In brief

In the June update, I made reference to valuers answering questions from a landlord or a tenant about a rental valuation. I cautioned valuers about doing this, as it can result in your rental valuation being set aside with it not always being classified as a supplementary valuation.

What you need to know

Valuers need to exercise extreme caution in providing a follow-up or supplementary valuation at the request of the landlord or the tenant. At a minimum, I do not believe any further communication should be made to either party, say after 30 days since the valuation has been given.

If any further communication or supplementary report is to be given, it must be provided to both parties and their respective solicitors and valuers (if any).

It may be worthwhile adding a condition to the terms of engagement stating that any clarification of the report (if any) will be provided to both parties, any request for clarification must be made within 30 days of the date of valuation, and the party requesting clarification must bear the costs involved.

Background

In the VCAT decision of Di Dio Nominees v JVR Enterprises (Vic) Pty Ltd (Building and Property) [2018] VCAT 772the landlord’s lawyer wrote to the valuer seeking further details of the rent determination and the matters that were taken into account by the valuer. The valuer responded to the letter 14 months after the rental valuation was given. The tenant was of the view that the letter should be taken into account therefore forming a supplementary report. This was rejected by the landlord as presumably the letter did not suit its purposes. VCAT noted the following concerning the response:

  • it was only provided to one party;
  • there was a significant delay between the rent valuation and the response (14 months);
  • it did not state it was supplementary to the rental valuation; and
  • it was in response to leading questions by the landlord.

Accordingly, VCAT did not consider that the letter formed part of the rental valuation and it was not deemed to be supplementary to the rental valuation.

Conclusion

If a landlord or a tenant seeks clarification of the rental valuation, exercise extreme caution. Preferably, obtain legal advice before offering any further explanation. As noted, please amend the engagement to allow for additional response at the cost of the requesting party.

About the Author

Rohan Ingleton

Partner
A telecommunications and retail leasing expert, Rohan is a property specialist with an enviable reputation.

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