Countrywide faces unprecedented negligence litigation

Countrywide, the UK’s largest residential property broker, faced at least 38 cases of litigation against it last year alone for negligence related to surveying of properties in the housing boom era.

Most of the negligence suits have been filed by major lenders such as Barclays Bank plc and Lloyds. Countrywide, like many of the property surveyors, normally takes out professional indemnity insurance to protect themselves against claims of negligence, but in these cases is determined to fight the lawsuits tooth and nail.

A typical example of negligence brought up by one of the lenders is the case of a man called Suninder Sandha. He had an apartment inside a country mansion near Leicester, surveyed by Countrywide’s surveying department, and took out a loan with Barclays based on the surveyed price at 1.2 million pounds in 2005. When the property boom collapsed, so did the value of the property and Sandha was unable to keep up the mortgage repayments. Barclays has sued Countrywide for its losses, having seized the property and only being able to sell it for 500,000 pounds.

The number of cases of litigation that the company is facing appears to be far more than the number that any one of Britain’s major banks had in 2011. Countrywide was bought by Apollo Management LP in 2007 and since that date 97 cases of negligence, all arising from losses incurred due to the collapse in property prices, have been directed at the company.

The lawyer, who has been representing Countrywide and several smaller surveying firms facing similar litigation, stated that the blame for the losses really fell at the door of the lenders themselves. She said that the banks had suffered huge losses and were looking for a scapegoat. She said further that the lending practices the banks had been using at the time were the real reason for the huge losses.

Countrywide, which has additional property divisions as well as its surveying arm, put its charges up significantly in 2010, largely due to increasing premiums charges for PI insurance. The increase in premiums was as a direct result of the huge number of professional indemnity claims which the company was facing.

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