Valuation of property rights and claims

Property rights are a distinct object of valuation: what is valued is not a thing, but a right connected with it. An apartment in a building under construction does not physically exist yet — but the property rights to it are already sold, pledged and inherited. A loan is not the bank's property in the ordinary sense, yet the claim under it has a perfectly definable market value. Independent valuation of property rights establishes the monetary equivalent of such rights at a specific date — for a transaction, collateral, litigation or financial reporting.

Which rights qualify: legal framework and classification

Under Article 3 of the Law of Ukraine "On Valuation of Property, Property Rights and Professional Valuation Activity", property rights subject to valuation include any rights connected with property other than ownership itself: possession, use and disposal as components of ownership, the special property right to an object of unfinished construction and to future real estate, claims (rights of demand), and other specific rights — to conduct activities, to use natural resources, and so on.

In practice, property rights fall into rights in rem (tied to specific assets), contractual claims (under loans and commercial agreements), corporate rights and intellectual property rights. The latter two have dedicated sections on this site — corporate rights valuation and intellectual property valuation; this page and its subsections cover rights in rem and contractual claims.

Property rights and claims we value

• claims under loan agreements — single loans and debt portfolios, performing and distressed;
• receivables — claims under supply and service agreements;
• property rights to future real estate — apartments and commercial premises in buildings not yet commissioned;
• subsoil use rights — the extraction permit as the core asset of mining companies;
• land lease rights and easements;
• other specific rights, depending on the nature of your asset.

Loan claims and debt portfolio valuation — our core practice

The largest body of our property rights work is the valuation of loan claims: from single loans to portfolios of thousands of positions, both unsecured (consumer) and secured by land, real estate, vehicles or equipment. The bulk of this work was performed in 2015–2020 for the Deposit Guarantee Fund of Ukraine as part of the revaluation of assets of insolvent banks.

A separate class of engagements involves loans secured by the assets of large industrial companies. A bank cannot take "the business" itself as collateral, so security is structured over the assets of the entire production cycle: real estate, equipment, production lines, vehicles. Valuing the claim under such a loan effectively means a full revaluation of the enterprise's assets — and our track record includes many such engagements.

We also handle individual mandates: a borrower seeking to buy out the claim under their own loan from a bank or litigating against it; an investor interested in a collateralised asset who commissions a claim valuation before the purchase. It is not uncommon for the bank itself to recommend our company as the appraiser.

When valuation of property rights is required

• assignment or sale of claims and debt portfolios;
• pledge of property rights, mortgage transactions;
• purchase or sale of rights to future real estate;
• financial reporting, recognition and revaluation, including under IFRS;
• contribution of property rights to charter capital;
• litigation, quantification of damages or compensation;
• corporate reorganisation or liquidation;
• auctions and privatisation;
• insurance and other cases established by law or contract.

How the valuation proceeds: stages and approaches

The engagement starts with a free preliminary consultation: the appraiser reviews the object and the purpose of valuation, defines the basis of value and the document list, and proposes timing and fees. Then follow the engagement contract, information gathering, identification of the right and its associated risks and encumbrances, calculations, reconciliation of results and delivery of the valuation report.

The choice of approaches depends on the nature of the right. For claims, the income approach is primary: expected recoveries are adjusted for collection probability, collateral quality and timing, and discounted to present value. For rights to future real estate, the market approach applies — offers in the same or comparable developments, adjusted for the stage of completion. For use rights, income and market approaches are applied depending on available market data.

Documents required

The list depends on the classification of the right: a loan claim requires one set of documents, rights to a property under construction — another. The common core:

• title documents for the right (agreement, certificate, statement);
• documents for the underlying asset;
• for claims — loan or contract documentation, collateral details and servicing history;
• constituent documents and financial statements (for legal entities);
• client identification documents.

The exact list is agreed with the appraiser at the preliminary consultation.

Questions and answers

Can property rights be valued internally? An indicative figure for internal purposes can be produced in-house. But transactions, collateral, court proceedings and financial reporting require a report issued by a certified valuation entity — only such a report has legal force in Ukraine.

The valuation report is outdated — is a new valuation needed? The report is updated to a new date, which is faster than the initial engagement: the appraiser already knows the object, its specifics and the market. Report updates are a regular service for our recurring clients.

What exactly is valued when buying an apartment in a building under construction? Until the building is commissioned, the object of the transaction is the property rights to future real estate — and these rights are what is valued, based on the developer agreement, the stage of completion and market comparables.

Our team, including appraisers holding international valuation certificates, has valued property rights for over 20 years — from a claim under a single loan to bank portfolios and rights over the assets of major enterprises. Every engagement receives an individual approach: we are attentive to the client's task, meet agreed deadlines and support the report until its purpose is achieved. Contact us by email or messenger to discuss your case and receive a quotation.