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
• Building Survey

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?

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.