Commercial property valuers face millions of pounds worth of claims for losses by banks and investors who claim their professional reports were based on flawed valuations.
Several cases have already been before the courts – and many more are in the pipeline.
Banks have already won claims arguing that money was lent based on inflated valuations.
The undercurrent in the commercial property market was revealed by Rosling King partner James Walton.
He explained that the framework of judgments was leading to international claims, many dealing with commercial mortgage backed securities (CMBS) worth hundreds of millions of pounds.
At the start of 2013, the market was holding an estimated £130 billion of European CMBS debt.
The problem for lenders and valuers is although around £19 billion is due to mature this year; substantial amounts will become due on a rolling basis.
In most cases, the securities register a loss, and investors and other parties are seeking ways to reduce their losses, explained Walton.
In private, many valuers confess that properties were overvalued in the boom years – and commercial and residential cases have regularly gone before the courts.
In general, the courts are finding in favour of the lenders and now commercial valuers and their professional indemnity insurers are seeking ways to deal with the cash haemorrhaging from claims.
Walton suggested some claims are laying idle because of ongoing business relationships or lack of information about how to proceed to settle losses.
At least two multimillion pound claims have been before the courts –
• A £100 million claim against CBRE and Warwick Street (KS) LLP by Gemini (Eclipse 2006-3)
• A £66 million claim brought by Titan Europe 2006-3 against Colliers International relating to an alleged overvaluation of the former Quelle headquarters in Nuremburg. The case is due to go to trial next year.