Surveys and Valuation

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Independent Business Valuation: There are several companies that offer such valuations with the report being addressed usually to the lending source. There are some national independent business valuers as well as some more local, specialist valuers. Not all business valuers are acceptable to all lenders. It is imperative that you do not make your own arrangements, as you could find that the report is simply unacceptable to the lender.

We must emphasize that independent business valuations are commissioned either by ourselves or the lending institution but at your expense. These valuations can be an essential feature of the proposal and represent the situation where totally independent and impartial comments are being made. They can help to ascertain that you are paying a realistic price and that there should be sufficient profitability to service the proposed borrowing. You may receive a copy of the report, but you must understand that this is commissioned to assist in the arrangement of the finance rather than necessarily giving a warranty on which you can totally rely.

Bricks and Mortar Valuation: This is often, but not always, required and is frequently commissioned by the lending source but usually after agreement in principal to the proposed advance. Please note that Independent Business Valuations will incorporate a bricks and mortar valuation

The figure the lender is looking for is precisely what the property is worth without any business included. This obviously reflects the 'fall-back' value of the property to the lending institution in the event that they need to enforce their security as a result of failure to meet the loan repayments.

Sometimes a bricks and mortar valuation commissioned by yourselves can be used, but you should ensure that the valuation is carried out either by a Fellow or an Associate of the Royal Institute of Chartered Surveyors (FRICS or ARICS).

Some lenders retain the right to instruct the valuers themselves and have a restricted list of approved surveyors. Such valuations also equate to those requested by Building Societies in connection with house purchase i.e. ensuring an adequate value for mortgage purposes without necessarily providing any warranty as to the general condition of the property.

These are the most thorough of all (and therefore the most expensive) and once again are carried out by a FRICS or ARICS to determine the precise structural condition of the property. A structural survey is a condition of an advance in only exceptional circumstances - usually where the property is very old or in doubtful condition. From the point of view of your own peace of mind, you may feel more comfortable about your purchase if you have such a valuation, which obviously would preclude the necessity for a bricks and mortar valuation as described.

Do not think that these various 'surveys' are restricted to freehold properties. With leasehold property you are often expected to become responsible for the repair and maintenance of the property (under the terms of a 'fully repairing and insuring lease'), and prior to taking on such a commitment a full structural survey will reveal any defects for which you may be taking responsibility. The preparation of a 'schedule of dilapidations' may ensure that such repairs come outside the scope of your responsibility or reduce your liability for repairs in the future.