PBL81 - Status Default - March 2017

I'm not suggesting that SS knew about problems with the PP at all.  The borrower needed the loan to amongst other things, complete works on the house, hence it was uncompleted.

I have absolutely no idea what SS knew or didn't know, about the planning.  It is my opinion that they should have known, whether they are culpable for this omission or the surveyor that is an entirely different proposition.  savingstream are on record that the ability to repay the loan is secured by the property in question not the debtor and therefore they should take all steps to ascertain all material factors that could affect its value.

It may also be difficult for lenders to sue for negligence as it far from clear that we are party to the contract or have any right to place any reliance on the report.  All valuation reports (or underlying engagement letters) warn that reports should not be relied on by third parties to whom they are not addressed and that they take no liability if reliance is place by such parties.  In most cases the valuation reports are addressed to Lendy Ltd without any indication that they are acting as agent for lenders.  The surveyor would be liable to SS, but its not SS who would suffer the loss.  Thus for a successful claim of negligence it would need to be established that they had a contractual or other care of duty towards us lenders.  This wouldn't have been an issue under the old lending structure and may have been overlooked.

I would think the claimant in such a scenario would most likely be the provision fund owner, if they paid out as a direct consequence of the negligence. If I was a betting man I wouldn't suggest that action would be successful.

nick I fully agree, the chances of holding a valuer negligent are -0% (ish) it has been done before tho   . Personally i think it is grasping at straws to expect either us the lenders or SS to place the burden of responsibility on a valuer.

So with all the extraneous information taken away, c.£1million was required to complete the property (£3million advance, £2million previous borrowing).  One third of the loan was required for works and costs, hence my contention this was not a bridging loan and I disagree with your view that the property was complete if it still needed £1million spent on it.

Maybe if the provision fund was legally obliged to pay out, but in this case any payment would be discretionary and thus could be avoided (a claimant would be obliged to minimise any loss).  Moreover, the provision fund is also a separate legal entity and not a addressee of the report so would again would struggle to demonstrate that the surveyor had care of duty (clearly there is no contractual obligation).  It may all seem pedantic, but in my previous life as an auditor/accountant it was drilled into me to minimise liability to any third parties working doing any work by expressly restricting the audience of reports and disclaiming liability to anyone except specifically named individuals/legal entities.

Prehaps SS have already addressed this issue in an underlying engagement letter, but I suspect not given I haven't seen a single instance in any valuation report, some of which include underlying engagement letters, that SS is acting on behalf us lenders as agent or otherwise.