VRB newsletter No.6 - September 2001

Welcome

Changes to the Valuers Registration Act 1992

As advised in a recent letter to all Valuers, the changes to the Act are presently before Parliament. As soon as the legislation is in place, all Valuers will be notified by the Board.

One of the changes will be the composition of the Board. The new legislation provides for two additional members to be representatives who are not necessarily valuers. This is to give the Board a broader range of experience that is drawn from the wider community.

Referee Reports

It has come to the Board’s attention that some Referee Reports are being completed by Valuers who have themselves only recently gained registration. A referee’s report is an important part of the registration process and it is recommended that applicants nominate referees who have had a number of years experience within the valuation profession, and who have known the applicant for at least two years.

Quality of Valuation Reports

The standard of many valuation reports submitted for registration have been poor. Photocopies of reports, with a staple in the corner, are being sent with applications. The valuation reports submitted for registration should be among the best reports produced during an applicant’s career as there is no time limit imposed on applicants preparing valuation reports for the Board. Please remind future applicants that all reports must be original bound copies with original photos or good quality scanned photos, and are to be as recent as possible, certainly no more than six months old.

Applicants need to ensure that reports are checked by another person as the Board continues to receive reports that contain simple mathematical errors and spelling mistakes.

Two Tier Market

As you are no doubt aware, there has been considerable coverage in the media in regard to the ‘two tier market’, and the Board has received several complaints in relation to this.

Below is a comment from one of our Investigators relating to a recent investigation.

“The valuation of these unit complexes has been a most difficult exercise for all valuers. There has been evidence of a ‘two-tier’ market occurring again and again, particularly in this Gold Coast area. The over-supply of units onto the market has in part been responsible for this. Other considerations such as the tax advantages to owners of rental premises makes the purchase of new units a more attractive proposition when compared with the purchase of second-hand units with a lesser period to run on the depreciation of fittings supplied to the units.

I consider that the standard valuation format used by most valuers does not lend itself to comment about the variability of the market, particularly the resale market. It may be appropriate for the Board to issue an advice to all valuers about the perceived inadequacy of the comments made by many valuers in the valuations provided to lending institutions.”

The Board believes that the valuation should be in keeping with the standard API definition of value, and that the valuer should comment on the market value if resold on typical resale marketing through a local agent. Comments should also be made, where appropriate, on the potential if any of market oversupply, rental vacancy levels, and the difference between new and second hand values.

Complaints

The Board continues to receive complaints and this number has escalated in recent years. Since our last Newsletter in July 2000, 25 written complaints have been received and in 13 instances an Investigator has been appointed. Three complaints were against the same valuer, and after a hearing was held his registration was cancelled. A hearing was held in one other instance. In two cases legal advice advice was sought. At the present time there are two complaints being investigated, while three new complaints await review by the Board.

Risk Management: Turning Hindsight into Foresight

Marcus Johnson - Russell Hanley & Johnson, Lawyers

Risk management is an attempt to eliminate negligent errors in valuation reports that give rise to a claim for loss and damage suffered by a client or third party. Even a claim that is successfully defended will be very disruptive to your practice.

This article offers valuers a brief review of relevant journal articles on the area of risk management. All of the articles are written for the Australian Property Journal by solicitors practicing in professional indemnity insurance law.

In the first article “Professional Practice and Negligence”, Peter Eilenberg (May 1994, pp. 143-6) offers, among others, two points of practical advice. The first, warns that letters of demand of which he gives examples, usually require a valuer to notify his or her professional indemnity insurer. Secondly, he outlines a claims risk check list in relation to the valuation process: a proforma designed to limit the receipt of letters of demand in your practice.

In the second article “Valuers: Lessons to be Learnt From Litigation”, Gregory Skehan and Veronica Chapman (November 1994, pp. 319-320) discuss twelve risk areas with recommendations.

Both of these articles deal with important issues that arise regularly in practice, particularly in areas where you may be competent but not expert.

The third, more recent article “Points of View – Valuers and Professional Indemnity” is published in the current issue of the Australian Property Journal (February 2001, pp. 372-3). There David Leggatt of Phillips Fox, points out the extra risks associated with carrying out valuations for the purpose of private mortgage lending.

One important risk reduction technique is to have a colleague act as a “critical friend” to audit your penultimate draft report. This friendly feedback process can take time, but it is cheap “insurance”. Remember the old adage: value in haste, repent at leisure.

For copies of the articles mentioned in this paper please send a stamped addressed envelope to the API.

Annual Roll Fees

As you may have heard along the grapevine, the Board did not send out reminder letters for the renewal of registration fees for 2001 after the initial letters went out, and the Board has received a lot of criticism because of this. In total, 88 valuers were struck off for non-payment of fees at 31 December 2000.

Each year a considerable amount of time and effort is spent trying to contact valuers who have missed the initial deadline of 31 October, and then 31 December. This involves quite a number who have changed their address and omitted to notify the Board. This in itself can be quite a time consuming process chasing a valuer from one address to the next involving numerous telephone calls and reposting of mail.

Be mindful that your mail is sent to the last known address, so if you fail to notify the Board of a change, or you mistakenly advise an incorrect address, correspondence is more than likely to go astray, and as a reasonable amount of valuers have found this year, you can’t always rely on your previous employer to forward on your mail after you have left their employment.

For the majority, registration is essential for your livelihood. With fees for 2002, the Board has decided to send reminders to those who neglect to pay their fees by the due date 31 October. It will be greatly appreciated if you notify the Board of any change of address. Please take the time to fill in your registration renewal advice with your correct details and return it with your annual roll fee.

If you have an article you would like considered for a future newsletter, or if you have a particular topic you would like discussed, please contact the Board on 07-3221 3892.

Happy Valuing,

Julia French

Secretary

Last updated 24 February 2005