Companies selling properties from repossession could recover substantial losses from the valuers and solicitors who advised them, says law firm Optima Legal.
The firm, which provides property, debt recovery, litigation and dispute resolution legal services to lenders and businesses across the UK, says the recession is revealing considerable levels of negligence from professional advisers.
Philip Robinson, partner at Optima Legal, says: “In the current economic climate, pursuing the borrower may prove fruitless, but in some cases companies can recoup money from the valuers and solicitors who acted for them when they made the advance.
“If lenders have suffered a significant loss – say over £20,000 – now is a good time to review shortfall files for evidence of professional negligence. “
It advises companies to examine the mortgage valuation report prepared by the valuer to establish whether they had erroneously overvalued properties, leading the business to obtain security over property worth significantly less than the evaluation.
They should also look closely at the conveyancer’s report on title prior to completion of the mortgage, which will have certified that there were no issues connected to the property or borrower, which should have been drawn to the company’s attention.
He adds: “Companies will have relied upon this report to decide if and how much to lend.
“Failure to disclose information which would have altered that decision – for example that the conveyancer had acted for both vendor and purchaser, or the value was inflated by sales which took place in the preceding six months – could be negligent.
“When the economy falters and house prices fall as they are now, negligence is revealed in the same way that a receding tide exposes shipwrecks on a seabed. The same happened in the early 1990s and lenders brought significant claims against their professional advisers.”
He adds: “Businesses suffering large losses when selling properties from repossession should closely examine their lending, arrears, repossession and sales files and their conveyancers’ files.”