Not always wise to depend on seller surveys, says Michael Sheridan
A house buyer who had purchased on the strength of a home report is now dissatisfied with the condition of the roof. Having exhausted the complaints/ombudsman route, without success, he writes to his solicitor: “Dear Sir…I received a home report where there were no adverse issues…the report stated that the roof had recently been re-leaded when it was patently obvious that this was not the case, even viewed from the ground…”.
Shortly after moving into the property, it transpires the roof is in need of immediate, substantial repair to prevent water ingress at a cost of £7,000. The client seeks compensation for this unexpected expense.
The solicitor consults the Housing (Scotland) Act (Consequential Provisions) Regulations 2008 and finds that a house buyer who suffers loss as a result of a home report not being prepared with reasonable skill and care has a right “to damages against the person who prepared the report”. So far, so good.
However, potential recovery is complicated and is, for many practical purposes, excluded altogether. The regulation states also that material loss has been suffered when the market value of the house is materially lower than stated in the survey report and the buyer has paid more than the market value. Unfortunately, market value is an uncertain quantity and any claim based on market value is subject to that same uncertainty of success.
While the repair bill which focuses the attention of the purchaser might be a factor, it is only a factor and it is certainly not the measure of any compensation that might be recovered. If the purchaser recovers less compensation than claimed, he might find that the expense of pursuing that compensation will exceed any compensation awarded. If he happens not to recover compensation at all, he might find that his attempt to recover compensation turns misfortune into calamity.
Why should the house purchaser who, after all, only wanted to buy a house, find himself looking at an unexpected expense of up to £7,000 have no effective remedy against the professional, insured adviser who failed to advise as to the true and obvious condition of the roof?
Perhaps the answer has to challenge the premise of the question. Why should the purchaser have any remedy against the home report surveyor? The purchaser did not select or instruct that surveyor or make any payment for his services. The legislation says that the purchaser is entitled to damages but it seems to be less wise to believe what you read in legislation than it is to believe in what you read in newspapers.
The purchaser has been given to understand that he can rely upon the home report survey as the professional statement of an honest and independent expert.
That is certainly the case, but perhaps not the whole of the case. In the real world, we have to recognise that (a) survey reports are subject to a degree of legitimate variability (b) any professional surveyor is entitled to look to receiving future instructions from existing clients, especially estate agent clients and (c) the surveyor may well operate in partnership with or even be an employee of the instructing estate agent.
None of these factors would apply to a surveyor instructed directly by the purchaser.
Moreover, such a private surveyor presents the purchaser with the option of a limited mortgage valuation type of report, similar to the home report, or a full and more expensive report which would, however, include items such as a full roof inspection. It is perhaps safer to make house purchase offers subject to the purchaser’s own survey inspection – to be carried out within 24 hours after agreement in principle, as was common practice before the advent of home reports.
Even the more expensive private survey is a negligible expense in the context of a house purchase which is now likely to proceed. That practice would also remove the requirement and the often unwelcome expense of home reports.
• Michael Sheridan is Secretary of the Scottish Law Agents Society www.scottishlawagents.org