VALUATION CRITERIA
1.The Valuator is required to adhere to the following criteria while assessing value of land and building.
A Land:
I. Fair Market Value:
a) Fair Market Value of Land refers to the value of the Land derived by considering the minimum of prevailing market rates of past 6 months.
ii) Distress Value:
(a) To derive the Distress value, first the Adjusted Value of the Land should be derived by giving 30% weight to government value and 70% to Fair Market Value. This doesn't limit the valuator to factor other aspects and to arrive at Adjusted Value at further lower side. Above given weights shall be applicable only where the government value is lower than the Fair Market Value. If the government value is higher than the Fair Market Value, then 100% weight to be given to the Fair Market Value.
(b) After arriving at the Adjusted Value, the Valuator shall assess the Distress Value of the property by further discounting the Adjusted Value at its discretion so as to reach the recoverable value of the Land in distress situations.
(c ) The distress value should not be more than 90% of the 'Adjusted Value" of the property. B Building:
The value of temporary sheds/buildings, specific structures which are not useable for other than the intended purpose and or Decorative items etc should not be considered for valuation purpose.
i) Fair Market value:
(a) Fair Market Value of Building refers to actual replacement value i.e. current cost price less depreciation charged at regulatory rate.
ii) Distress value:
(a) Given the locality, construction type, design and other factors, the Valuator shall further adjust the Fair Market Value of the Building by subtracting adjustment amount on replacement value at its discretion to arrive at Distress Value of the Building. Adjustment amount depending on various factors such as location of the building (e.g. whether it is in remote area, residential area or high rental earning commercial area), structure of the building (current or outdated) etc to be factored and deducted. In commercial location, the Distress Value could be at par with Fair Market Value and in case of the property situated in the remote area the Distress Value could be significantly less than the Fair Market Value.
b) The Distress Value of the Building should be the likely disposable price of the building at distress selling.
In case of Consortium financing valuation report prepared by the valuator nominated by the consortium and or lead bank shall be accepted.
2. The property obtained/ to be obtained for coverage of the credit facilities provided by the Bank should fulfill at least the following conditions:
a) The property should be freehold.
b) Access to the property as shown in the location map is undisputable. The width of access should be minimum 8 feet for the plots up to 1 ropani or equivalent. Minimum 10 feet wide access is required if the land size is more than 1 ropani or equivalent. However, property with an access road of width less than eight/ten feet may be accepted by the Bank at its discretion if the same has acceptable residential or commercial value. In such a case, the Valuator should obtain prior approval of the Bank in order to commence valuation.
c) The motorable road should be visible at the site as well as on the “Trace survey map”. If it is not visible on the survey map, the conformation of same must be obtained from the concerned municipality/ward of VDC by the Valuator through the client.
d) If there is no access by a motorable road and a third party is willing to provide access through its property, a legally enforceable and binding consent document should be obtained.
e) Required time period must have elapsed from the date of the transfer to avoid claimant risk as per the nature of the transfer e.g. Rajinama, Bakaspatra, Angsa banda etc.
f) Guthi Land and land with tenants (Mohi) not to be accepted. However special purpose Guthi land may be considered with prior specific approval from the Bank.
g) The property should not be located within any protected heritage area.
h) The property should be within the vicinity of municipality or a VDC adjacent to the municipality.
i) The property should preferably have single ownership viz. the property being in the name of one person or firm /company.
j) The property should not be adjacent to a river or marshy grounds. Property up to 20 meters from the edge of each side of river bank should not be considered for valuation without prior approval from the Bank Management.
k) Features like sewerage, dumping, water logging, temple/shrine, river, hazardous factory, noise pollutions, army barracks, cremation area, fuel storage depot, present or potential road expansion projects affecting the land etc affecting the value of the property to be critically examined. Such information needs to be stated in the valuation report.
l) Property under or affected by electricity supply line (hi-tension line) not to be considered unless and until specifically approved by the Bank. In such cases, required distance as per the Electricity by laws to be deducted from the total area and valuation is further subject to deduction of additional distress factor of 20%.
m) The type of land to be disclosed e.g. agriculture, residential, commercial etc. agricultural land in rural areas should not be considered for valuation without written consent form the bank.
n) The property must have a boundary wall or at least permanently marked boundary. o) Four boundary and area of the land is physically verified and tallied with the Official survey map (Blue Print) and confirmed there is no dispute with the neighbouring plots.
p) If the property under valuation consists of a number of plots, the valuation report should clearly specify the plots with independent access and the plots without the same. In the case property under valuation consists of a number of plots with independent access, the valuation of each individual plot may be calculated separately.
q) The authorized Valuator should review the legal documents related to the property. Any information indicating probability of a legal dispute should be clearly mentioned in the valuation certificate, summary of valuation report and detailed valuation report.
r) The Valuator should explicitly mention in the valuation report any restriction to transfer the ownership of the property or to construct a building including maximum permitted height or storey. Similarly, the Valuator should also mention in the valuation report any restriction to construct any building within the specified distance from the centre of the road.
s) In case the property under consideration includes construction as well:
I. The construction should have been done as per the approval of concerned authorities and copies of the approved drawing and certificates should be enclosed in the report
II. The construction does not violate the norms and parameter specified by the local or government authorities. The Consultant/Valuator should also check and confirm that the set back line and free space as prescribed by the government authority/ies has been adhered to while constructing the building.
III. Factors and basis considered for the rate applied for valuation of construction should be mentioned in the report in detail
IV. The Consultant/ Valuator should use his discretion in application of appropriate rate of depreciation on the basis of the condition of the assets to be valuated. However, the rates applied should not be less than the standard rates as per the law.
V. Value of the items (that can be severed) used for house decoration and construction of temporary nature should not considered in the valuation.
VI. In case of under construction works, valuation should be done up to the completed portion only.
VII. Salability of the property in a free market should be assessed.
VIII. The Valuator should ensure that rules and regulation of Town Development Board have been adhered to in the case of building to be valuated. The Consultant/Valuator should not valuate building for which proof of registration and approval of blueprints of the same at the Town Planning/ Municipality Office/ concerned Government authority obtained. However this may not apply to buildings constructed when there were no such requirements. (before implementation of such requirement).
IX. Temporary building/shed, guard house, boundary wall should not be considered for valuation.
X. The built up area of building should match with the original approved drawings. The number of floors considered in the valuation should be the same as per the approved blueprints.
3. The valuation report should be in the standard format which consists of “Valuation Certificate”, “Summary of valuation report” and detailed valuation report. In case of revaluation, the revaluation report may consist of “Valuation Certificate’ and “Summary of Valuation report”. Every page of the valuation report should be signed and stamped by the Valuator.
a) The contents of the report should cover at least the following information:
I. Valuation Certificate: Besides brief details of the property (e.g. client, owner, location, plot nos, area, fair market value, distress value, the certificate should certify that the valuator has taken proper measures to ascertain the fair market value and distress value of the property in line with the valuation agreement with Nabil Bank Limited and also declare that:
i. The Valuator has physically inspected, verified and measured the properties on ……
ii. The Valuator has no direct or indirect interest in the Client or the property
iii. Based on the documents examined and upon physical visit of the site, the information furnished are true and correct
iv. Valuation Certificate to be accompanied by “Remarks/qualifying or limiting conditions” if any, covering any adverse information or exception to the valuation criteria that may pose as a risk to the interest of the Bank and should come to Bank’s attention (example: filling requirements, high tension lines, remaining claim periods, legal disputes over the property etc, if any).
v. Valuator’s opinion as to whether the property may be taken as security for up to distress amount recommended in the certificate.
II. Valuation Summary: It should cover:
i. Details of the Client (e.g. Name, registration numbers, address, contact nos)
ii. Details of the owner of the property
iii. Address of the property
iv. Brief details of the land (e.g. plot numbers, area (measured and as per Lal purja),
v. Details of the buildings/Plant/machinery as applicable
vi. Details of access to the Land
vii. Boundaries details
viii. Commercial rates, Government rates, FMV and DV of the properties
III. Detailed Report: it should cover:
i. Location of the property with location map
ii. Area of the land as per Lalpurja
iii. Measured Area of the land (along with calculation table)
iv. Present and future potential (commercial importance) of the property e.g. proximity to civil amenities like schools/hospitals, transportation services, residential/commercial area etc.
v. Legal status (ownership, revenue payments, compliance with governments requisites e.g. free spaces around construction, map designs etc.
vi. Description and type of the properties, facing (west/east etc)
vii. Present use of the properties
viii. Technical features of the building (as applicable) e.g. number of floors, floor areas, structure, foundation type, internal and external finishing , water supply and sanitation, electricity, years of completion and other relevant details
ix. Current rental earnings if any
x. Methods of valuation for land/building
xi. Calculations of FMV, Adjusted Value and DV
b) The copies of the following major documents should be included in the valuation report: • Citizenship Ceritificates.
• Copy of land ownership certificate.
• Ownership transfer deed (Rajinama)/Separation/Gift (Bakaspatra).
• Trace survey map of the area issued by Survey Officer/Government and approved by survey office for mortgage purpose.
• Blue print map
• Payment receipt of most recent land revenue tax/property tax
• In case of building, the approved drawing of the building by concerned municipality. A letter of approval to construct the building from the concerned V.D.C. if the property is situated in a V.D.C.
• Location map prepared by the valuator himself/herself showing distance in Kilometers from the nearest popular area to the site.
• Boundary certificate of the proposed property issued by the local authority • Photographs of land /building pictured from East, West, South and North elevation and main access road with clear marking and caption.
• Confirmation of access road to property obtained from the concerned municipality / ward of village development committee when access road not visible on the Trace survey map.
• Consent from third party willing to provide access through its property when there is no access by a motorable road.
• All assumptions used while valuating the machinery should be clearly stated in the valuation report.
