On disputes related to the value of the market value of real estate, and let’s talk in this article.
Based on the Law on Appraisal Activities, the market value of real estate is the most likely price at which this property can be alienated on the open market in a competitive environment under normal social, economic and political situations in the country.
When concluding transactions, the parties need to remember that according to the law, if a specific legal valuation of real estate is not defined in a regulatory legal act or contract, the market value of this object is subject to determination. In addition, terms such as “real value”, “reasonable value”, “equivalent value”, “and real value” also mean market value.
The question of applying the market value of real estate arises, for example, in cases involving claims arising from insurance contracts, since it is real estate that is most often the subject of this contract.
So, by virtue of clause 2 of Article 947 of the Civil Code of the Russian Federation, when insuring property, unless otherwise provided by the insurance contract, the insured amount must not exceed its actual value (insured value). At the same time, Article 951 of the Civil Code of the Russian Federation expressly provides that if the insured amount specified in the insurance contract exceeds the insured value, the contract is void in that part of the insured amount that exceeds the insured value. Thus, on the basis of the provisions of the Civil Code of the Russian Federation and the Law on Appraisal Activities, when insuring real estate, the insurance amount should not exceed the actual value, which is equivalent to the market value of this real estate. This approach to the use of market value by the courts is used uniformly (for example, the FAS Decisions of the Moscow District of 01/21/2013 in case No. A40-113591 / 10-59-1009,
Disputes about the use of market value are also common in cases involving non-payment of mortgages.
For example, the case of the St. Petersburg City Court No. 2-2393 / 12 on foreclosure of the mortgaged property. In this case, the defendant did not fulfill the obligation to pay interest on the loan agreement, secured by a mortgage. As a result, during the trial, a penalty was levied on a share in a three-room apartment in the mortgage by selling the said share at public auction. At the same time, according to the law “On Mortgage”, the court is obliged to determine the initial sale value of the property to which the penalty is levied. Accordingly, the court determined the initial sale value of the apartment shares to be equal to the market value of the apartment shares defined in the appraiser’s report submitted by the respondent.
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The legislation lists a number of cases in which the assessment of the market value of real estate is mandatory, namely:
In determining the value of objects belonging to the Russian Federation, subjects of the Russian Federation or municipalities, for the purpose of their privatization, transfer to trust management or lease;
In mortgage lending to individuals and legal entities in cases of disputes about the value of the subject of the mortgage;
when drawing up marriage contracts and dividing the property of divorcing spouses at the request of one of the parties or both parties in the event of a dispute about the value of this property;
When controlling the payment of taxes, if there are disputes about the calculation of the taxable base.
If it is impossible to independently challenge the value of the valuation object determined by an independent appraiser by filing a separate claim, the question of the reliability of this value can be considered as part of the consideration of a specific dispute regarding a transaction, an issued act or a decision made (including a case of invalidation of a transaction , on challenging a regulatory act or decision of an official, on declaring a decision of a management body of a legal entity invalid, etc.).