for
> these reports is to pass the buck onto somebody else.
You old cynic. I agree, though, these surveyor chappies should have
sufficient expertise to be able to form an accurate enough opinion in
all except a small minority of cases where hidden dodginess may justify
calling in an expert.
> Therefore I think the Housebuyer's survey should be obligatory as
> the 'lowest' level of survey offered. The buyer pays a fee and
> develops a contractual relationship with the surveyor. The
> surveyor completes a mortgage valuation for the lender at the
> same time but as a separate contract.
Well, if the buyer isn't interested, and is happy if the lender is happy,
why should it be obligatory so long as the buyer knows that he's not
really getting anything like a no-dry-rot guarantee. But if he does
get an HBS done I don't see why the surveyor should need to act *separately*
for the lender, unless there is a suggestion of lack of impartiality.
Don't lenders generally have local lists of approved surveyors whom they
will trust, and will be happy to accept an HBS from?
> Can't write any more about this 'cos I'm now studying to become
> an ARICS....... :-)
A wise move. Let's see, now, £100 fee for 10 mins work. That's, um,
oh forgot about the travel and parking time, but I'll bet it sure beats
cut price conveyancing and endowment commissions.
> Seriously,
>
> 1) What you suggest means that if the vendor's survey is flawed
> then the vendor has to pay up, not the surveyor.
Quite, but inasmuch as the vendor relies on information provided by
his surveyor, and this turns out to be inaccurate, then the vendor
would have comeback against his surveyor.
> 3) I have plenty of knowledge of buyer's who withdraw under the
> present regime on account of 'what the surveyor said' when in fact
> their withdrawal is just because they are a 'time waster'.
Fortunately this doesn't work in Scotland.
John Boyle
Rainer Thonnes <r...@dcs.ed.ac.uk> writes
> But if he does
>get an HBS done I don't see why the surveyor should need to act
>*separately*
>for the lender, unless there is a suggestion of lack of impartiality.
>Don't lenders generally have local lists of approved surveyors whom they
>will trust, and will be happy to accept an HBS from?
I've snipped your other stuff RT 'cos it makes sense and I agree
with it.
Just about this bit though, the HBS survey is generally done by the
same surveyor and at the same time as he does the lender's
survey. two forms are completed and two sets of contractual
terms are completed, one set with the lender the other with the
buyer, so two sets of contractual obligations are developed so if
he cocks up he has two cocks up. (eh???)
--
John Boyle
David Swarbrick
<jr...@cam.ac.uk> writes
>>document stating that in return for 1 GBP the vendor grants the
>>potential buyer the right to buy the property for a stated price
>>within a stated time?
>
>
>would be *very* strongly advised not to sign it...
>
>plus it would have to be drawn up pretty tightly... you have an option to
>buy... but on what terms?
>
Don Hamilton
John Boyle <jo...@chartw.demon.co.uk> wrote in article
<8Mt1kqE3...@chartw.demon.co.uk>...
Years ago when I bought my first house (terrace) and a couple after that
(semis) the insurance reinstatement value was always considerably less that
the VP value, the reason given being that the insurance cover was for the
building itself. In the theory the reinstatement value was the VP valuation
less the land value.
As my present house is detached I would have expected the same to apply.
Given that the insurance premiums relate to the reinstatement value its a
significant item.
Don Hamilton
> Don Hamilton wrote in message <01be0d85$79ef7420$LocalHost@default>...
>
> >Under what circumstances would a valuer charged with the task of making
a
> >valuation for a prospective mortgagee know, or be properly deemed to
know,
> >that a negligent valuation will cause loss to the buyers propective
> >affairs?
>
> the argument goes that the buyer will know whether the valuation
considers
> the house adequate security for a mortgage, and he can rely on that. It
is
> very difficult to imagine that the valuer can get around this argument.
>
without being aware of the instructions given to the valuer. It being
possible that a prospective lender could, without disclosing it to the
proposed buyer, instruct that the valuation be marked down by a certain
percentage for a certain type or class of house.
It would be different if there was agreement that the valuer acts as such
between seller and buyer, thereby implying impartiality. But I do not
think that is the case at present, is it?.
> >When trying to answer this I found myself having to extent a duty of
care
> >well beyond the bounds of reasonableness.
>
> Not really... if, like in Caparo, there was a duty to the world at large
it
> would be unreasonable. But here, it is clear that only the mortgagee or
the
> buyer is going to lose out. And if the buyer has a good income, the
> mortgagee may not lose out at all, as the buyer will keep paying his
> premiums. Is it reasonable to let the valuer get away with negligence
> without paying anyone at all - even when he has caused the buyer harm?
>
As I understood it responsibilty for negligent misstatement is imposed only
if it is made in circumstances which made it reasonable to rely upon it.
As above I think that it would be unreasonable to rely upon a valuation
unless you were aware of the instructions governing its preparation. If
the valuer owes a duty of care to a prospective buyer it would be
unreasonable unless it was clearly understood that he was acting in a
neutral and impartial capacity.
> In many of these cases, one way of looking at the results is that denying
a
> duty of care would allow a professional to be negligent, cause harm and
get
> off scot free.
>
> > Also extending the duty to
> >include a prospective buyer raises quite valid argument that an
equivalent
> >duty would also be owed to the seller.
>
> A quite valid point. It is, however, more difficult to see how the seller
> could establish loss from such a situation. And the seller may not know
of
> the exact valuation figure in the same way - the buyer could be willing
to
> pay more than the surveyor said the house was worth.
>
Assuming an overseas seller (having been bequeathed the house) agrees with
a potential buyer that he will sell at a price fixed by a valuer appointed
and instructed by buyers building society. Would that constitute reasonable
reliance?
>
According to my dictionary 'valuation' means 'a formal assessment of the
property's worth' - Why is it that I always seem to have paid more for my
houses than they are worth:-).
BTW - Under the terms of my own mortgage offer the valuation was provided
by me. With an addded provision that "the terms of the valuation must be
acceptable to us
The way it was worked was that the valuation was arranged by the b.s. on my
behalf. Ostensibly under the b.s.'s terms, which I have never had sight
of.. Which makes me wonder whether there might in fact be a hidden agenda
in the way b.s. valuations are arranged.
Joel Hogarth
>And how many purchasers are going to register the option?
IIRC, that would only really cause a problem if the seller signed contracts
with another party before the expiration of the option. It would not be
rendered invalid against the seller for want of registration.
And as soon as the purchaser wanted to act on it his solicitor would, of
course tell him to register it...
I had a sketch attempt at working out a 'cross-undertaking in damages'
contract for my friend -- trying to specify that anyone unreasonably backing
out would be liable to meet the others' cost, but found that this required
considerable draughtsmanship to be anywhere near effective.
Paul Burridge
In article <36483C...@swindon.ericsson.se>, Ian Diddams (con...@swindon.ericsson.se) writes:
>Maybe I've missed something in the thread, but surely all that would be
>required is for the survey rto prominently display the surveyors name,
>address etc.
>
>Then, the "genuine" status of a survey could be easily checked (ie you
>could walk into their offices and ask if it was indeed them that did the
>survey), and if the survey was WAY off and effectively fraudulent, there
>may be grounds for litigation.
I think you'll find that in practice, such documents are almost
invariably taken at face value and virtually never checked. It's
the same with references and 3 years' accounts or (6m payslips)
when lenders appraise mortgage applications. People just tend to
accept these things provided the figures add up. Enough fruad goes
on as it is.
--
Noverint universi presentes et futuri
David Swarbrick
<jr...@cam.ac.uk> writes
>I had a sketch attempt at working out a 'cross-undertaking in damages'
>contract for my friend -- trying to specify that anyone unreasonably backing
>out would be liable to meet the others' cost, but found that this required
>considerable draughtsmanship to be anywhere near effective.
Coming back to your friend. Will he complain when he comes to try to
sell his house, spends 6/700 on a structural survey, and a few hundred
on other things, puts the house on the market, but finds he hasn't got a
buyer. The survey and searches will be time limited - so he renews them
after say six months.
At present at least half of sales take place through agents working on a
no sale no fee basis. Why? Because sellers cannot be persuaded to spend
money in the mere hope that their house will sell.
Charles Bryant
Rainer Thonnes <r...@dcs.ed.ac.uk> wrote:
>In article <1998-11-1...@chch.demon.co.uk>,
> Charles Bryant <n89425...@chch.demon.co.uk> writes:
>>
>> document stating that in return for 1 GBP the vendor grants the
>> potential buyer the right to buy the property for a stated price
>> within a stated time?
>
>so small a consideration. Now if it were, say, 1% of the agreed sale price
>for, say, a period of 6 weeks, it might be a more attractive proposition.
That would seem to show that the solution to gazumping is already
available to buyers, so further legislation is unnecessary. Indeed,
it also suggests that by looking for protection from gazumping buyers
are trying to get something for nothing.
Jon Rouse
>
> Years ago when I bought my first house (terrace) and a couple after that
> (semis) the insurance reinstatement value was always considerably less that
> the VP value, the reason given being that the insurance cover was for the
> building itself. In the theory the reinstatement value was the VP valuation
> less the land value.
>
> As my present house is detached I would have expected the same to apply.
> Given that the insurance premiums relate to the reinstatement value its a
> significant item.
So what happens if the land cannot be built on due to discovery of
contamination or an unknown mineshaft under the site? You would have to
find another plot and rebuild. For £1,000?
--
The views expressed are my own and may not represent those of my
employer
David Swarbrick
Joel Hogarth <jr...@cam.ac.uk> writes
>Charles Bryant wrote in message <1998-11-0...@chch.demon.co.uk>...
>>>A better scheme would be a statutory scheme providing that the seller must
>>>have the survey done,...
>>
>>Why? Why not let buyers choose whether they want to buy without a
>>survey, use the sellers survey, or get their own done? The seller
>>could use their survey as an advantage, and estate agents could have
>>them done just as they commission advertisments to attract buyers.
>
>
>because many people may want to buy the house. It is incredibly inefficient
>to have so many surveys. Because of the over-used practice of gazumping.
Gazumping is a tiny problem - is it 2% of purchases?
>Because the seller can easily pass the cost on to the eventual buyer in the
>price.
No he cannot. Are lenders going to lend on this cost?
David Swarbrick
Ian Diddams <con...@swindon.ericsson.se> writes
>Paul Burridge wrote:
>>
>> I suspect this idea, in practice, would open the door to fraud.
>> Some sellers with sub-standard property might be tempted to
>> fabricate a favourable survey to show prospective buyers, using
>> their computer and DTP s/ware, rather than commissioning one that
>> would expose all the faults.
>
>Maybe I've missed something in the thread, but surely all that would be
>required is for the survey rto prominently display the surveyors name,
>address etc.
Another trouble is that the system is already dominated (and that is a
very polite word for it) by the sellers estate agent. If he appoints his
best pal to do the survey (at half price because the agent controls the
market), only a fool would rely on such surveys.