A commercial property transaction whether by sale or purchase, lease or raising finance is likely to involve two professionals: a solicitor and a surveyor.
Both will play an important role in the transaction and both will have a legal obligation in contract and will also have a duty of care to you.
It is also possible that either professional (although in practice this is likely to be much more relevant for the surveyor) will owe duties to someone other than you as their client.
When a surveyor prepares a report for a client but which he knows is intended to be shown by the client to a third party who will rely upon it is likely that the surveyor will owe a duty to that third party if there is a sufficient relation of proximity between the third party and the surveyor. For example a surveyor instructed to prepare a valuation for a mortgage lender could also owe a duty to the purchaser. This is more likely in the purchase of residential property but it could apply in relation to a commercial property transaction in certain circumstances.
A solicitor and surveyor owe to their client a duty to act with the reasonable skill and care of a competent solicitor or surveyor dealing in commercial property matters.
The solicitor’s duty can be wide ranging because they are generally involved in the transaction from start to finish. Typical arrears arise in:
- The terms of the sale/purchase contract.
- The terms of the lease.
- The terms of the mortgage documentation.
The surveyors obligations will most likely relate to:
- Valuation; and
- The condition of the property.
In both cases the solicitor or surveyor will only be liable if their negligence causes a loss to their client. The client has to establish that he relied upon the advice and that had he been properly informed he would not have acted as he did. In the case of the solicitor therefore failing to advise properly in relation to a clause in a commercial lease will only be negligent if the client would not have proceeded, or would have proceeded in a different way had he known the position.
The calculation of damages caused as a consequence of the negligence can be difficult in commercial property transactions. The measure of damages where the client has purchased a property relying on a negligent valuation will normally be the difference in value between the price actually paid for the property and true market value.
In periods of upheaval in commercial property values this can be quite tricky and will always involve expert evidence from another surveyor.
Solicitors and surveyors will often include in their terms and conditions clauses to try to avoid or limit their liability. Purported exclusion clauses are subject to a test of reasonableness. The validity of the exclusion clause will be tested differently in the case of consumers and parties on an equal footing. The approach is likely to be less strict where the property concerned is commercial.
A commercial lease or commercial purchase is an important transaction for any business and if it goes wrong in some way taking proceedings for professional negligence may be the only way to recover losses suffered.
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