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WHAT TO DO WHEN BANK DEMANDS VALUATION OF LAND PORTION ONLY OF A COMMERCIAL BUILDING

QUESTION & OPINION

B. Kanaga Sabapathy 04.02.2022

Question :

A bank is requesting me to do the valuation of land portion only while there is a self occupied commercial building in it. Is it right for a panel valuer to certify the value of land portion alone?

Opinion :

The opinion depends upon the purpose of valuation for which the bank is directing the valuer to do the valuation.

1. If the purpose is for mortgage :

i) The loan amount may be very less when compared to the value of land and building. In such case, the manager would have thought that getting a valuation report for the land portion alone is quite adequate since the loan portion is fully covered.

ii) Get an engagement letter from the bank indicating clearly the purpose of valuation and the scope of the valuation. This letter may be attached along with the valuation report.

iii) After considering the marketability and enforceability aspects, do the valuation of land portion and do not forget to mention in the certificate like this :

“The property consists of land and a commercial building owner occupied. The scope of valuation is restricted only to value the land portion alone as directed by the bank manager.”

2. If the purpose is for SARFAESI :

i) The manager’s request cannot be accepted by the panel valuer if the valuation is required for the purpose of auction under SARFAESI act.

ii) Do the valuation of the entire assets for “as is where is” condition considering the approval aspects, violation, marketability, etc.

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