Measurement Discrepancy and the Defective Boundary Wall
You are instructed to value a sectional-title townhouse unit for a deceased estate. The title deed states the unit's participation quota (PQ) as 8.5% and floor area 142 m². On inspection you measure 128 m² of internal floor area (excluding garage). The complex's boundary wall on the northern side has a 2 m section that is visibly leaning and has diagonal cracking; a neighbour alleges it encroaches 300 mm onto their erf. The body corporate has no recent structural report. The managing agent says 'the wall is fine, it's been like that for years.' The estate's executor needs a figure for the liquidation and distribution account.
1. How should the measurement discrepancy and the wall defect affect your valuation and reporting?
Read the worked answer
Measurement discrepancy (142 m² title vs 128 m² measured):
- Do not silently adopt either figure. Investigate: is the 142 m² a design/building figure including balconies, or does it include the garage? Is the measured 128 m² net internal? Reconcile the basis.
- If the title/PQ figure is higher than reality, the unit may be over-stated in the scheme's records, which could affect levies and PQ-based rights. Flag it; recommend the body corporate/land surveyor verify.
- For valuation, value the actual, legally held extent but disclose the discrepancy and its implications (possible rectification, levy adjustment, or dispute).
Boundary wall defect:
- Visual evidence of structural movement (leaning + diagonal cracking) is a red flag. 'Been like that for years' is not an engineering opinion. You are not a structural engineer - you must recommend a structural report and state the assumption/limitation in your report.
- Encroachment allegation: if the wall encroaches 300 mm, this is a title/boundary issue that can affect marketability and may require a surveyor and possibly a court/neighbour agreement. Disclose as a material uncertainty.
- Body corporate liability: the boundary wall is likely common property - the body corporate, not the unit owner, is responsible. This affects the unit's risk exposure (special levies) and must be noted.
Net effect: value is likely reduced and/or qualified (e.g. 'subject to structural report and surveyor confirmation of boundary'). Do not present an unqualified figure.
2. Draft the key caveats/limitations you would include, and explain why they matter to the executor.
Read the worked answer
Key caveats:
- Measurement - 'Floor area measured at 128 m² net internal on inspection; title records 142 m². Discrepancy not resolved; value reflects measured extent subject to verification by a land surveyor.'
- Structural condition - 'A section of the northern boundary wall shows visible lean and diagonal cracking. No structural report was available. The valuation assumes the wall is structurally sound; if a report reveals defects, value may reduce. Recommended: obtain structural engineer's report.'
- Boundary/encroachment - 'A neighbour alleges a 300 mm encroachment. This is unverified. The valuation assumes no adverse boundary issue; a surveyor's determination is recommended.'
- Common property - 'The boundary wall appears to be common property; the body corporate is responsible for maintenance. Potential special levy exposure not quantified.'
- Basis and purpose - market value for estate liquidation/distribution; not a structural or title guarantee.
- Information reliance - managing agent's verbal assurance not relied upon as expert opinion.
Why it matters to the executor: The executor has a fiduciary duty to administer the estate correctly and may be personally liable for losses. An unqualified valuation could lead to: (a) over-distribution to heirs, (b) a later claim against the estate, (c) a dispute with the neighbour or body corporate. The caveats protect the executor, define the limits of the valuer's opinion, and prompt the estate to obtain the missing reports before finalising the account. They also make the valuation defensible if challenged.