Property rights evaluation is a service, which is quite specific. And the need for it for customers is relatively rare, compared to, for example, real estate evaluation. In general, the concept of property rights is quite interesting even from a domestic point of view. If we buy a land plot, what exactly is the subject of its evaluation? The land itself (soil) or the right to use a certain space? Often the boundary between the value of property and property rights of individual objects is very blurred. This often leads to confusion both in the minds of customers and some appraisers. We will deal with this issue together.
Let’s look at the most frequent or better say common cases of property rights valuation. And the characteristics of each of these situations.
Evaluation of property rights for premises in new buildings
The most obvious and simple case of the works described in this article is premises evaluation or apartments in new buildings. And at the stage of construction, when the house has not been put into operation. That is, the object of the study is not the premises as such, but the right to take possession of the real estate after the completion of construction work and putting the house into operation. Such property rights are confirmed by various types of investment contracts. Unlike the usual evaluation of apartments, where the ownership of the object is a title deed: a contract of sale or gift, a certificate of ownership, a court decision, a certificate of the right of inheritance, etc.
In most cases, it is easy to evaluate property rights to premises or apartments in unfinished houses. It is enough to go, for example, to the ad site in the section «New buildings» and analyse the ads for the sale of real estate, or rather the rights to it, in the same house that interests us. Although, if there are any problems with the new house, and evaluation is needed for presentation in court, in practice, the situation is not so simple and unambiguous.
Pay attention to customers, the peculiarity of preparation of documents to determine the cost of premises (both residential and non-residential) in new, not commissioned houses. The appraiser and an appraisal company must have permits not just for work with real estate, but also for property rights evaluation (direction 2.1. in the Conformity Certificate). Be careful, as cases of poor quality and unprofessional preparation of such documents are frequent! Such permits are much more difficult to obtain than the usual work with real estate, so they do not have all firms.
Another common type of valuation of property rights is the valuation of the shares of founders in enterprises. This is a rather broad and multifaceted topic to which we pay great attention and devote a significant number of articles.
It is clear that when working with such objects, they cannot, as they say, «touch with your hands». Therefore, it is a question of determining the value of property rights, not the objects themselves. As a private case, corporate rights can be considered stock assessment. This work has its own significant features, but overall it is another classic example of property rights evaluation.
Securities and property rights contracts
Documentary evidence of ownership of property rights can be some types of securities: bonds, bills and so on. The use of so-called derivatives is widespread in the construction of real estate. That is, forward acquisition contracts, which are themselves subject to evaluation. We also have experience in determining the cost and loan agreements, in particular, for re-registration of claims on factoring companies.
Evaluation of land use rights
It is also worth mentioning the fairly common type of work with property rights to determine the ownership of land parcels on leases. This is an interesting type of work, which is often in demand when selling detached buildings. Under this article we will not go into the details of the assessment of the right to lease. You just need to pay your attention to the fact that the cost of the land plot and the rights to it – it is, as they say in Odessa, two great differences. Both in terms of document processing and cost.
Another case where it is necessary to calculate land lease rights is the work on evaluation of expensive cottages. Such houses often have an adjacent area, which is issued as a lease. Often it may be a forest area or a coastal strip of water. Also the beach can be rented from enterprises or associations of owners of nearby land plots.
Property rights as subject of valuation
All work on the valuation of rights differs significantly from usual property evaluation. Most calculations are made using the so-called income approach, which analyses the cash flows from ownership.
Each case of such work is unique. And there are no common approaches to solving these problems. We specialise in performing atypical work on expert evaluation, therefore, we will be glad to cooperate with you also in determining the market value of property rights. You are welcome to contact with us!