Cheval considers legal action over valuations
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Cheval Bridging Finance is planning to take legal action against surveyors over alleged negligent valuations, its 2010 accounts reveal.
The bridging lender filed its accounts last month which show it had a bad debt provision of £1.16m in June 2010, a portion of which it attributes to negligent valuations by third party surveyors.
The lender did however manage to cut its bad debt provision by almost 50% from £2.14m in 2009.
It says that since June 2010, £214,400 has been received to date in relation to the claims.
Its accounts say: “The company has put the insurers of these surveyors on notice of possible claims and will commence legal proceedings where appropriate.”
The accounts show the lender made a pre-tax profit of £614,942, compared with a £324,069 loss in 2009.
Gavin Diamond, finance director at Cheval, could not comment on the companies involved in the claims, but says: “Where a shortfall is suffered on repayment of a loan, we work with our professional advisers to determine the best course of action to recover any shortfall. This can include claims against valuers in appropriate circumstances.”
Adrian Bloomfield, chief executive of the Association of Short-Term Lenders, says he has seen a lot of examples of properties being overvalued
in the sector, especially between 2007 and 2008.
He says: “I have seen cases where valuations have allegedly been up to 15% wrong.
“This is across the board from small residential properties to large commercial ones.”
He adds: “It is usually not dis-covered until a new valuation is done later down the line and the lender realises it may have grounds for a complaint.”
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