Is there a bill on property valuation within the framework of European integration?

A big war had just begun, it was barely possible to drive away the racists from Kiev, and the people’s deputies were already preoccupied with valuation activities - on May 17, 2022, bill No. 7386 “On amendments to the Law of Ukraine “On the valuation of property, property rights and professional valuation activities in Ukraine".

It is unlikely that the people's representatives read this bill, which was written by Dmitry Sennichenko (now on the run) while managing the State Property Fund. It turned out that many provisions of this document were simply copied from a similar law of the Russian Federation (Federal Law of July 29, 1998 No. 135-FZ “On Valuation Activities in the Russian Federation”). And now they are trying to pass the bill in the Ukrainian parliament. The State Property Fund even created an Expert Council on Valuation Activities, whose No. 1 priority is advocating for Bill No. 7386.

Scanned copy of the law

The authors of the document are in favor of introducing exams in Ukraine for practicing appraisers every three years. Even the term - three years - was copied. This is similar to being required to renew your qualifications every three years after successfully graduating from university. This is not the case in any EU country, USA or Canada. Only from the aggressor, who thus allows corrupt officials to earn money. There is no other explanation for such a requirement.

And it is planned to take exams to confirm qualifications in a training center that will be created by the Foundation itself. Well, our officials also need to earn money from something. There is no need to talk about independence here; in fact, this is the selection of “our own” and their admission to the market. But this has nothing to do with the quality of the assessment, its impartiality.

For some reason, the monopolization of the training market by creating a training center controlled by the Foundation did not lead to inspections by the Antimonopoly Committee. Nothing strange, because the bill was introduced by the people’s representatives, and not by a government agency—the State Property Fund. So approval from the Antimonopoly Committee was avoided. The rest of the ministries and departments that use assessment in their activities did the same without approval.

Mandatory membership in self-regulatory organizations of appraisers (violation of the Constitution) and mandatory requirements for such organizations were also copied from the Russian law.

Of course, officials in Ukraine very often in the past rewrote the legislation of the aggressor country. But to do this today, when there is a bloody war going on... And then to register such a bill and try to push it through is simply beyond the bounds.

One gets the impression that Russian agents have left Ukraine, but their work to maximize the unification of Ukrainian legislation with the legislation of the Russian Federation continues to live. After all, having copied legislation, it is easier to later fight off Ukraine’s claims in international arbitration courts... This is such a specific integration into the EU.

Regulated organizations

The bill also provides for the creation of an Expert Council under the State Property Fund. But for what? After all, such advice already exists. And why would such a thing be written into law? Of course, according to the bill, the head of the Expert Council is the head of the State Property Fund. Who would doubt that. That is, we are talking about the Expert Council, which has a consultative and advisory function and will be headed by an official. And will he advise himself? Or will they advise him what he himself wants? There is no need to talk about the independence of such a body. And again everything is like the aggressor...

The bill, in comparison with the current law in Ukraine, proposes to increase the number of appraisers from 250 to 500 in order to recognize the status of a self-regulatory organization. Although this also has nothing to do with the quality of the assessment and the ability to avoid fraudulent and/or custom-made assessments. But it again allows us to monopolize some procedures for training and receiving orders for assessment.

However, in developed countries there are no such requirements at all, and thousands of appraisers are members of the organization. Thus, the American Society of Appraisers, which unites representatives of various disciplines, has more than 5,500 members, and the Appraisal Institute (USA) has about 23 thousand members who are involved in the appraisal of commercial and residential real estate. And, by the way, to evaluate real estate in the USA, you only need a license or permit to operate.

Of course, in the United States there are no membership requirements for any of these organizations, just as there are none in Canada or Europe. In democratic countries, the state does not interfere in such matters at all. But in Russia there are restrictions: there is a requirement for recognition of a self-regulatory organization - 300 appraisers, that is, in this matter we even surpassed the Russian Federation.

Trump Fraud

At the same time, the authors of the bill do not notice the obvious shortcomings of the current assessment law and do not even try to avoid them in the bill. For example, this is the fact that a qualification certificate is issued by a state body - the State Property Fund. Nowhere in the world (except for the Russian Federation) does the state issue qualification certificates, but only licenses, that is, permission to carry out activities. The bill not only retained this approach, but also proposed issuing such certificates to foreign specialists who have qualification certificates from their independent private professional organizations (not from governments).

No one is saying that foreign professionals don't understand valuation, but nowhere in the world do countries open up professional services markets to foreigners so easily: Britons won't be able to work in the US unless they obtain US qualifications and membership from one of the private valuation bodies. Are we really so indifferent to our own specialists? I don’t know of any other country that treats its specialists and its own market so frivolously.

One more thing: the bill preserves the system in force today, when permission for an appraisal is issued to the company SOD (subject of appraisal activities), in which the appraiser works on a permanent basis. This approach actually makes the appraiser a slave to the company. At the same time, an individual, the appraiser, is actually responsible for the assessment, and the legal entity skims the cream of the process.

The topic is very painful. In professional circles, another system was discussed for a long time - the director of the appraisal company should be the appraiser, and it is better that he be among the founders, similar to how it is with auditors. None of this was proposed in the bill.

Another approach is when the work permit is obtained by the appraiser himself, and this excludes the intermediate link in the form of a company. But in the proposed bill there is not even a hint about this.

In Bill No. 7386, even the proposal to use International Valuation Standards (IVS), recognized in many countries around the world, does not work properly. The idea, of course, is correct, but its application is lame on both legs - in the next sentence after mentioning the MCO it is stated that the International Valuation Standards are applied only if they comply with the norms of the current legislation.

Another very important issue is not resolved in the bill - the transfer of responsibility from the appraiser to the owner, as it exists, for example, in the USA.

When Trump's fraud with a penthouse in New York was examined in America, no one was interested in the property appraiser; the owner, that is, Trump, was charged. If desired, the owner can always find highly qualified specialists to carry out the assessment, rather than shifting responsibility to the appraiser, to whom he either paid well or put a knife to his throat, who knows.