A disposal instruction with a price, a silence and a date already decided

1. Contingent fee. The agency commission of 1.5% on completion is a commercial matter for the marketing mandate, but only if it is separately documented and disclosed. The danger is that the valuation fee, directly or indirectly, becomes contingent on the price achieved or on the value reported. That is a self-interest threat to independence which cannot be managed by disclosure; a valuation fee must be fixed and payable regardless of outcome. Deal with the two mandates in separate engagement letters with separately stated fees.

2. Predetermined value. A report written to 'support' RM120 million is not a valuation. The figure must be the valuer's own conclusion on the evidence, and if the evidence points to RM95 million, that is what is reported. Explain that a board-approved reserve is an internal decision that the valuation may or may not support, and that the valuer will provide the evidence and a recommended reserve but will not reverse-engineer a value. If the instruction is repeated in writing, decline the valuation mandate.

3. Suppression of the occupation. Twenty-two families in occupation for over 30 years is material to value, marketability, time to possession and the buyer's risk. Under the Torrens system long occupation does not by itself defeat registered title, but recovering possession may require court process, relocation costs and years, and a buyer will discount accordingly. The valuer must report it, must state the assumption on which possession is valued, and must not accept an instruction to omit it. Silence here would make the report misleading and expose the valuer to negligence and disciplinary action.

4. Backdating. A valuation may be prepared as at an earlier date if there is a proper instruction, contemporaneous evidence and a clear statement of both the effective date and the report date. Signing a report as though it were issued last year when the inspection has just occurred is a false record. Explain the distinction and refuse the request; offer a retrospective valuation with a correct effective date and today's report date if it is genuinely needed.

5. Spouse's financial interest. This is a conflict that cannot be managed: a person closely connected to the valuer has a financial interest in a bidder. Declare it in writing immediately and decline the instruction, both valuation and agency. Do not rely on confidentiality to keep it internal.

6. Dual role. Valuing and marketing the same asset is permissible only with separate, disclosed mandates, fixed valuation fees, independent review of the valuation, and clear disclosure to prospective purchasers.

Draft reply - for the file and for the client

Dear [Name],

Thank you for the meeting on [date]. I am able to act, subject to the following, which reflect my obligations as a registered valuer under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 and the Malaysian Valuation Standards.

Scope and fee. I will provide (a) a valuation of the freehold interest in the 350-acre estate and (b) a separate marketing mandate. The valuation fee is fixed at RM[amount] and is payable irrespective of the value reported and of whether a sale completes. The agency fee of 1.5% of the gross sale price, payable on completion, is accepted for the marketing mandate and will be documented separately.

Value. I will report my own opinion, supported by comparable evidence, and will provide a recommended reserve price with reasons. I am not able to work to a predetermined figure, and I would ask the board to treat RM120 million as a target rather than an instruction. If my opinion differs materially, I will set out the evidence and the reasons for the difference so the board can make an informed decision.

Occupation. The report will record that approximately 60 acres are occupied by 22 households, the basis and duration of that occupation as far as I can verify it, and the assumption made about vacant possession. I cannot omit this. I recommend the company obtain legal advice on recovering possession and on any relocation obligation before a sale is marketed, and that a title and boundary survey be commissioned.

Date. I inspected the property on [date]. The report will be dated [date] and will state that date as the date of valuation. A retrospective valuation as at the last financial year-end can be provided as a separate instruction if required, clearly labelled with its effective date and the date of the report.

Conflict. My spouse holds 10% of a company that has expressed an interest in bidding. I must therefore decline this instruction, and I will not disclose the identity of any bidder to the company or any information about the company to that bidder. I am happy to recommend three registered firms who can act.

Yours sincerely, [Valuer, registration number, firm].

Consequences of proceeding

• Professional discipline. Preparing a valuation to support a figure chosen by the client, or omitting a material occupation, is a failure of competence and integrity. It exposes the valuer to complaint and sanction by the Board, including suspension or removal from the register.
• Civil liability. The valuer owes a duty of care to the client and, in defined circumstances, to those the valuer knows will rely on the report - a purchaser, or a lender if the land is later charged. A negligent or misleading report leading to a loss exposes the firm and its professional indemnity cover.
• Criminal and regulatory exposure. A knowingly false or misleading report, or a false date on a document used for financial reporting, may go beyond professional misconduct. Signing a report backdated to a financial year-end to support year-end accounts is a serious matter.
• Reputational and transactional damage. If the occupation emerges after exchange, the sale may collapse or the price be renegotiated, and the company, not only the valuer, faces the loss. A suppressed fact destroys the valuer's credibility in any subsequent dispute.
• Conflict. Acting while a connected person is a bidder taints the process and may expose the transaction to challenge.

If the client insists

1. Put the objection in writing, setting out what is required and why it cannot be done, and record it on file.
2. Offer the compliant alternative: an independent valuation with a recommended reserve, a retrospective valuation with correct dates, and a marketing mandate on fixed, disclosed terms.
3. If the pressure continues, withdraw from both mandates in writing, stating the reason factually and without disclosing confidential information about other parties.
4. Return or destroy papers not required to be retained, keep the file and all correspondence for the required retention period, and notify the firm's professional indemnity insurers if a claim or complaint appears likely.
5. If a report has already been issued and is being used to mislead a third party, correct it in writing to the persons known to be relying on it, and take advice before doing so.
6. Refer the matter internally to the firm's compliance or ethics partner and, where the conduct may amount to misconduct by another party, consider whether any disclosure obligation arises.