Friday, 19 September 2014

VALUATION OF PROPERTIES – A BANKER’S VIEWPOINT

Advocate S Selvakumar|Property advocates in Bangalore|Property lawyers in Bangalore

Whenever a customer approaches Bank seeking credit facilities from the Bank, invariably securities are insisted upon. Sometimes, loans are sanctioned on the worth of movable assets and advances are collaterally secured by evenhanded or straightforward mortgage of lands/buildings.Typically facilities extended by one Bank are taken by another Banker, not solely with regard to the previous securities given by the purchasers however with respect of the assets generated out of Bank’s finance.

In essence, valuation of the properties is an important operates within the day-after-day disposal business of the Banks.Even to shield the assets charged to the Bank or funded by the Bank,insurance policies need to be taken and for that purpose additionally valuation is required. 


Usually, the worth of a property depends upon the materials of that it’s created of, the age of the property, the geographic location, the surrounding developments, the neighborhood, etc.One necessary issue that contributes to the worth of a property is that the clarity of title of its owner and also the encumbrances riding on that.

Some folks have a conception that a appraiser want solely to require care of the fabric and placement facet and it's not his orbit to appear into the title facet of it. However the conception isn't correct because the title to the property incorporates a touching on its valuation.A property infested with long-drawn litigations or varied claims won't actually, fetch the worth it'd have otherwise got with a transparent title.  Similarly, a property occupied won't be able to command a similar worth if it's owner occupied, since the buyer should pay right smart quantity of cash and additionally time to induce vacant possession of the property.Thus, possession of the property is as title thereto whereas inward at its worth.Hence, whereas crucial the worth of a property, the appraiser ought to detain his mind the devolution of title, the particular possession of the property, varied claimants over it like minors or court orders adversely affecting possession and title to the property.

A valuer, whereas assessing a property, ought to ascertain the custody of the first title deeds to establish the likelihood of evenhanded mortgages over the property.Discreet searches within the Sub-Registrar’s workplace,Taluk/ Municipal Offices and also the Offices of assorted Township/Development Authorities that have an effect on the native administration of the property for ascertaining whether or not the property is constructed on any reserved space or prohibited space or the likelihood of a buying deal by regime–of these factors have an effect on the valuation of the properties.

In one instance, once the valuation of the property was done by one appraiser for ‘X’ Bank, another appraiser of a similar Bank seen a similar set of documents were deposited with another establishment and also the aforementioned establishment has already place a similar property for auction.  Such things will happen once there are made-up set of documents given as security.

In another incident,it happened that aside from being multiplicity of establishments claiming to own taken mortgage of the property, there happened to be multiple persons bearing a similar name as patron and once the Bank determined to require possession of the encumbered property, they may not do therefore because the identity of the property which of the owner of the property couldn't be tallied because the person speculated to have encumbered the property denied even having gone to the Bank in question and lodged a police report.

Apart from such risks in identity of property and its holder, the appraiser should be additional careful whereas submitting his report on valuation. tho' it's necessary for the appraiser to enquire concerning the genuineness of the owner of the property and also the property in question, he ought to submit his report back to the involved authority, ideally head to head or with ample care to avoid interpolations.In one instance, a Bank entrusted the valuation of secured property to its empanelled appraiser however later it transpired that the particular valuation and also the report on valuation accessible to the involved authority varied terribly wide and iniquity was suspected.

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