Trustees have a fiduciary duty to ensure that the body corporate is adequately insured; therefore, prospective valuers must be thoroughly vetted before they are appointed. Aside from comparing prices, it is equally important to check the valuer’s sectional title experience and track record.

 Here are a few questions you need to ask prospective valuers:  

1. Is the valuer certified by the SA Council for the Property Valuers Profession (SACPVP)?
2. How many years has the valuer been active in the sectional title industry?
3. How many complexes has the valuer assessed over the past year?
4. Does the valuer hold professional indemnity insurance and how much?

 What happens if the valuer makes a mistake?

If a body corporate finds themselves under-insured at claim stage as a result of an inaccurate valuation, the trustees can rely on the valuer’s professional indemnity insurance to cover the shortfall. That is, IF the valuer they selected has sufficient professional indemnity insurance (many do not!).

How much professional indemnity insurance is needed?

Most valuers are insured for any amount ranging from R1 million to R10 million – but this is hardly enough! It is recommended that the valuer holds at least 10% of the assessed insurance value and no less than R20 million. (Mirfin holds R45 million professional indemnity insurance).

Without sufficient professional indemnity insurance, the valuer will be unable to cover the shortfall and the affected body corporate members will hold the trustees financially responsible in their personal capacity. For a sectional title scheme, this amount can amount to millions of Rands.

As a last resort, the trustees then try to claim the shortfall from their trustee indemnity insurance but be aware that the insurer may reject the claim based on gross negligence if they find that the valuer screening process was insufficient or lacking in its entirety.

For reasons stated above, it is vital for trustees to take the valuer selection process more seriously than just looking at the initial quotation to conduct the valuation. The last thing you want is to be held liable for millions because you tried to save the body corporate a few hundred Rand.

Make sure that the valuation company you select is sufficiently covered in the case of a claim to protect yourself as well as experienced enough to alleviate the likelihood of errors.

Mirfin’s quotation request process takes place online, so you can get a quote 24/7!

 

 

 

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