Reference definitions of the technical terms used in real-estate expert appraisal and valuation in Madagascar.
Determination of the market value of a property at a given moment — that is, the price at which it could be sold under normal market conditions between an informed and unconstrained seller and buyer.
Open-market valuation is required for transactions, inheritances, partitions, mortgage guarantees and disputes. It is produced by an accredited expert after a site visit, documentary analysis and the collection of comparable transactions.
A synonym for open-market value, consistent with the International Valuation Standards (IVS). The estimated amount for which a property would be exchanged on the valuation date between a willing seller and a willing buyer, in a transaction carried out without constraint, after proper marketing.
The annual rent that a property is likely to generate under normal letting conditions, regardless of any rent actually received. It is used for commercial leases, tax declarations, rental disputes and the valuation of investment properties.
A valuation method reconstituting the value of a property as the sum of the new-build construction cost, less the depreciation allowance, plus the value of the land. This approach is particularly suited to specialised properties (industrial, hospital, religious) for which comparable transactions are scarce.
A reduction applied to the new-build reconstruction value to account for the property's physical wear (deterioration of materials), functional obsolescence (outdated equipment or layouts) and economic depreciation (changes in the neighbourhood or in usage).
A valuation method that estimates the value of a property from recent transactions involving comparable properties — located in the same area and sharing similar characteristics of floor area, condition and use — after applying adjustments for the differences identified.
This is the method most commonly used for residential properties and building land in urban areas.
A valuation method applied to rental or income-producing properties (offices, shops, multi-unit residential buildings), consisting of dividing the annual net rental income by a capitalisation rate representative of market conditions for that category of property.
Compagnie des Arbitres Rapporteurs et Experts Agréés près les Cours et Tribunaux de Madagascar — the official body of court-accredited property experts in Madagascar, bringing together the experts officially accredited by the Malagasy judicial system.
Membership of CAREA attests to the expert's professional competence, independence and adherence to the body's code of ethics: independence, impartiality, integrity, competence and confidentiality.
A professional officially recognised by the Malagasy judicial system to produce valuations and expert reports carrying evidential weight in court. In Madagascar, this status is acquired by registration on the list maintained by CAREA after examination of the candidate's professional competence.
An expert report whose conclusions may be relied upon in the relationships between the parties to the engagement. Reports drawn up by a CAREA-registered expert carry the evidential weight attached to that status; their effect towards third parties is assessed under the ordinary rules of law applicable to expert reports.
An appraisal engagement ordered by a court (Court of First Instance, Court of Appeal, Supreme Court) in a dispute, and entrusted to an expert on the CAREA list.
The judicial appraisal report is intended to inform the magistrates on the technical questions of the case: contested inheritance partitions, divorces involving real-estate assets, expropriations, construction litigation and property seizures.
A real-estate security whereby a property is pledged as collateral for a debt, generally a bank debt. The amount of the guarantee is based on a prior open-market valuation of the property, produced by an accredited expert in accordance with the requirements of credit committees.
A comprehensive audit of the value and risks of a real-estate asset prior to an acquisition. It covers verification of title deeds, analysis of easements and charges, planning compliance, the technical condition of the property and the assessment of latent liabilities.
An official document issued by the Malagasy Land Registry (service des Domaines), attesting to the right of ownership of a property. In Madagascar, a distinction is made notably between:
— the land title proper (TF), resulting from land registration and enforceable against third parties;
— the land certificate (CF), issued by communal land desks;
— untitled properties, based on possession or tradition, which call for specific analysis.
Charges burdening one property for the benefit of another property or a community. The most common easements in practice are the right of way, the right of light, water flow, plantations and party walls.
Identifying easements is a key part of the appraisal and can significantly influence the value of the property.