Banks, Loans, Security and Valuations = the requirement to allow your bank to value with who they want when they want is usual in most commercial loans. The question is why ? Shouldn’t it be more ‘customer’ orientated, after all it is your property that is offered up as security on which the bank find comfort
To lend it will be common for the bank to select a preferred surveyor from a panel and request a valuation based on suitability to lend, investment value or market value. The bank instruct and the bank control this process
When your ‘revalue’ is due, say on loan review, the same scenario happens again but the very basis of the valuation can change to suit the banks needs. Is this right ? Does the bank and the Surveyor have a wider duty of care to the customer ?
This is a very topical subject matter and one being looked into by Gov BIS and the leading broadsheets.
I fear the press will soon unveil examples of valuation ‘abuse’, examples of the bank flexing muscles with undue influence to ensure they effect reduced loan to value terms to increasing loan interest costs or force loans to prove breaches in covenants should they not be profitable loans.
We are working on some case examples in which a common factor runs through each scenario; bank instructed valuations. Report will be produced soon.