Incorrect Mortgage Valuation

ms_fashionista

I purchased a property in March 2004. Needed updating as hadn't been touched in over 20 years but structually sound.

The property was bought with a BTL mortgage with Bank of Scotland. Valuation report stated property construction bricks & render.

Due to financial problems & seperation from my partner last year I put the property up to sell. Found a buyer within 2 weeks, had the survey. A week later buyer pulled out of sale as his lender, Chelsea BS wouldn't lend on the property as it was a concrete construction.

Went back to Colleys, the company that did the survey originally on behalf of B of S & the surveyor confirmed that it was a Wimpey No-fines construction (concrete) & not bricks.

6 months down the line I still can't sell the property. I am in arrears with the mortgage. I have to go to court tomorrow with the threat of repossession.

I have written to B of S & sent a copy of the letter to the solicitors acting on behalf of B of S regarding the arrears.

My proplem is that if I was aware it was a concrete build I would not have purchased let alone paid what I did. I have written to B of S stating that out of 10 offers (all pulled out once they found out it was a concrete construction) 1 couple were still keen to buy but their valuation after survey was £25,000 low than price agreed (their lender was HBOS). That was far to far for me to drop & I had to decline.

It has now come to a stage which I now have to move back to my parents with 2 children (4yrs old & 9mths) & rent the property until i found a buyer.

Ideally I would like to get the mortgage reduced as concrete builds are worth less than brick and therefore as my valuation was based on a 'brick build' then I have overborrowed from B of S.

What do I do with regards to the court case tomorrow. I have given an income expenditure and a payment plan to the solicitors but I still don't know whether they will accept.

Do I stand a chance getting the mortgage reduced as properties do sell on my road but only if I reduce the price by £25,000.

toonfish

your comebacks are on the surveyor and the estate agent IMO. The bank have lent on the surveyors valuation though, which you were happy to purchase for and this has no bearing on your difficulties in repaying the loan.

Moggett

If, when you bought the property you just had the ordinary mortgage valuation report instead of a Homebuyers Report, then, although you paid for the valuation it is purely for the benefit of the mortgage company and not you. You therefore do not have any comeback against the lender or surveyor. If, however, it was a Homebuyers Report, you definitely have a case against the surveyor.
The court may look at your case sympathetically but although it is of no benefit to you, your case clearly shows the benefits of having an independent survey undertaken instead of relying on the lenders valuation.
Good luck tomorrow but I'm afraid I don't think you have any comeback unless you had the HomeBuyers report.

ms_fashionista

Unfortunately we only had a valuation report (my partner, now ex, filled in the paperwork & I thought he requested to have a homebuyers report). I have had a call back from the solicitors to say that they have agreed to pay back arrears in instalments so things are looking up. Hopefully I will get a tenant in asap.

The B of S have received my letter and will be responding to it so I just have to wait and see what they say.

At least they have agreed to my instalment plan so that's one less stress.

Thanks for all your advice and will keep you posted with the outcome.

dmg24 - the estate agents that we purchased the property through never advised us of the construction. The EA that are selling the property for me however are letting all interested parties know as not all banks will lend on these properties. So if anyone is buying a property through Haarts please make sure you ask them what the construction is!!!

homer_j_3

To my understanding:

Mortgage Valuation - Tells lender its worth what its worth - no info for buyer or protection.

Homebuyers - gives buyer more info on the condition of the property and will often help give you an idea of cost on any repairs needed.

Building Survey - Will be an indepth report - will provide legal protection against them missing anything.

The above are not comperhensive explanations but just short general statements. You can find more out here:

http://www.rics.org/Property/Residentialproperty/Acquisitionanddisposalofresidentialproperty/Homebuyer_Survey_and_Valuation_Report.htm and here:

http://www.rics.org/Property/Residentialproperty/Acquisitionanddisposalofresidentialproperty/survey_building_survey.htm

I would probably contact RICS to see what they say about the rights that you have and whatever way you look at it - the surveyor has stuffed you. I would explore all avenues but I dont think a homebuyers report would have given you the information if the surveyor didnt spot that construction type in the basic survey

Rick62

You did not have a survey done, you have no recourse to anyone. The bank had a valuation done for their benefit, to give a general assessment of the security for their loan.

This is a common misconception, a valuation and a survey are not the same thing, usually they will be done at the same time by the same person but thats not the same. Anyone buying who wants a survey needs to commission a 'homebuyers report' (basic survey) or full survey. A lenders valuation gives you, the purchaser, no protection.

MarkyMarkD

Everything that's been said about basic mortgage valuations is correct - they give the buyer absolutely no protection and there's no way you can sue the valuer when they were acting only on behalf of the lender.

I am pretty amazed that anyone could buy a concrete house whilst believing it was brick and render - almost all houses of the type you are discussing are ex-council houses and it's honestly pretty obvious if they are concrete or not.

I speak as someone who owned an ex-council concrete house ... but not one of a defective design/construction like yours.

ms_fashionista

The property is not defective & apparantly it was an easy mistake to make according the surveyor who came back to look at the property after I found out about the construction. The problem is all the houses on my side of the road are built of concrete and the houses on the other side of the road are brick & identical. Some have their brickwork exposed & some rendered therefore to someone like me I wouldn't think any different however I would have thought a surveyor would be able to tell straight off as now even I can spot the difference.

What I have asked B of S is that if they knew the property was concrete would they have lent the amount we required. This is my complaint as the last would be purchasers were happy to buy the property but HBOS would not lend the amount they required because concrete builds are lower in value than brick builds. Therefore as I see it the property has been overvalued.

By the way the court case was adjourned (perhaps my letter regarding the valuation helped who knows).

MarkyMarkD

Apologies, ms f. In the estate I lived in there were two different designs of concrete house; one was defective and unmortgageable whilst the type I bought was not defective and readily mortgageable.

But the purchase price is your problem, not the lender's valuer. A property is worth whatever someone will pay for it.

dmg24

What I have asked B of S is that if they knew the property was concrete would they have lent the amount we required.

Even if the bank admit that they would not have lent that amount, which is a moot point in itself, then surely the issue will be between the bank and the surveyor?

Rick62

The lender has lent you the money, not the property.