In brief: In the last two years, there have been two reported cases where valuations were set aside by VCAT. Further, a number of disgruntled parties have initiated action to have valuations set aside, at least one of which has now been heard at VCAT. I acted on behalf of the tenant effectively defending the valuation and expect a decision in the coming week or two. By following the seven steps detailed below, you can avoid common mistakes and ensure that your valuation does not get set aside.
Seven key steps for valuers to consider:
At a recent seminar I conducted, I recommended that valuers do the following:
- Survey the premises to be valued by independent surveyors.
- If the Retail Leases Act 2003 (Vic) (Act) applies to the lease, restate the requirements of section 37 (2) of the Act in the valuation.
- Restate the market rent review requirements of the lease in the valuation.
- State in the valuation that you have complied with the market rent review requirements of the Act and the lease.
- State in the valuation the matters to which you had regard in arriving at a market rent determination.
- Give detailed reasons as to why you determined the rent at a particular amount.
- Get expert legal advice of any contentious matters, which is paid for by the landlord and the tenant.
The above recommendations derive from reported decisions in dealing with market rent valuations over the last 10 years. Recommendation 1 – to obtain a survey of the premises – derives from the Ladro decision, where the valuation was set aside because an incorrect area was used by the valuer. Rather than undertaking the survey yourself, I recommend that you engage an independent surveyor. Further, you should include in your retainer that the parties bear the cost of the survey.
In coming months, I will provide further details around each of the recommendations above.
By following the above seven steps, you can help minimise the chance of any valuation being set aside by VCAT, or the Supreme Court of Victoria. If you have any concerns relating to market rent valuations, do not hesitate to contact me on firstname.lastname@example.org or 03 9242 4719.