Professional Conduct in Valuation

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Questions and Answers

What is one of the primary purposes of the Code of Professional Conduct for property valuation?

To create competition among valuers

To promote only local property valuation

To maintain the integrity and reputation of the valuation profession (correct)

To ensure profits for valuers

Which of the following responsibilities is NOT associated with the Code of Professional Conduct?

Sign all written valuations

Disclose financial interests in properties

Notify the Council of changes in employment

Engage in disputes based on remuneration (correct)

What defines improper conduct within the field of property valuation?

Conducting valuations during peak season

Bidding for appraisal contracts

Communicating with clients accurately

Performing work during suspension (correct)

What happens to the ownership of expropriated property under the Expropriation Act?

It transfers to the expropriator on the expropriation date Signup and view all the answers

Which of the following actions could be considered improper conduct?

Providing services without a valid registration Signup and view all the answers

How should compensation for expropriated property encumbered by a mortgage be handled?

It requires prior agreement between the owner and the mortgagee Signup and view all the answers

Which statement about misleading advertising in property valuation is correct?

It can lead to sanctions against the valuer Signup and view all the answers

What does the Expropriation Act aim to address?

Weaknesses of earlier fragmented laws on expropriation Signup and view all the answers

What must an expropriatee prove when claiming potentiality attached to land?

The allegation on the balance of probabilities Signup and view all the answers

In the case of Benede Sand Boerdery, why was financial loss or inconvenience not compensable?

It was deemed an external factor unrelated to expropriation Signup and view all the answers

What does the term 'willing buyer and willing seller' refer to in the context of property valuation?

Hypothetical parties fully informed of the property Signup and view all the answers

Who bears the onus of proof when asserting the value of land has increased due to potential uses?

The claimant asserting the increase Signup and view all the answers

What critique did the judge have regarding the summation method of property valuation in Bouwer v. Stadsraad van Johannesburg?

It lacks a rational scale for depreciation Signup and view all the answers

What must the valuer consider when determining a property's value according to Braamfontein Co. Ltd v. Johannesburg Municipality?

The expected sale price under reasonable terms Signup and view all the answers

When does interest become payable according to Cato v. Group Areas Development Board?

From the date of the arbitrators' award Signup and view all the answers

What must be true for sales to be prioritized as 'comparable' according to Davey v. Minister of Agriculture?

They must be truly comparable in nature Signup and view all the answers

Who is entitled to compensation as if their rights were registered?

Lessees, builders with a lien, and sharecroppers Signup and view all the answers

What happens to the compensation payable to the landowner regarding amounts owed to holders of protected unregistered rights?

It is reduced by the amounts owed Signup and view all the answers

Which of the following is a valuation method used for whole property expropriation?

Before-and-After Method Signup and view all the answers

What is a characteristic of the 'Developer's Residual Approach' method of valuation?

It considers potential future development value Signup and view all the answers

In the context of property valuation, what does the term 'Comparables Sales' refer to?

Sales of similar properties used for valuation Signup and view all the answers

Which case emphasized that market value is the sole criterion for calculating compensation?

Administrator of the Transvaal v. Kildrummy Holdings Signup and view all the answers

What principle is important when valuing expropriated property?

Various methods exist, and no single method is definitive Signup and view all the answers

What is the 'Before-and-After Method' primarily used for in valuation?

To determine the market value of an entire property Signup and view all the answers

What factors must be considered in compensation according to the Minister of Land Affairs ruling?

Market value and potential future use Signup and view all the answers

In the case of Pietermaritzburg City Council v. Mkhize, what principle was emphasized regarding compensation?

Fairness and equity in determining compensation Signup and view all the answers

What aspect is emphasized as crucial during the expropriation process by Radebe v. Minister of Land Affairs?

Community involvement and input Signup and view all the answers

According to SABC v. Minister of Communications, what should the property valuation reflect?

Unique characteristics of the property Signup and view all the answers

What does the court stress regarding the calculation of compensation in Schoeman v. Minister of Land Affairs?

It should be based on the highest and best use of the property. Signup and view all the answers

In Smit v. Minister of Land Affairs, what right is affirmed for the expropriatee?

Right to compensation for improvements made prior to expropriation Signup and view all the answers

What does Tshwane City v. Mothiba require from municipalities regarding expropriation?

Clear rationale for expropriation and compensation offered Signup and view all the answers

What is mandated by the court in Van der Merwe v. Minister of Land Affairs regarding the valuation process?

It must be conducted by qualified professionals. Signup and view all the answers

What must damages payable for an expropriated right include?

Comparison of the market value prior to expropriation Signup and view all the answers

In claims for additional compensation, who bears the burden of proof?

The expropriatee Signup and view all the answers

What type of compensation is not payable according to the ruling in Estate Late Marks v.Pretoria City Council?

Compensation for financial losses to descendants Signup and view all the answers

What did the court determine regarding potentiality in Illovo Sugar Estates Ltd v.SAR & H?

Potentiality has value even if the expropriating authority is the likely purchaser Signup and view all the answers

What must the valuation process be based on according to Klein v.Minister of Agriculture?

Transparent and objective criteria Signup and view all the answers

What condition must a sale meet according to Jacobs v.Minister of Agriculture?

It should be regarded as a bona fide transaction between a willing buyer and seller Signup and view all the answers

What does the court require for the expropriation process in Mafikeng Local Municipality v.Mothibedi?

Adequate justification for the expropriation and compensation must be provided Signup and view all the answers

What entitlement does an expropriatee have during the expropriation process as per Mokhantso v.Minister of Land Affairs?

Compensation for loss of use of the property Signup and view all the answers

Study Notes

Code of Professional Conduct

Purpose: To uphold the integrity and reputation of the valuation profession
Key Responsibilities:
- Uphold dignity and professionalism
- Perform duties efficiently, competently, and without undue delay
- Disclose any financial interests in properties being valued
- Comply with local laws when valuing properties internationally
- Include specific instructions in valuations
- Sign all written valuations
- Ensure the valuer's name appears on all related accounts
- Display the certificate of registration prominently
- Notify the Council of any changes in address or employment

Improper Conduct

Definition: Actions that violate ethical standards or legal provisions
Examples:
- Performing work during suspension
- Engaging in disputes where remuneration depends on the outcome
- Failing to comply with specific restrictions set by the Council

Conduct Constituting Improper Conduct

Examples:
- Undertaking valuations beyond training and experience
- Misleading advertising or self-promotion
- Maliciously harming another valuer's reputation
- Criticizing other valuers without just cause
- Accepting fees from unauthorized parties
- Disclosing confidential information without consent
- Soliciting employment through unethical means

Overview of the Expropriation Act No. 63 of 1975

Purpose: To provide a consolidated legal framework for expropriation in South Africa
Historical Context: Replaced fragmented laws and addressed weaknesses of earlier legislation

The Appropriation of Compensation

Ownership of Expropriated Property: Transfers to the expropriator on the expropriation date, free from mortgage bonds but subject to registered rights in favor of third parties
Separate Claims: If unencumbered ownership is required, all registered rights must be expropriated separately, allowing holders to claim compensation

Compensation Payment

Mortgage Bonds: If the property is encumbered by a registered mortgage or sale agreement:
- The expropriator cannot pay out compensation without prior agreement between the owner and the mortgagee/buyer
- If no agreement is reached, compensation may be paid to the Master of the Supreme Court, releasing the expropriator from liability

Protected Unregistered Rights

Entitlement to Compensation: Holders of protected unregistered rights are entitled to compensation as if their rights were registered:
- Lessees of land (business/agricultural)
- Builders with a lien on the property due to a written contract
- Sharecroppers
Reduction of Compensation: Compensation payable to the landowner is reduced by the amounts owed to holders of these rights

Valuation Methods

General Principle: Various methods exist for valuing expropriated property; no single method is definitive
Whole Property Expropriated: If an entire property is expropriated, its market value is determined
Partial Expropriation Approaches:
- Before-and-After Method: Value the whole property before and the remainder after expropriation; the difference reflects the value of the expropriated portion and any reduction in value of the remainder
- Separate Unit Valuation: Valuing the expropriated portion as an independent economic unit, along with the diminished value of the remainder
- Part of the Whole Valuation: Used for farmland; separate values are assigned to different land uses (e.g., irrigated, dry, grazing) and improvements

Important Valuation Methods

Comparable Sales (Direct Comparison): Valuation based on sales of similar properties
Income Approach (Indirect Comparison): Valuation based on the income generated by the property
Cost Method: Valuation based on the cost to replace the property
Developer's Residual Approach: Valuation based on potential development value

Key Cases in Law on Property Valuation

Abelsohn Holdings (Pty) Ltd v.Cape Valuation Court (1954): The court held that a neon sign is considered a movable asset, impacting how it is valued in expropriation cases
Administrator of the Transvaal v.Kildrummy Holdings: The court ruled that the before-and-after method of valuation was invalid, emphasizing that market value is the sole criterion for calculating compensation
Badenhorst v.Minister van Landbou: The court determined that if an expropriatee claims potentiality attached to land, they must prove this allegation on the balance of probabilities
Benede Sand Boerdery (Edms) Bpk v.Virginia Munisipaliteit: The court found that financial loss or inconvenience caused by sewage works on adjoining land was not due to expropriation, thus not compensable
Bestuursraad van Sebokeng v.M & K Trust en Finansiële Maatskappy (Edms) Bpk: The court clarified that the willing buyer and willing seller referred to in the Act are hypothetical parties fully informed of the property's advantages and disadvantages
Bonnet v.Department of Agricultural Credit and Land Tenure: The court established that the onus of proof lies with the claimant asserting that the value of land has increased due to potential uses
Bouwer v.Stadsraad van Johannesburg: The judge criticized the summation method of valuation, arguing that there is no rational scale for depreciation
Braamfontein Co.Ltd v.Johannesburg Municipality: The court held that the valuer must determine the property's value based on the expected sale price under reasonable terms
Caltex Africa Ltd and Others v.Director of Valuations (Cape): The court emphasized the importance of considering the nature of the article, the degree of attachment to the realty, and the intention of the person attaching it
Cato v.Group Areas Development Board: The court ruled that interest is payable from the date when the arbitrators have made an award, not from the date of possession or expropriation
Colman & Others v.Johannesburg City Council: The court held that the valuer must consider all circumstances likely to influence a purchaser's decision, even in the absence of comparable sales
Davey v.Minister of Agriculture: The court analyzed the concept of "comparable" and found that for comparative sales to be prioritized, they must be truly comparable
Davis v.Pietermaritzburg City Council: The court ruled that compensation agreed upon includes potential value
De Kock en Seuns (Edms) Bpk v.Eskom: The court stated that damages payable for an expropriated right must include a comparison of the market value of the property prior to expropriation
Die Suid-Afrikaanse Naturelletrust v.Kitchener en Andere: The expropriatee must provide proof of circumstances when claiming additional compensation
Dormehl v.Gemeenskapsontwikkelingsraad: The court held that the burden of proof lies with the claimant asserting potential value
Estate Late Marks v.Pretoria City Council: The court ruled that no compensation is payable for financial losses to descendants; compensation is only for the property's value at the expropriation date
Huddlestone Motors (Pty) Ltd v.S.A.R.& H.: The court held that solatium applies only to the expropriation of land, not interests in land
Illovo Sugar Estates Ltd v.SAR & H: The court recognized that potentiality has value, even if the expropriating authority is the only likely purchaser
Jacobs v.Minister of Agriculture: The court held that a sale should be regarded as a bona fide transaction between a willing buyer and seller unless contrary evidence is presented.
Jones v.Potchefstroom Municipality: The court ruled that the valuation must reflect the market conditions at the time of expropriation, considering all relevant factors
Klein v.Minister of Agriculture: The court emphasized that the valuation process must be transparent and based on objective criteria
Kriel v.Minister of Land Affairs: The court determined that compensation must be fair and just, reflecting the true value of the property taken
Mafikeng Local Municipality v.Mothibedi: The court held that the municipality must provide adequate justification for the expropriation and the compensation offered
Mokhantso v.Minister of Land Affairs: The court ruled that the expropriatee is entitled to compensation for loss of use of the property during the expropriation process
Mokhantso v.Minister of Land Affairs: The court reiterated that compensation must consider both the market value and any additional losses incurred by the expropriatee
Ndlovu v.Minister of Land Affairs: The court found that the valuation must take into account the potential future use of the property
Pietermaritzburg City Council v.Mkhize: The court ruled that the council must adhere to the principles of fairness and equity in determining compensation
Radebe v.Minister of Land Affairs: The court emphasized the importance of community input in the expropriation process and the need for transparency
SABC v.Minister of Communications: The court held that the valuation must reflect the unique characteristics of the property and its potential uses
Schoeman v.Minister of Land Affairs: The court ruled that compensation must be calculated based on the highest and best use of the property at the time of expropriation
Smit v.Minister of Land Affairs: The court determined that the expropriatee is entitled to compensation for any improvements made to the property prior to expropriation
Tshwane City v.Mothiba: The court held that the municipality must provide a clear rationale for the expropriation and the compensation offered
Van der Merwe v.Minister of Land Affairs: The court ruled that the valuation process must be conducted by qualified professionals to ensure accuracy and fairness
Zuma v.Minister of Land Affairs: The court emphasized that the expropriatee's rights must be protected throughout the expropriation process, ensuring just compensation
Zuma v.Minister of Land Affairs: The court emphasized that the expropriatee's rights must be protected throughout the expropriation process, ensuring just compensation
Mokhantso v.Minister of Land Affairs: The court reiterated that compensation must consider both the market value and any additional losses incurred by the expropriatee

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Description

This quiz focuses on the Code of Professional Conduct applicable to the valuation profession. It covers the key responsibilities of valuers, the importance of integrity, and examples of improper conduct. Test your knowledge on ethical standards and legal provisions governing property valuation.