There are situations when users of the report on the valuation of property or property rights are not satisfied with the value determined by the subject of valuation activities. However, an alternative assessment is often inappropriate and economically disadvantageous. If objections are raised regarding the results of the valuation, the solution to the problem may be a review of the valuation report. What are the conditions and procedure for reviewing and what is its appropriateness?
The appropriateness of valuation reports reviewing
Reviewing the report on the valuation of property consists in its critical consideration and provision of conclusions on their completeness, correctness of implementation and compliance of the applied procedures for valuation of property to the requirements of regulatory acts. It is the review of the valuation report that is the only legally established way to refute the valuation results.
The review of the valuation report takes place as of the relevant date, since the relationship between the valuation date, the date of the report and the date of signing the review. The reviewer should not take into consideration any additional information about the valuation object or similar property that arose after the date the report on the valuation of the property and making the conclusion on the value of the property made up to the date of the signing of the review.
If the validity period of an assessment report is specified in the report or determined by law and it has already expired, review of such a report is not prohibited by law and it is expedient if its results were applied during the validity of the assessment report. If the application took place after the expiration of its validity, then it would be logical to appeal such an application, rather than the results of the assessment.
Procedure and conditions for reviewing the valuation report
The general principles and procedure for reviewing the property valuation report are established by the Law of Ukraine “On valuation of property, property rights and professional valuation activities in Ukraine” of 12.07.2001, No. 2658-III, and provisions (national standards) on property valuation.
Review of the report on the assessment of the property is carried out on the demand of the person who uses the valuation of the property and its results for decision-making, including at the request of property valuation customers, state authorities and local authorities, courts and persons who are interested in an unbiased critical review of property valuation, as well as on its own initiative of the subject of valuation activities.
Often, a property valuation consumer, for the purposes of the court proceedings, simultaneously orders the property valuation report and its review to level the risk of obtaining a negative review from the reviewer, which will be appointed by the court or upon the opponent’s request. This approach allows completely avoiding such a review because, at the stage of its completion, all errors in the assessment report will be corrected.
The basis for conducting a review is a written request to persons who, in accordance with the law, have the right to review the report on the valuation of property. The review can be carried out by an appraiser who has at least two years of practical experience in property valuation; expert councils specially created by self-regulatory organizations of appraisers; appraisers who have at least two years of practical experience in property valuation and work in the State Property Fund of Ukraine, as well as other bodies.
When choosing the evaluator-reviewer, you need to make sure that he/she has the right to review the evaluation reports or to check information about him in the State Registry of Appraisers, which is publicly available on the official website of the State Property Fund of Ukraine.
In addition to confirming or recognizing the inability to use the valuation, the negative results of the review of the valuation report are grounds for depriving the appraiser of the qualification certificate.
The reviewer prepares a review in writing and affixes it with a signature. The review should not contain a reviewer’s own conclusion on the value of the object of evaluation. It is also prohibited to give relative conclusions regarding the value specified in the report on valuation. If a written request for review of an assessment report establishes a requirement to provide an opinion on the value of an object of valuation, it is satisfied through the valuation of property with the compilation of a property valuation report.
Review of the valuation report is carried out on a fee basis. The cost of reviewing the valuation report is, on average, 20−30% of the cost of the valuation and the preparation of such a valuation report.
Conditions for mandatory review conducting
Legislation defines the conditions for mandatory review, namely:
- in accordance with Art. 13 of the Law “On Valuation of Property, Property Rights and Professional Appraisal Activities in Ukraine” of 12.07.2001, No. 2658-III, if such valuation is agreed, approved or accepted by the public authority or local government;
- according to Art. 22 of the Law of Ukraine “On Land Plots Valuation” of 11.12.2003, No. 1378-IV in case of necessity of such valuation.
If the parties to the enforcement proceedings do not agree with the results of determining the value or valuation of property, then according to Art. 57 of the Law “On Enforcement Proceedings” of 02.06.2016, No. 1404-VIII they may appeal them in court within 10 days from the day of receipt of the corresponding notification.
Classification of reviewed valuation reports
According to the results of the review, the review report is classified on the following scale:
- the report fully meets the requirements of normative legal acts on property valuation;
- the report as a whole meets the requirements of normative legal acts on valuation of property, but has minor deficiencies that did not affect the authenticity of the valuation;
- the report does not fully comply with the requirements of normative legal acts on valuation of property and has significant deficiencies that influenced the authenticity of the assessment, but may be used for the purpose specified in the report after correcting these deficiencies;
- the report does not comply with the requirements of normative legal acts on valuation of property, is poor quality and (or) unprofessional and can not be used.
If the valuation report on the results of the review is classified on a third basis, then the review service for the valuation report is divided into two stages: the first is under the results of which the valuation report is classified on a third basis, and the second is when the evaluation report to be reviewed after the correction of these deficiencies.
