2.2.2024
The Importance of Valuation Report in Inheritance Sharing and Problems with Share Deeds
The process of inheritance sharing is generally complex and prone to disputes. One of the most important steps for the proper sharing of inheritance is the impartial valuation of the properties, hence the preparation of valuation reports for the properties.
The Role of the Valuation Report in Inheritance Sharing
A real estate valuation report is an official document prepared to determine the market value of a property. This report examines the market value of the real estate within the framework of current economic conditions and includes the physical condition of the property and all other legal factors and general market data that may affect the value. Real estate appraisal reports are prepared by a licensed appraiser.
- The current market value of the property is determined. This may be based on the sale prices of other comparable properties.
- Economic factors in the region where the property is located, in the country, or global economic developments may affect the real estate market. The analysis of these issues is also taken into account in the valuation report in a general framework.
- Regional or environmental features in the vicinity of the property, such as infrastructure, transportation facilities, urban facilities, etc., are considered in the valuation process.
- The appraiser makes a valuation by examining the physical condition of the property. This includes important factors such as any damage to a built property, the need for maintenance, and the physical advantages or disadvantages of the property (goodwill factors such as building quality, facade, view, floor, etc.). Similarly, comparisons can be made with goodwill factors based on the type of property for commercial properties or vacant lots or land.
The income Discounting Method (Project Development, Discounted Cash Flows, Direct Capitalization Approaches) or Cost Method may also be used for immovable properties where it is not possible to use market value or where more than one valuation approach is required by expert judgment.
- In the market approach, a comparative analysis is made with the sales or realized sales prices of comparable properties. This helps to determine the market value of the property based on its characteristics.
- Factors such as title deed records, legal restrictions on the property, if any, recorded in the title deed records, legal processes related to the property in the municipal zoning file, documents such as minutes and demolition decisions, if any, and technical and legal permits such as court decisions are also considered among the factors that may affect the value in the valuation reports and the details are presented in the report.
What is a Share Deed? What are the Differences Between Shared Ownership and Unified Ownership?
"Article 701 of the Turkish Civil Code defines joint ownership as the ownership of those who jointly own the goods due to the community formed by the law or the agreements stipulated in the law. In joint ownership, the partners do not have defined shares, and the right of each of them extends to all of the goods entering into the partnership.
Shared ownership, in other words, joint ownership, is the ownership of the whole of something that is not materially divided by more than one person with certain shares. In a shared title deed, the rights between the shareholders are shared in a certain proportion and these persons are granted certain rights of use and disposition on the property.
Article 640 of the TMK regulating the "Inheritance Partnership" states: "In case there is more than one heir, with the passing of the inheritance, a partnership is formed between the heirs covering all rights and debts in the estate until the sharing.
"Conversion of joint ownership into shared ownership", which is one of the cases of termination of joint ownership, is regulated under Article 644 of the TCC. Under this article, for the conversion of joint ownership into shared ownership, one of the heirs must request the conversion of joint ownership into shared ownership on all or part of the property included in the estate.
Following the termination of joint ownership, shared ownership will be formed and the shares of the heirs will be formed as required by law. Disputes can often arise, especially in the division of shared ownership where more than one property is inherited.
How Does the Valuation Report Prevent Disputes?
Valuation reports are extremely important to prevent disputes between property owners in shared title deeds. Contributions of valuation reports to dispute prevention processes:
An Objective and Independent Perspective:
Appraisers appraise the market value of the property from an independent and objective point of view. This prevents emotional factors from influencing the valuation process. The fact that property values are revealed through the eyes of a completely objective and outsider expert provides confidence for all parties.
Basis in Legal Process:
Appraisal reports are prepared by licensed appraisal firms and report a valuation that is historically and reliably accurate. Having an official report at hand can provide a foothold in legal proceedings. In case of disputes, it can be used as data to create a solution between stakeholders.
Property and Value Inventory:
Especially in cases where multiple properties are inherited, the values of each property can be inventoried upon client request. Since the share values of the shareholders in exchange for their shares are also presented in the report, it is very easy to realize the property divisions without going through the court process. Solutions such as possible share or property swaps, and share transfers in return for consideration can be provided as a result of the values appraised by the valuation expert with a professional perspective.
