Valuation of Immovable Properties
5.1 INRODUTION
It is human nature to create controversy even where it does not exist. Expert values have been fighting, in vain, to find out whether valuation is an art or a science. To set this rift at rest, Justice Viscount Simon of the House of Lords in Gold Coast Selection Trust case held that "valuation is an art and not an exact science. Mathematical certainty is not demanded, nor indeed is it possible".
Thus valuation cannot be tied up by rigid laws of nature or science. It also cannot work under fixed and inflexible set up of principles because it has great dependence in human nature and individual' thinking. It can not be said that vacant flats are always required to be valued on comparable sales method. Sometimes circumstances may demand value estimation by Rental Method. Hence two flats in the same building may have different values for the same area.
Similarly two adjacent plots in the same area may have different values because one plot falls in garden reservation and another plot is marked for commercial user.
An old case of human intelligence affecting value of property is worth studying. An open plot of land was offered for sale in a posh locality of Mumbai. But there were no buyers for the plot because it was subjected to the covenant that no construction above 5' would be allowed to be put up in the plot. Owner failed to sell plot for 2 years in spite of his best efforts. One day a person came with an offer of Rs. 10 lacs with condition that the deal be completed in 2 days time. Owner was too happy and he immediately agreed to sell the property, but he also let the buyer know about the covenant. The purchaser replied that he was aware of that restriction. After the deal was completed, the curious vendor asked the purchaser about the proposed use to which the land would be put and he came to know that the purchaser intended to put up a petrol pump on the said plot. Thus human intelligence changed a `bad covenant' into a lucrative business
It is human nature to create controversy even where it does not exist. Expert values have been fighting, in vain, to find out whether valuation is an art or a science. To set this rift at rest, Justice Viscount Simon of the House of Lords in Gold Coast Selection Trust case held that "valuation is an art and not an exact science. Mathematical certainty is not demanded, nor indeed is it possible".
Thus valuation cannot be tied up by rigid laws of nature or science. It also cannot work under fixed and inflexible set up of principles because it has great dependence in human nature and individual' thinking. It can not be said that vacant flats are always required to be valued on comparable sales method. Sometimes circumstances may demand value estimation by Rental Method. Hence two flats in the same building may have different values for the same area.
Similarly two adjacent plots in the same area may have different values because one plot falls in garden reservation and another plot is marked for commercial user.
An old case of human intelligence affecting value of property is worth studying. An open plot of land was offered for sale in a posh locality of Mumbai. But there were no buyers for the plot because it was subjected to the covenant that no construction above 5' would be allowed to be put up in the plot. Owner failed to sell plot for 2 years in spite of his best efforts. One day a person came with an offer of Rs. 10 lacs with condition that the deal be completed in 2 days time. Owner was too happy and he immediately agreed to sell the property, but he also let the buyer know about the covenant. The purchaser replied that he was aware of that restriction. After the deal was completed, the curious vendor asked the purchaser about the proposed use to which the land would be put and he came to know that the purchaser intended to put up a petrol pump on the said plot. Thus human intelligence changed a `bad covenant' into a lucrative business