When it comes to a conveyancing transaction where the Buyer is reliant on a
mortgage there is a common misunderstanding the lender carries out a detailed
survey.
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There are, writes Michael Riches, Trainee with MJP Conveyancing, three “levels” of surveys that are available to a Buyer, which are: Valuation
Report, Homebuyers Survey, Full Structural Survey.
Valuation Report
This is the survey the lender carries out when they are considering a mortgage offer. It
is a mandatory requirement for any Buyer reliant on a mortgage. The lender will
instruct a surveyor, at the Buyers expense, to report to them on the value of the
property. The purpose of the survey is to advise the lender whether the property will
make a suitable return should the Buyer default on the mortgage. The report does not
comment on the structural soundness or any defects the property may have. It is
merely a report on the current market value of the property.
Homebuyers Report
A homebuyers report will comment on the quality of the property. It is a survey more
suited to newer properties, by which we mean properties less than 70 years old. The
purpose of this survey is to point out to the Buyer any areas of concern such as damp
or woodworm and indicate a cost of repair. When instructing a surveyor for their
Valuation Report most lenders will offer, at an additional charge, to have their
surveyor carry out this survey.
Full Structural Survey
This is a more comprehensive report and as such is time-consuming and costly to the
Buyer. It is a survey more suited to older properties, which may have timber frames,
thatched roofing or are listed. It would also be the more appropriate survey for any
Buyer considering having significant works carried out on the property. As the name
suggests it will comment on the structure, major and minor faults and any areas of
concern.
After reading the above definitions and what each survey contains it may surprise you
to know that only 20% of all Buyers will carry out an additional survey to the
mandatory Valuation Report conducted by the lender’s surveyor. There is a common
myth that the Valuation Report will be sufficient and provide all the detail a Buyer
will require to make an informed decision about the purchase of a property. This is
simply not the case.
In the world of conveyancing there is a latin adage Caveat Emptor, which means “Let
the Buyer beware”. The seller has a limited duty to disclose latent defects in the
property. Therefore it is the Buyer’s responsibility to investigate the property as much
as they can. This is a very simplified and edited explanation of the principle to
illustrate the importance of surveys. The survey will advise the Buyer of any concerns
which can then be duly forwarded to the Seller during pre-contract enquiries. This
may then result in the defect being corrected, a re-negotiated purchase price or indeed
neither of these.
It is for these reasons that when asked the question “Do I need a survey?”, any
conveyance will answer “Yes!”.
The logical follow-up question would be “Which surveyor should I use?”.
You may be able to use the same surveyor the lender uses to carry out their valuation
report. However, it is important when buying a property to make your own
investigations in the first instance. A Buyer should always visit the property and
inspect as much as possible. By doing this you may find areas of concern that you can
ask the surveyor to pay particular attention to. This is an important step.
The main purpose of any survey is to advise the Buyer but it is also to protect the
Buyer. By viewing and inspecting the property you will be able to give specific clear
instructions to the surveyor on areas of concern to you. This means the surveyor is
duty bound to investigate those particular areas as well as conduct a general survey of
the property. If a surveyor fails in this duty and a fault is found after completion, then
this may give rise to a claim of negligence against the surveyor. If you fail to give
clear instructions and the surveyor only conducts a general survey, the report will
usually contain caveats to cover the surveyor should any future defect arise.
If you do not want to use the lender’s surveyor then you can instruct an independent
surveyor. Most surveyors will be regulated by the Royal Institute of Chartered
Surveyors and you will be able to find a local surveyor on their website
http://www.rics.org/uk/ . Using a local surveyor will have the benefit of knowledge of
the local market values.
When looking to purchase a property the main focus of the transaction should be
geared towards finding out as much about that property as possible. When you are
buying a property you are making a big investment. Therefore it is important to
understand what you are buying, whether it is worth the money you are paying for it
and whether there are likely to be any significant expenses in the future. Surveys are
one way of achieving this.
MJP Conveyancing are solicitors who provide conveyancing services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk
