This article deals only with real estate — apartments, houses, land plots, and non-residential premises. For this type of property in Ukraine, there are two valuation options: a classic report from a certified valuer and an electronic certificate from the State Property Fund of Ukraine (SPFU) for automatic valuation. Let us look at when a certificate is enough and when it is necessary to contact valuers.
SPFU certificate: when is it suitable?
Today in Ukraine, any interested person can receive a certificate of automatic real estate valuation online for free. To do this, it is enough to go to the service of the State Property Fund of Ukraine, enter the property address and its characteristics. The system instantly generates an electronic document with a unique registration number. This is simply a long number (21 digits with hyphens, not a QR code as some people think), which allows the notary to verify the authenticity of the document in the register. That is why no seals or signatures, including electronic ones, are provided for or required on the document.
Interestingly, a certificate can be ordered not only for your own real estate, but also for someone else’s — the database is open to everyone. This is convenient: each party to the transaction can check the data in advance, even before going to the notary.
With this certificate, the owner goes to the notary for re-registration of the property — sale, gift, or inheritance. The notary is obliged to accept such a document, since it is entered into the Unified Database, which is an official state source of information on the value of real estate properties. Legal basis — Article 172.3 of the Tax Code of Ukraine.
The scheme looks simple:
- Any interested person receives the certificate online for free by entering the address and main characteristics of the real estate.
- The certificate states the appraised value of the property calculated automatically.
- If you are satisfied with the figure, you can safely take the certificate to the notary.
- If the amount is understated or overstated, you can contact a valuer and order a report with the correct value, which in turn will be registered in the same state register. And, like the certificate, it will have unique registration numbers that allow the notary to verify the authenticity of the document online.
Sometimes the automatic valuation can differ significantly from the real market price. For example, when selling a garage in one of the cooperatives in the Berezniaky district of Kyiv, the SPFU register showed UAH 100,000, while the actual transaction price was about UAH 200,000. In other words, the appraised value turned out to be understated by almost half. This is because the automatic valuation is calculated on the basis of average prices for similar properties, so it does not reflect the real condition of a specific property — its features, wear and tear, layout, or improvements made. In this case, obviously, the fact that the garage being sold was a permanent structure was not taken into account, while the program was “guided” by numerous neighboring metal garages.
In such cases, sellers do not always turn to a professional valuation company, because the sale and purchase agreement states two amounts — the market (actual) one and the appraised one. Taxes are calculated based on the higher of the two. Accordingly, if the valuation turns out to be lower than the actual transaction value, this is not a problem for the parties, but rather savings on expert services.
Since clients often have many questions about these two figures in the agreement (the sale price and the appraised value), let us explain in more detail. Lawyers and experienced real estate agents advise stating the actual sale price in agreements, not understated figures. The main risks in such a tax evasion scheme fall on the buyer. If the transaction is declared invalid, including because of the use of a “forged” or incorrect valuation, as law enforcement agencies put it, only the amount fixed in the agreement can be recovered. Therefore, a fictitious understatement of the price may turn into major losses for the buyer and unnecessary problems for both parties.
Advice: already at the negotiation stage, it is worth checking the SPFU certificate in advance and comparing it with the market value of the property. If the figures differ significantly, it is better to discuss immediately with the other party to the transaction what amount will be fixed in the agreement. This simple step helps avoid misunderstandings at the notary’s office and reduces legal risks in the future.
Advantages of the SPFU certificate
Why has this certificate become popular among real estate agents, property sellers, and heirs formalizing their rights to property? It has obvious advantages:
- Free of charge. No expenses, unlike a paid valuation report.
- Fast. The document is generated online in a few minutes.
- Convenient. It is provided to the notary in electronic form; you do not even have to print it out and can simply show it on your phone.
- Suitable for most notarial actions. Selling an apartment, processing an inheritance, or gifting a land plot — the certificate is completely sufficient.
When you cannot do without a valuer’s report
The most common situation when the SPFU certificate is not suitable is court cases. Automatic valuation is calculated on the basis of averaged market data for similar properties and does not take into account the features of a specific property: its condition, degree of wear, layout, and individual improvements. At the same time, for the court to make a decision, it needs an objective and individual value of the specific property confirmed by a report from a certified valuer. At the same time, registration of such a document in the Unified Database of Valuation Reports is not mandatory, because this is not a valuation for tax purposes.
In practice, situations often arise when parties try to use an SPFU certificate instead of a full valuation report for court. For example, some of our clients, when filing a statement of claim, attached a certificate of automatic valuation to the documents in order to calculate the court fee. But the court clerk’s office, understandably, did not accept such a document — they had to order a full report.
There was another case — during the division of property after divorce, the opponents of our clients submitted automatic valuation certificates in which the value of the real estate properties was significantly and quite obviously understated. Their position was that “this is what the state system calculated, so this is the official price.” However, the court pointed out that such certificates could not serve as proof of the real value and ordered an expert examination, the results of which confirmed a much higher market value of the property.
That is why professional valuers always clarify with the client at the beginning for what purpose the valuation is being carried out. Depending on the situation — sale and purchase, accounting, or a court dispute — the documents are prepared differently. Let us emphasize once again: for court, the SPFU certificate is fundamentally unsuitable.
Why do some notaries refuse to accept the certificate?
The reasons vary. Some genuinely hear about such a tool for the first time and work “the old way.” Others understand that automatic valuation may turn out to be lower than the figure in a valuer’s report, which means that the mandatory taxes and fees calculated from this amount will also be lower. For some notaries, this means lower additional income, so they begin to create obstacles for clients, insisting on ordering a full expert real estate valuation. It must be understood that such demands are unlawful.
Our article does not claim to be a full and exhaustive legal consultation on this issue. Let us focus on the main point — in Article 172.3 of the Tax Code of Ukraine, it states, in particular, the following:
Income from the sale of a real estate property … is determined based on the price specified in the sale and purchase agreement, but not lower than the appraised value of such property calculated by the electronic module for determining the appraised value of the Unified Database of Valuation Reports, or not lower than the market value of such property determined by a valuation activity entity (valuer).
and
Based on the results of determining the appraised value of a real estate property … the Unified Database generates a certificate of its appraised value with the automatic assignment of a unique registration number to each certificate.
If a person does not agree with the results of the automatic determination of the appraised value of a real estate property, an indivisible unfinished construction object/future real estate object, they have the right to contact a valuation activity entity (valuer) for the purpose of determining the market value of such an object.
In other words, if you agree with the result of the automatic valuation, the notary is obliged to accept such a certificate. Provided, of course, that it is valid at the time of the transaction. And the automatic valuation certificate is valid for 30 calendar days. Legal basis — Clause 6, Section III of the Procedure for Maintaining the Unified Database of Valuation Reports.
One of our regular clients was processing the inheritance of an apartment from her mother. We obtained an SPFU certificate for her, which showed a value of about UAH 1 million. This figure corresponded to the market price level, so the client decided to use the certificate. The notary said that he would not accept “such a piece of paper” and demanded an apartment valuation. The client knew that the certificate had full legal force and insisted on a written refusal. After that, the notary, understanding the responsibility, still accepted the document. As a result, the transaction cost less and did not involve unnecessary expenses of money and time.
In practice, we also often encounter another scam used by crafty notaries. If the client is not legally informed, they are, so to speak, “put through the wringer.” First, for some far-fetched reasons or without any explanation at all, the notary refuses to accept the certificate of automatic state valuation. But at the same time, they offer to solve this “problem.” They send the client to a valuer who works in collusion with the notary. And then, depending on the specific situation, that valuer will “spin a story,” impose unnecessary services, charge triple for them, because they are supposedly doing the client a favor, and in the end prepare a valuation for the same amount that appeared in the certificate. Usually these are the same valuers who participate in the schemes of so-called “black realtors” and apartment raiders.
What should you do if the notary refuses to accept the certificate?
In practice, there are cases when notaries, for various reasons, refuse to accept the free certificate of automatic real estate valuation, even though this is directly provided for by law. In such a situation, the client has several strategies for protecting their rights. Usually one of four is chosen:
- Give a link to this explanatory article of ours. 🙂 . Sometimes it is enough to show the notary a publication that explains in detail that the SPFU certificate is a lawful document. Throughout the text, we provide links to the relevant legal acts regulating the procedure. Therefore, clients can simply show this article on a smartphone as an argument. In most cases, after that the notary’s objections disappear.
- Ask for a written refusal. If the notary still insists, you can calmly ask for a written refusal to accept this electronic document, indicating the reason. In practice, many notaries do not do this because they understand that such demands on their part are unlawful. Very often, after such a request, they change their position and stop demanding unnecessary documents.
- File a complaint with the Ministry of Justice of Ukraine (you can learn how to do this on their Hotline). This body reviews citizens’ complaints and can take measures against a notary who violates the rules. True, this route takes more time, so it is used less often, when the notary has already, as they say, “pushed things too far” and the client decides to stand on principle. Such complaints are very “motivating” for a notary, because if there are several of them, they may lose their license. Therefore, after such complaints, the notary often calls the client personally and offers to “resolve the misunderstanding.”
- Contact another notary office. The simplest and fastest way is to choose another notary who works within the law. Today, in most cities there are dozens of such specialists, and finding one who will accept an SPFU certificate is usually not difficult. Especially since, if a particular notary’s qualifications are so low that they refuse to accept official state documents, it is unclear whether they will be able to formalize your transaction correctly at all and avoid making a mess in the registers.
Thus, clients have different options for protecting their rights. And, importantly, all of them are based on current legislation. So the choice of strategy depends only on the situation, the time available, and your determination. 🙂
The SPFU certificate of automatic free state valuation is a fully official instrument for real estate transactions. It saves time and money, but it requires the client to be confident in their rights and ready to defend them if the notary tries to reject the document.
