RICS issue guidance note on risk
As a profession, surveyors (and their insurers) have been particularly hard hit by claims arising from the credit crunch. As such RICS have published a guidance note which aims to increase awareness and understanding of the main areas of risks and liabilities associated with negotiating valuation contracts with clients.
The document provides guidance on the following:
This section covers breach of contract, negligence, the ‘bracket’, damages and run-off.
RICS strongly recommends the use of liability caps to members, wherever legally permissible, to manage risk in valuation work.
Other parties relying on your valuation
Clients are increasingly asking valuers to allow non-client parties (known legally as ‘third parties’) to rely on their valuations. RICS recommends that, as a default position, valuers do not permit third party reliance.
The terms of your contract
The focal document in the contract between the valuer and the client is known as the ‘engagement letter’. The RICS Valuation – Professional Standards 2012 (the ‘Red Book’) requires you to record the terms of valuation engagements. The engagement letter provides you with an opportunity to think about and manage the risks faced in carrying out each valuation for your client.
Professional indemnity insurance
All firms must ensure they have adequate and appropriate professional indemnity insurance in place that complies with the RICS Rules of Conduct and RICS Minimum Terms. Having proper cover is a key part of managing your risk. For more information on professional indemnity insurance for surveyors click here.
To download a copy of the guidance note issued by RICS click here.