Model Engagement Letter

For Bank Valuation Assignments (Collateral Security / Mortgage Purposes)

Note: This model engagement letter is structured in line with judicial principles recognized by the High Court of Judicature at Patna and Supreme Court jurisprudence including CBI, Hyderabad vs. K. Narayana Rao, which clarify that a valuer’s responsibility is limited to valuation and does not extend to title verification unless specifically contracted.

This template may be modified to suit institutional requirements.

📄 MODEL ENGAGEMENT LETTER

OPTION-1

Date: ____________
Ref No.: ____________

To,
The Branch Manager
[Name of Bank]
[Branch Address]

Subject: Engagement for Valuation of Property Offered as Collateral Security

Dear Sir/Madam,

We acknowledge receipt of your request dated __________ for valuation of the property described below for the purpose of securing credit facilities proposed to be granted to:

Borrower Name: __________________________
Property Address: ________________________
Type of Property: (Residential/Commercial/Industrial/Land)

1️⃣ Scope of Assignment

We understand that we are being engaged to:

Conduct physical inspection of the property
Assess its Fair Market Value as on the valuation date
Submit a valuation report for internal credit appraisal purposes

The scope of work is strictly limited to the determination of the market value of the property as per prevailing market conditions.

2️⃣ Exclusions from Scope

Unless separately agreed in writing, this engagement does not include:

Verification of title or ownership
Authentication of sale deeds or legal documents
Search for encumbrances or litigation
Structural stability certification
Technical due diligence
Environmental assessment
Compliance verification under local building regulations

Verification of title and related legal aspects shall remain the sole responsibility of the Bank and/or its appointed legal advisor.

3️⃣ Basis of Valuation

The valuation shall be based on:

Physical inspection of the property
Documents made available by the Bank/Borrower
Market comparables and prevailing rates
Applicable valuation methodology

The valuation will represent the estimated market value as on the specified date.

4️⃣ Reliance on Information Provided

We shall rely upon:

Copies of title documents provided
Layout plans, approvals, and related documents
Information supplied by Bank officials or borrower

We shall not independently verify the authenticity or legality of such documents unless specifically instructed and contracted to do so.

5️⃣ Purpose Limitation

The valuation report shall be prepared exclusively for:

Internal credit appraisal and collateral assessment by the Bank.

The report shall not be used for any other purpose without prior written consent.

6️⃣ Confidentiality

All information provided by the Bank shall be treated as confidential and used solely for the purpose of this assignment.

7️⃣ Professional Fees

Our professional fees for this assignment shall be:

₹ ____________ (Rupees ____________________)
Plus applicable taxes.

Payment Terms: _____________________________

8️⃣ Limitation of Liability

Our liability, if any, shall be limited to professional negligence established in relation to the valuation exercise and shall not extend to:

Fraud committed by borrower
Forged or fabricated documents
Loan sanction decisions
Recovery performance of credit facility

9️⃣ Independence Declaration

We confirm that:

We have no direct or indirect interest in the subject property.
The valuation shall be carried out independently and objectively.
There is no conflict of interest in accepting this assignment.

🔟 Acceptance of Terms

Kindly confirm acceptance of the above terms by signing and returning a copy of this letter.

We look forward to working with your esteemed institution.

Yours faithfully,

Name of Valuer: ____________________
Registered Valuer No.: ________________
IBBI Regn. No. (if applicable): ________
Firm Name: ____________________________
Address: ______________________________
Contact Details: _______________________

Signature: _____________________________

Bank Acceptance

For [Bank Name]

Name: ___________________________
Designation: _____________________
Signature & Seal: _________________
Date: _____________________________

📄 MODEL ENGAGEMENT LETTER

OPTION-2

Date: _________
To:
The Branch Manager
[Name of Bank]
[Branch Address]

Subject: Engagement for Valuation of Immovable Property Offered as Collateral Security

Dear Sir/Madam,

This letter sets out the terms and conditions governing our engagement for valuation of the property described below.

1️⃣ Appointment

We acknowledge receipt of your request dated ______ appointing us as Valuer to assess the fair market value of the following property:

Borrower Name: ____________________
Property Address: ____________________
Type of Property: ____________________
Purpose: Loan / Cash Credit / Mortgage / Other

Our appointment is accepted strictly subject to the terms contained herein.

2️⃣ Scope of Work

Our scope shall be limited to:

Physical inspection of the property (where access is provided)
Assessment of market value as on valuation date
Application of appropriate valuation methodology
Preparation of valuation report

We shall not undertake:

Title verification
Legal due diligence
Structural stability assessment (unless separately instructed)
Verification of statutory approvals
Investigation of encumbrances

3️⃣ Title and Legal Disclaimer

The Bank shall provide copies of all relevant documents. We shall rely upon the documents and information furnished.

Verification of:

Title ownership
Authenticity of sale deed
Encumbrances
Litigation status
Legal validity

shall remain solely the responsibility of the Bank and/or its appointed legal counsel.

We shall not be responsible for forged, fabricated, or misrepresented documents supplied by the borrower or any third party.

4️⃣ Basis of Valuation

The valuation shall be conducted based on:

Market data available as on valuation date
Comparable sales (where available)
Physical condition observed during inspection
Applicable valuation standards

The valuation reflects market conditions prevailing on the date of assessment and does not guarantee future realizable value.

5️⃣ Limitation of Liability

Our liability, if any, shall be limited strictly to professional negligence proven in the valuation exercise.

We shall not be liable for:

Loan sanction decisions
Credit appraisal errors
Borrower default
Fraud by borrower
Forged collateral documents
Market fluctuations

Under no circumstances shall liability exceed the professional fee charged for this assignment.

6️⃣ Purpose Restriction

The valuation report shall be prepared exclusively for the purpose mentioned herein and shall not be used for any other purpose without our prior written consent.

7️⃣ Confidentiality

All information provided by the Bank shall be treated as confidential and shall not be disclosed except as required by law.

8️⃣ Independence Declaration

We confirm:

No direct or indirect interest in the subject property
No conflict of interest
Independent and unbiased assessment

9️⃣ Access and Cooperation

The Bank/borrower shall ensure:

Free and safe access to property
Provision of necessary documents
Correct disclosure of relevant facts

Any limitation in access shall be recorded in the report.

🔟 Professional Fee

Professional fee for this assignment: ₹_________
Payment terms: ____________________

1️⃣1️⃣ Governing Law

This engagement shall be governed by the laws of India. Any dispute arising shall be subject to jurisdiction of courts at __________.

Acceptance of Terms

Kindly sign and return a copy of this letter as confirmation of acceptance.

Yours faithfully,

Name of Valuer: ____________________
Registration No.: ____________________
Firm Name (if applicable): ____________________
Signature: ____________________

For and on behalf of [Bank Name]

Authorized Signatory: ____________________
Designation: ____________________
Date: ____________________

📌 Optional Additional Protective Clause (Recommended)

The Valuer’s role is strictly limited to estimating market value. The Valuer does not certify or guarantee the enforceability of mortgage rights, nor the genuineness of documents relied upon.

Published by: Council of Engineers and Valuers (CEV)