Topic 14 - Valuations and Surveys

Question 1

Basic Valuation:

Answer 1

A contract between lender and valuer to assess security and reinstatement value.

Question 2

Retention:

Answer 2

A portion of the loan held back by the lender until the buyer provides evidence that specified repairs have been completed satisfactorily.

Question 3

A claim for negligence in a valuation, that resulted in financial loss, is only likely to succeed in two circumstances:

Answer 3

• The disclaimer was insufficiently prominent;

- The borrowers were inexperienced

Question 4

Actions the valuer can recommend to a lender:

Answer 4

• Acceptance
• Rejection
• Conditional recommendations for acceptance
• Lower valuation

Question 5

Reinstatement Value:

Answer 5

The valuer’s estimate of the cost of rebuilding the property from scratch in the event of destruction by fire or another catastrophe. It is a vital part of insurance cover.

Question 6

What reports can the buyer commission?

Answer 6

In increasing order of thoroughness:

• Condition Report. This does not consider the market value of the property.
• Homebuyer Report, survey (not deep) and valuation. Can just get survey
• Building Survey- full and detailed

Question 7

What are two of the most common problems identified in surveys?

Answer 7

Subsidence - when land below the building drops unevenly, causing it to shift.

Heave - when underground forces cause the land below the property to rise unevenly.

Question 8

Undertaking:

Answer 8

A formal agreement that the buyer will undertake specific remedial work within a specific period of time after taking possession of the property.

The lender reserves the right to inspect the property after a period of 3-6 months to see that the work has been done.

Question 9

The Buildmark scheme provides protections against defects and damage for how long?

And what are the other 2 called?

Answer 9

The first 2 years, where it is caused by the builder’s failure to meet NHBC standards.

For the balance of the first 10 years, the scheme provides insurance for the full costs of damage caused by major defects in the building structure.

Premier guarantee similar for new complexes and conversions

LABC New home warranty same for builders of speculative built residential housing and social housing

Question 10

What is the consumer code for home builders?

Answer 10

Code of practice developed by key industry bodies

It makes sure home buyers are better informed of their rights and reinforces their protection they get from warranty.

The code includes

„ are treated fairly;
„ know what service levels to expect from their builder;
„ are given reliable information;
„ know how to make a complaint if they are dissatisfied.
New house builders registered with NHBC, Premier Guarantee and LABC New Home Warranty must comply with the code