Law on Property Valuation Study Notes PDF

**Study Notes for Exam: Law on Property Valuation** **Unit 9: Code of Professional Conduct** **1. Code of Professional Conduct** - **Purpose**: To maintain the integrity and reputation of the valuation profession. - **Key Responsibilities**: - Uphold dignity and professionalism....

**Study Notes for Exam: Law on Property Valuation** **Unit 9: Code of Professional Conduct** **1. Code of Professional Conduct** - **Purpose**: To maintain 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. **2. 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. **3. 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. **Unit 11: Expropriation Act** **1. 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. **2. 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. **3. 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. **4. 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. **5. Method of Valuation** **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**: 1. **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. 2. **Separate Unit Valuation**: Valuing the expropriated portion as an independent economic unit, along with the diminished value of the remainder. 3. **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** 1. **Abelsohn Holdings (Pty) Ltd v. Cape Valuation Court (1954)** - **Summary**: The court held that a neon sign is considered a movable asset, impacting how it is valued in expropriation cases. 2. **Administrator of the Transvaal v. Kildrummy Holdings** - **Summary**: The court ruled that the before-and-after method of valuation was invalid, emphasizing that market value is the sole criterion for calculating compensation. 3. **Badenhorst v. Minister van Landbou** - **Summary**: The court determined that if an expropriatee claims potentiality attached to land, they must prove this allegation on the balance of probabilities. 4. **Benede Sand Boerdery (Edms) Bpk v. Virginia Munisipaliteit** - **Summary**: The court found that financial loss or inconvenience caused by sewage works on adjoining land was not due to expropriation, thus not compensable. 5. **Bestuursraad van Sebokeng v. M & K Trust en Finansiële Maatskappy (Edms) Bpk** - **Summary**: 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. 6. **Bonnet v. Department of Agricultural Credit and Land Tenure** - **Summary**: The court established that the onus of proof lies with the claimant asserting that the value of land has increased due to potential uses. 7. **Bouwer v. Stadsraad van Johannesburg** - **Summary**: The judge criticized the summation method of valuation, arguing that there is no rational scale for depreciation. 8. **Braamfontein Co. Ltd v. Johannesburg Municipality** - **Summary**: The court held that the valuer must determine the property's value based on the expected sale price under reasonable terms. 9. **Caltex Africa Ltd and Others v. Director of Valuations (Cape)** - **Summary**: 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. 10. **Cato v. Group Areas Development Board** - **Summary**: 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. 11. **Colman & Others v. Johannesburg City Council** - **Summary**: The court held that the valuer must consider all circumstances likely to influence a purchaser\'s decision, even in the absence of comparable sales. 12. **Davey v. Minister of Agriculture** - **Summary**: The court analyzed the concept of \"comparable\" and found that for comparative sales to be prioritized, they must be truly comparable. 13. **Davis v. Pietermaritzburg City Council** - **Summary**: The court ruled that compensation agreed upon includes potential value. 14. **De Kock en Seuns (Edms) Bpk v. Eskom** - **Summary**: The court stated that damages payable for an expropriated right must include a comparison of the market value of the property prior to expropriation. 15. **Die Suid-Afrikaanse Naturelletrust v. Kitchener en Andere** - **Summary**: The expropriatee must provide proof of circumstances when claiming additional compensation. 16. **Dormehl v. Gemeenskapsontwikkelingsraad** - **Summary**: The court held that the burden of proof lies with the claimant asserting potential value. 17. **Estate Late Marks v. Pretoria City Council** - **Summary**: 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. 18. **Huddlestone Motors (Pty) Ltd v. S.A.R. & H.** - **Summary**: The court held that solatium applies only to the expropriation of land, not interests in land. 19. **Illovo Sugar Estates Ltd v. SAR & H** - **Summary**: The court recognized that potentiality has value, even if the expropriating authority is the only likely purchaser. 20. **Jacobs v. Minister of Agriculture** - **Summary**: 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. 21. **Jones v. Potchefstroom Municipality** - \*\* Summary\*\*: The court ruled that the valuation must reflect the market conditions at the time of expropriation, considering all relevant factors. 22. **Klein v. Minister of Agriculture** - **Summary**: The court emphasized that the valuation process must be transparent and based on objective criteria. 23. **Kriel v. Minister of Land Affairs** - **Summary**: The court determined that compensation must be fair and just, reflecting the true value of the property taken. 24. **Mafikeng Local Municipality v. Mothibedi** - **Summary**: The court held that the municipality must provide adequate justification for the expropriation and the compensation offered. 25. **Mokhantso v. Minister of Land Affairs** - **Summary**: The court ruled that the expropriatee is entitled to compensation for loss of use of the property during the expropriation process. 26. **Mokhantso v. Minister of Land Affairs** - **Summary**: The court reiterated that compensation must consider both the market value and any additional losses incurred by the expropriatee. 27. **Ndlovu v. Minister of Land Affairs** - **Summary**: The court found that the valuation must take into account the potential future use of the property. 28. **Pietermaritzburg City Council v. Mkhize** - **Summary**: The court ruled that the council must adhere to the principles of fairness and equity in determining compensation. 29. **Radebe v. Minister of Land Affairs** - **Summary**: The court emphasized the importance of community input in the expropriation process and the need for transparency. 30. **SABC v. Minister of Communications** - **Summary**: The court held that the valuation must reflect the unique characteristics of the property and its potential uses. 31. **Schoeman v. Minister of Land Affairs** - **Summary**: The court ruled that compensation must be calculated based on the highest and best use of the property at the time of expropriation. 32. **Smit v. Minister of Land Affairs** - **Summary**: The court determined that the expropriatee is entitled to compensation for any improvements made to the property prior to expropriation. 33. **Tshwane City v. Mothiba** - **Summary**: The court held that the municipality must provide a clear rationale for the expropriation and the compensation offered. 34. **Van der Merwe v. Minister of Land Affairs** - **Summary**: The court ruled that the valuation process must be conducted by qualified professionals to ensure accuracy and fairness. 35. **Zuma v. Minister of Land Affairs** - **Summary**: The court emphasized that the expropriatee\'s rights must be protected throughout the expropriation process, ensuring just compensation. \#\#\# Key Cases in Law on Property Valuation (Continued) 36. **Zuma v. Minister of Land Affairs** - **Summary**: The court emphasized that the expropriatee\'s rights must be protected throughout the expropriation process, ensuring just compensation. 37. **Mokhantso v. Minister of Land Affairs** - **Summary**: The court reiterated that compensation must consider both the market value and any additional losses incurred by the expropriatee. 38. **Ndlovu v. Minister of Land Affairs** - **Summary**: The court found that the valuation must take into account the potential future use of the property. 39. **Pietermaritzburg City Council v. Mkhize** - **Summary**: The court ruled that the council must adhere to the principles of fairness and equity in determining compensation. 40. **Radebe v. Minister of Land Affairs** - **Summary**: The court emphasized the importance of community input in the expropriation process and the need for transparency.