UK: Time Running Out For Lenders’ Potential Negligence Claims Against Surveyors

Last Updated: 10 September 2012
Article by Michael Axe

When the property market collapsed in the 1990s, there was a corresponding rise in Lender Claims against Surveyors for losses suffered as a result of negligent valuations carried out during the "boom years".  More recently, we have seen a similar boom in the property market during the first half of the last decade, before another property crash in 2007/2008.  However, as yet the anticipated increase in Lender Claims against negligent Surveyors has not yet fully materialised; why is this the case?

The Clock is Ticking...

There may be a number of reasons for this, not least of which is that many Lenders are still in the process of assessing what losses (if any) they have suffered since the collapse of the property market and/or are assessing whether any losses suffered were caused by the crash itself rather than any negligent valuation.

However, time may be running out for many of these potential claims, as any professional negligence claim must be brought within 6 years of the date the damage was suffered.  Whilst it might not always be clear precisely when the damage was suffered (see, for example our recent article Taking it to the limit – limitation periods in professional negligence claims), in most cases the damage will be deemed to have been suffered on the date the money was loaned by the Lender in reliance upon the negligent valuation.  Accordingly, unless exceptional circumstances apply, claims arising from loans made during 2007 are likely to become time-barred during 2013.

Mortgage Lenders and Property Investors will therefore want to consider very carefully whether they have any potential claims arising from negligent valuations provided before the property crash, ahead of  those potential claims expiring.  Whilst each case will be different, below are some of the more common issues that may be relevant to such a potential claim.

Are there any issues relating to the Surveyor's Professional Indemnity Insurance?

As part of the process of engaging the Surveyor, the Lender may have become aware of some of the terms governing the Surveyor's terms of engagement and/or professional indemnity insurance cover.  The Lender may, therefore, be aware of issues that could potentially arise in relation to, for example, purported caps on liability, the exclusion of consequential losses, and/or the late notification of potential claims.

Who actually instructed the Surveyor?

It may sound like a straightforward question, but in practice the party that instructed the Surveyor may not necessarily always be the same entity that suffered the eventual loss.  For example, in a number of cases the branch/division of the Lender's group of companies that instructed the Surveyor was not the same branch/division that made the loan to the borrower.  It is therefore vital to confirm that any claim is actually pursued and issued in the name of the correct claimant.

Who else might the Surveyor owe a Duty of Care to?

It has long been established that the duty of care owed by a surveyor to the Lender that has instructed him is also extended to the borrower who is purchasing the property (Smith v Bush [1989]).  However, more recently the Court of Appeal in Scullion v Bank of Scotland [2011] confirmed that this rule did not automatically apply where the transaction related to an investment in a buy-to-let property rather than an ordinary purchase of a domestic residence.  However, this decision has been appealed to the Supreme Court and is due to be heard in April 2013.

Are there any other parties who the Lender may have a claim against?

In some cases, a Lender may have a valid claim against more than one party, for example, its Surveyor and its Solicitor.  In the case of Nationwide Building Society v Dunlop Haywards (DHL) Limited & Cobbetts [2009], the Lender had a valid claim against its negligent former Solicitor as well as its fraudulent former Surveyor (see next section on fraud).  The High Court in that case also provided guidance on how damages are to be apportioned between co-defendants in such a situation (in that case, the fraudulent Surveyor was held to be liable for 80% of the damages which both parties were responsible for, whereas the negligent Solicitor was only liable for 20% of the damages).

Is Fraud involved?

Allegations of fraud can certainly complicate matters.  On the plus side, the recoverability of damages may be easier for the Lender (as there is no need to show that the losses suffered were foreseeable), and the fraudster is unable to put forward any defence of contributory negligence against the Lender (see next section on contributory negligence).  Fraud may also serve to extend the limitation period for a claim.  However, a significant potential disadvantage is that the Surveyor's professional indemnity insurance policy may be likely to exclude cover for fraudulent acts, meaning that the Lender may be left to pursue a claim against a defendant with insufficient assets to cover the potential liability.

What defences might a Surveyor attempt to raise?

Even if a Surveyor's valuation was negligent, that is not to say that it was the actual cause of any loss suffered by the Lender.  Causation of loss is a very complex area of law (see, for example, our previous article Cause and Effect in Professional Negligence Claims), and for that reason the Surveyor may well argue that the losses were actually caused by reasons other than the negligent valuation (such as the property crash itself).  In the July 2012 High Court case of Platform Funding Ltd v Anderson & Associates Ltd [2012] the Surveyor was found not liable for the losses suffered by the Lender (notwithstanding that his valuation had been negligent) because the entire loss suffered by the Lender had been caused by underlying fraud perpetrated by the vendor (with the assistance of others).

A Surveyor may also attempt to allege that the Lender was itself contributively negligent if, for example, it failed to follow correct underwriting procedures, it failed to take adequate steps to verify the borrower's financial status (particularly relevant in relation to self-certification mortgages), or it failed to detect recognised fraud methodologies.  These allegations are often grouped together under the umbrella term "careless lending".

Beware the Strict Time Limits

Clearly, each potential claim will depend on its own individual facts, but the issues summarised above provide an overview of the sort of questions that are likely to need to be considered.  What will be relevant to all potential claims, however, is the 6-year limitation period for bringing a claim.  This is a strict time limit that can only be extended in very limited circumstances, and so any Lender who even suspects that it may have a potential negligence claim against a Surveyor will want to ensure that a proper case assessment is carried out well in advance of any forthcoming limitation deadline.  In many cases, this may now be a race against time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.