The Purposes of Valuation

Abstract

This issue's comparative survey has grown wide enough that a classification is forced, and the classifier chosen at the top decides everything below it. This entry sets out the journal's ontology of valuation practice. The top-level classifier is the purpose of the valuation -- not the type of compensation, which is an output of the system rather than its root, and not the forum, since courts encounter every purpose. Eight purposes are recognized: purchase and sale; lending and collateral; compulsory acquisition; taxation and assessment; damages and compensation; ownership transfer and allocation; financial reporting; and insurance. Beneath each, three things are settled, often together and in no fixed order -- the property interest valued, the governing law, and the basis of value -- and beneath those the valuation methodology; the purpose constrains them without fixing a single answer to each. The verified instruments of the quarter are placed under their purposes in comparative tables, so that like sits beside like and the differences are visible without being asserted. Three refinements the survey forced are recorded: a sub-branch of compulsory acquisition for statutory purchase between private parties at a formula price; the finding that title-validity questions belong to the property interest, before every purpose, and are not a ninth purpose; and the placing of statutory war-damage compensation under purpose 5, damages and compensation: it resembles insurance in its measure, but its objective is to measure the owner's loss. The entry's central empirical point is that the hierarchy is durable but its allocation is local: in some systems the statute fixes basis, method, and date with no appraiser discretion, and where the discretion sits is a fact about each system, to be established before any appraisal judgment begins. Six of the eight purposes carry no verified instrument in this issue's survey, and the entry says so rather than filling them. A concordance relates the eight purposes to the eight litigation categories under which the journal's court digests are arranged.