liampke1085954/pinnaclepropertythailand
1
0
Code Issues Actions Packages Projects Wiki Activity

Add Fair Market Value-What does it Mean?

Liam Zeal 2025-11-30 19:44:35 +00:00
commit 017ddfecb8
1 changed files with 13 additions and 0 deletions
Show stats Download patch file Download diff file Expand all files Collapse all files

13
Fair Market Value-What does it Mean%3F.-.md Normal file

@ -0,0 +1,13 @@
<br>In the world of property, it is typical to utilize fair market price (FMV) as a way of explaining the value of property or leas payable. However, possibly not frequently considered is the issue that the term FMV can imply various things to different people. For some, FMV may be the cost that somebody would be ready to spend for the land under its [existing usage](https://al-mindhar.com). For others, FMV may be the rate that someone would want to spend for that same land under its greatest and finest usage, such as for redevelopment functions. Alternatively, for specific special possessions, FMV may have other meanings, such as replacement worth. For example, if land is to be sold to a neighbour as part of a land assembly which neighbour might want to pay a premium to get the land, is that premium then part of the decision of the FMV and should that premium be determined with a danger premium or since the date where the development value is protected?<br>
<br>This all begs the question-which method is proper?<br>
<br>By default, an appraiser would aim to the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP). Under CUSPAP, FMV means: "the most probable cost, since a defined date, in money, or in terms equivalent to money, or in other specifically revealed terms, for which the specified residential or commercial property rights ought to sell after reasonable direct exposure in a competitive market under all conditions requisite to a reasonable sale, with the purchaser and the seller each acting prudently, knowledgeably, and for self-interest, and presuming that neither is under undue duress."1<br>
<br>To put it simply, an appraisal of FMV should, as a beginning point, be based upon the presumption of greatest and finest use of the residential or [commercial property](https://lifetimeinvestmentrealty.com). From this beginning point, the appraisal would then take into consideration the time and threat that accompanies the entitlements procedure required to achieve the highest and finest usage (consisting of that it may not be achieved). This is frequently done in conjunction with a planner who will assess the website in the context of provincial policy and [regional](https://ccom.vn) official strategies.<br>
<br>While the CUSPAP meaning seems clear enough, it is not the universal approach as was explained in the current Ontario Court of Appeal (ONCA) case of 1785192 Ontario Inc. v. Ontario H Limited Partnership (1785192 Ontario).2<br>
<br>1785192 Ontario Inc. and 1043303 Ontario Ltd. (collectively described as the Landlord) were the property manager corporations of two commercial residential or commercial properties in Whitby, Ontario, which were leased to Ontario H Limited Partnership (the Tenant). The leases each consisted of an option for the Tenant to buy the residential or commercial properties from the Landlord and included a mechanism for setting the rate at which the [Landlord](https://dreampropertiespr.com) would be required to sell. The provision mentioned that the purchase cost would be a "purchase cost equivalent to the average of the appraised fair market value of the Leased Premises as determined by two appraisers, one chosen by the Landlord and one picked by the Tenant."<br>
<br>The Tenant [ultimately exercised](https://sleeping-options.com) both options to purchase and the parties engaged appraisers as needed. The Landlord acquired an appraisal from Colliers International Group Inc., valuing the residential or commercial properties at a cumulative $31,200,000 based upon a highest and best use assumption, while the Tenant acquired an appraisal from Equitable Value Inc., valuing the residential or commercial properties at a collective $11,746,000 based on a present zoning presumption. While the celebrations initially disputed each other's appraisals, the Landlord eventually accepted the Tenant's appraisal, [setting](https://dasseygeneralgroup.com) the purchase price at the midpoint of the 2. However, the [Tenant continued](https://realestatescy.com) to challenge the Landlord's appraisal, circuitry just $11,746,000 to the Landlord's lawyer on closing, resulting in the [Landlord refusing](https://leonisinmobiliaria.com) to close on the basis that the purchase rate had actually not been paid.<br>
<br>At trial, the [Tenant argued](https://propertyfied.com) that the Landlord's appraisal was overpriced as it was postulated on speculative and inappropriate assumptions about how the residential or commercial property could be developed if rezoned. However, the application judge, [depending](https://propertycatalog.co.za) on the CUSPAP standards, found that the leases set out a system that was indicated to take into account that each party might seek an appraisal utilizing [affordable presumptions](https://homesgaterentals.com) that were most favorable to that celebration. As such, each party was compliant with the FMV system set out in the leases and each celebration had a valid appraisal, meaning that the purchase price for the residential or commercial properties was the midpoint of the 2 appraisals and the Landlord had truly declined to close on the deal. On appeal, the ONCA agreed with the application judge finding that what makes up a [valid appraisal](https://ibiolavilla.com) is a concern of reality and absent a palpable and overriding mistake, there was no basis on which the ONCA could set that discovering aside.<br>
<br>Takeaways<br>
<br>When handling a decision of FMV, realty experts should be deliberate in their drafting. The of FMV and the system utilized for determining the FMV needs to be clear. If the objective is for FMV to show the "as is" usage of the residential or commercial property and the "where is" state of it, it should be drafted as such. If the intent is for FMV to show the greatest and best usage of the residential or commercial property, then the CUSPAP meaning need to be utilized, perhaps with any unique modification appropriate to the specific transaction. In addition to a clear definition, it would be prudent for professionals to include a disagreement resolution system to determine FMV so as to develop a tidy and efficient procedure to attend to a situation where the FMV definition fails to offer a clear response and appraisals are significantly various. Taking these steps would allow the celebrations to prevent a failed transaction and potentially pricey litigation as held true in 1785192 Ontario.<br>
<br>1 Appraisal Institute of Canada, Canadian Uniform Standards of Professional Appraisal Practice (Ottawa: AIC, 2024) online: chrome-extension:// efaidnbmnnnibpcajpcglclefindmkaj/https:// www.aicanada.ca/wp-content/uploads/CUSPAP-2024.pdf<br>
<br>2 1785192 Ontario Inc. v. Ontario H Limited Partnership, 2024 ONCA 775.<br>
<br>Please note that this publication presents an overview of noteworthy legal patterns and related updates. It is meant for educational functions and not as a replacement for comprehensive legal recommendations. If you need assistance customized to your specific circumstances, please contact among the [authors](https://listin.my) to explore how we can assist you browse your legal requirements.<br>