Both consumers and property valuation experts are set to benefit from the enhancements to professional standards within the newly launched APIV Scheme.

The limited liability scheme, approved under the Professional Standards Act 2003, can be complicated to understand.

In its most simple description, the scheme will operate to ‘cap’ an APIV member’s liability to a defined amount in the event a successful legal claim is made against them.

To receive the benefit of this capped liability, members must comply with certain requirement, these also protect consumers by ensuring agreed professional standards are complied with

For a deeper understanding of the latest iteration of the APIV Scheme, which came into place on September 1, ANZPJ has broken down the five biggest takeaways.

1. APIV Scheme goes nationwide

The APIV Scheme is regulated by the Professional Standards Councils – it is one of 16 Professional Standards Schemes currently operational in Australia.

Operating in all states and territories of Australia, the scheme requires members to meet compliance and professional obligations – the Australian Property Institute Valuers (APIV) was established as a special purpose company to ensure obligations of the scheme are met.

As previously mentioned, the scheme will operate to ‘cap’ the member’s liability to an amount outlined in the instrument and covers civil liability arising directly or vicariously from anything done or omitted by a person who was a participating member.

The scheme does not apply to any liability arising out of acts or omissions in the course of providing services that do not involve the application of the APIV members’ occupational qualifications or training.

The APIV Scheme is the third of its type since 2010 and will be in operation for a period of five years and will expire on 31 August 2026.

2. You have to join to get benefits

Australian Property Institute (API) members who undertake valuations in Australia and hold a certification as a certified practising valuer, certified practising valuer (plant & machinery) or residential property valuer must join the scheme.

The scheme also covers a range of other consultancy services including market commentary, feasibility reports, land use assessments and housing supply analyses.

Operating on a ‘one-in, all in’ basis, eligible firms and employees/subcontractors covered under the valuation firm’s professional indemnity insurance (PII) policy must also join to get benefits.

An exemption may be granted if the valuer is a non-practising member of the API, an employee of an authorised deposit-taking institution who only provides valuation services for the ADI’s internal risk/review purpose or a government employee solely providing valuations for internal purposes.

Members who derive 100 per cent of their income from a commonwealth, state or local government contract may also be exempt if approved by the APIV Board.

3. The APIV Scheme is not PII

The APIV Scheme is not a professional indemnity insurance scheme, with each operating separately to the other.

In order to invoke the ‘capping’ under the APIV Scheme and to ensure that the damages are paid, the person must have the benefit of a PII policy that is compliant with the requirements of the insurance standards set by the APIV.

These Insurance Standards  must also be approved by the Professional Standards Council – the authority for supervising the preparation and approval of schemes, which also assists in the improvement of occupational standards and protection of consumers.

In short, a member’s PII policy pays for the claim, while the APIV Scheme caps the amount of damages payable under the PII policy provided they can prove their compliance with requirements.

4. How do consumers benefit?

Consumers benefit from the APIV Scheme as they can feel confident that they are dealing with competent and independently assured professionals operating to the highest professional and ethical standards – hiring someone you know will be complying can ease the stress of getting a valuation.

APIV will confirm if a person or firm is covered by the scheme if contacted for the  membership status of a valuer. Professionals can also use the prescribed statement to disclose their limited liability on all correspondence promoting their business.

A brand logo is currently being developed for APIV, which will make it easier for consumers to identify APIV Scheme participants. A new member recording system also in the works.

5. OK, let’s talk numbers

The level of limited liability or “monetary ceiling” is the maximum amount for which a member can be held liable if a court determines they are compliant with all relevant obligations.

It also represents the minimum amount of PII cover – plus $500,000 or 5 per cent of monetary ceiling to account for potential defence costs if the limit of indemnity is cost-inclusive – they must hold to be compliant with the scheme requirements.

The method of limiting liability will be by way of insurance policy and is calculated by reference to four categories of occupational activities found below:

Category 1: Real property valuation services

This category includes anyone performing the valuation of real property, but excludes any low risk valuation (category 2) services.

The monetary ceiling in respect of the category is determined by the application of a formula to each valuation.

For property with an assessed value up to $3.5m, there is a fixed monetary ceiling of $1m.

Those ranging from $3.5m to $7.5m have a monetary ceiling of the assessed valued multiplied by 33 per cent, those between $7.5m to $100m have a monitory ceiling of $2m, plus the assessed value multiplied by 7.5 per cent. Finally, those over $100m have a fixed monetary ceiling of $10m.

Category 2: Low risk valuation services

The scheme provides ten low-risk services which include the valuation of real property undertaken in the capacity as an arbitrator, a valuation undertaken for the purpose of asset means testing, valuations undertaken for expert evidence and insurance valuations.

The monetary ceiling for this category is fixed at $1m.

Category 3: Plant and machinery valuation services 

This category relates to those who perform any valuation related to the ownership, possession or use of plant, machinery or equipment expressed as an assessed value.

The monetary ceiling for this category is fixed at $1m.

Category 4: Other occupational services

The category is for occupational services other than real property valuation services, low-risk valuation services or plant & machinery valuation services.

The monetary ceiling for this category is fixed at $1m.

For more information about the Scheme please visit the APIV website for a plethora of FAQs and many more online resources.  If you are an association who is interested to hear more about a limitation of liability scheme, how it may benefit your members the scheme and how we could assist you to apply for a scheme please contact [email protected].