A valuer’s life used to be so much easier in the old days. No mobile phones, a message book in the office, fewer cars on the roads, and a single named lender to answer to when creating reports. Today, message books are long gone, many people have more than one mobile phone, we have congested multi-lane highways, and valuation reports where the ‘named lender’ could arguably refer to half a dozen or more different ‘funds’.
The reason for this phenomenon is ‘crowd funding’ and the emergence of various peer-to-peer lenders. Although they are the darling of some of the national press, there can be issues in valuing for crowd funds.
Property is property, investment returns in it are cyclical, and when there’s a ‘crash’ inevitably investors face the risk of losses. Smaller investors often feel the impact harder and risk losing sums of money they can ill-afford. There’s a certain feeling of safety being in a crowd, but for valuers, crowd funds are impacting our industry too. Some valuation instructions now refer to several funds to whom the loan is subjugated to, rather than a single lender.
Ever since the case of Yianni versus Edwin Evans, that centred on the question: ‘to whom do we owe a duty of care,’ valuers have sought to identify their customers. Mr and Mrs. Yianni had relied on a mortgage valuation to buy a property (and not sought a full survey as advised in the lender’s form). They experienced problems with a structurally unsafe flank wall which all-but fell down. She sued; Edwin Evans claimed they had no liability as their customer was the lender, but they lost.
Until recently, valuers have always known to whom they owe a liability. Today, however, they could be liable to several different lenders/parties. They are effectively being asked to agree an open-ended liability to a third party – a fund – of which they have no real knowledge or relationship. Put simply, surveyors are fast becoming hostages to fortune, and valuers need to ensure they know on whose behalf they are acting.