VALUATION OF PROPERTIES – A BANKER’S VIEWPOINT

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Whenever a client approaches Bank seeking credit facilities from the Bank, invariably securities are insisted upon. Sometimes, loans are sanctioned on the value of movable assets and advances are collaterally secured by equitable  or easy mortgage of lands/buildings. generally facilities extended by one Bank are taken by another Banker, not exclusively with reference to the previous securities given by the purchasers but with respect of the assets generated out of Bank’s finance.

 

In essence, valuation of the properties is associate vital operates inside the day-to-day disposal business of the Banks.Even to defend the assets charged to the Bank or funded by the Bank, insurance policies got to be taken and for that purpose to boot valuation is needed. 

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

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 value it'd have otherwise got with a transparent title.  Similarly, a property occupied will not be able to command the same value if it's owner occupied, since the customer should pay right smart quantity of money 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 value of a property, the appraiser have to be compelled to detain his mind the devolution of title, the specific 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, have to be compelled to ascertain the custody of the primary title deeds to ascertain the probability of equitable mortgages over the property.Discreet searches inside the Sub-Registrar’s work, Taluk/ Municipal Offices and also the Offices of various Township/Development Authorities that have a bearing on the native administration of the property for ascertaining whether or not the property is made on any reserved space or prohibited space or the likelihood of a buying deal by regime – of those factors have a bearing 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 the same Bank seen the same set of documents were deposited with another institution and additionally the said institution has already place the same property for auction.  Such things can happen once there are made-up set of documents given as security.

In another incident, it happened that except for being multiplicity of institutions claiming to possess taken mortgage of the property, there happened to be multiple persons bearing the same name as patron and once the Bank determined to need possession of the loaded down property, they will not do thus as a result of the identity of the property that of the owner of the property could not be tallied as a result of the person alleged to have loaded down 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 ought to be further careful whereas submitting his report on valuation. though it's a necessity for the appraiser to enquire regarding the genuineness of the owner of the property and additionally the property in question, he have to be compelled to submit his report back to the concerned authority, ideally head to go or with ample care to avoid interpolations.In one instance, a Bank entrusted the valuation of secured property to its empanelled appraiser but later it transpired that the actual valuation and additionally the report on valuation accessible to the concerned authority varied really wide and iniquity was suspected.

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