Terms of Engagement
In the context of property valuation, the Terms of Engagement (TOE) is a crucial document that outlines the agreed-upon scope of work, responsibilities, and expectations between the valuer and the client. The TOE serves as a formal agreement that clearly defines the purpose, extent, and limitations of the valuation assignment, ensuring transparency and alignment between all parties involved.
According to the International Valuation Standards (IVS) and the Royal Institution of Chartered Surveyors (RICS) Valuation - Global Standards (Red Book), the Terms of Engagement should be agreed upon and recorded in writing before the valuation assignment commences. The TOE document should cover the following key aspects:
Identification of the client: The party commissioning the valuation and any other intended users.
Purpose of the valuation: The reason for conducting the valuation and how the results will be used.
Subject of the valuation: A clear description of the property or asset being valued.
Basis of value: The type of value being sought (e.g., Market Value, Fair Value, Investment Value) and its definition.
Valuation date: The effective date of the valuation.
Extent of investigation: The depth of research and analysis to be conducted, including property inspections and data sources to be relied upon.
Assumptions and special assumptions: Any assumptions or conditions that will be relied upon in the valuation process, such as the property's condition, planning permissions, or lease terms.
Restrictions on use, distribution, or publication: Any limitations on how the valuation report can be used or shared.
Confirmation of valuer competence: A statement confirming that the valuer possesses the necessary skills, knowledge, and experience to undertake the assignment.
Compliance with valuation standards: Confirmation that the valuation will be conducted in accordance with the relevant valuation standards, such as IVS or RICS Red Book.
Basis of fee: The agreed-upon fee for the valuation service and any related terms.
InterVal's Terms of Engagement feature streamlines the process of creating, managing, and storing TOE documents. By using customizable templates and a centralized database, valuers can ensure consistency, compliance, and easy access to the agreed-upon terms throughout the valuation process.
Having a clear and comprehensive Terms of Engagement is essential for maintaining professional standards, managing client expectations, and minimizing potential disputes or misunderstandings. The TOE document serves as a solid foundation for the valuation assignment, promoting efficiency, transparency, and quality in the delivery of valuation services.
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