WHICH AREA TO BE CONSIDERED BY A VALUER

KNOWLEDGE BANK

LET KNOWLEDGE SPREAD

Message from B K Aruna-03/11/2024
D/o, B Kanagasabapathy

Question:

I am a beginner in valuation and I have been recently empanelled. My question is as follows:

In 2014, Mr. X purchased a residential flat with an area mentioned as 1230 sq. ft. in the sale deed.

In 2019, Mr. Y purchased the same flat, and the area in the sale deed was again mentioned as 1230 sq. ft., consistent with previous records. A legal opinion and encumbrance certificate from 2019 also confirms this area as 1230 sq. ft.

Now in 2024, Mr. Z intends to buy the flat. Before finalizing the purchase, he hired a valuer who found that the actual area is 1320 sq. ft. Upon inquiry, it was revealed that Mr. X had previously listed a lower area to save on stamp duty. Mr. Z requested Mr. Y to mention the correct area of 1320 sq. ft. in the new sale deed, and he agreed to pay for 1320 sq. ft. at the prevailing composite rate of Rs. 10,000 per sq. ft.

The property has now come to me for valuation. Mr. Z provided the 2024 sale deed, which states the area as 1320 sq. ft. However, the area mentioned in previous sale deeds from 2014 and 2019 is 1230 sq. ft., and the encumbrance certificate from 2019 also lists 1230 sq. ft. The purpose of the valuation is to estimate the current market value for a housing loan.

Upon measurement, I found the actual area of the flat to be 1320 sq. ft., consistent with the approved building drawings.

Given that:

The 2024 sale deed reflects the corrected area of 1320 sq. ft.,

Previous legal records and encumbrance certificates indicate 1230 sq. ft., and

The purpose of the valuation is for a housing loan, Should I consider 1230 sq. ft. as per previous records or 1320 sq. ft. as per the latest sale deed and my measurements?

Opinion:

I suggest considering 1320 sq.ft for the valuation. Here are the reasons for my opinion:

1. The approved building drawings reflect an area of 1320 sq. ft.

2. Your measurement also confirms the actual area as 1320 sq. ft.

These are verifiable facts. You may set aside the area mentioned in the previous sale deeds, legal opinion, and encumbrance certificate, as the original owner reportedly declared a lower area to reduce stamp duty.

It may not be difficult to defend your valuation report as long as the value certified by you is correct and the property is marketable. Provide a detailed valuation report, clearly stating all relevant facts and include a precise sketch of the area.