Exposure Drafts

Proposed paper on Fee Simple

The IAAO Fee Simple Task Force recently completed its paper, “Setting the Record Straight on Fee Simple” and it has been released for exposure. The paper address issues surrounding the definition of the term fee simple, including the differences in the appraisal definition of fee simple and the legal definition, with a view that the appraisal industry definition should not be different. Comments are due by Friday, June 14th and can be sent to Heather Steel at steel@iaao.org.

Download Fee Simple paper

Proposed Standard on Sales Verification and Adjustment of Sales

The IAAO Board of Directors has approved the exposure for membership comment on a proposed change in Section 5.9 of the Standard on Sales Verification and Adjustment of Sales.

Members may review the following existing copy and the draft version of the revised section (impacted area in bold and red) below and submit comments on the proposed document via IAAO Connect or by email at mead@iaao.org. The comment period runs through June 14, 2019.

Existing Standard

5.9 Leasebacks

A leaseback is defined as the sale of a building, land, or other property to a buyer under special arrangements for simultaneously leasing it on a long-term basis to the original seller, usually with an option to renew the lease. These transactions are also referred to as sale and leaseback and sale-leaseback. Leasebacks occur in the commercial and industrial class of property. Sales involving leasebacks are generally invalid because the sale price is unlikely to represent the market value of the property. This can be determined only by further verification of the sale (see Appendix B for questions involving leasebacks). Typically, the land and location is purchased, the building erected, and the property sold with a long-term leaseback clause. A major benefit of the leaseback is cash-flow issues.

Proposed Change

5.9 Leasebacks

A leaseback is defined as the sale of a building, land, or other property to a buyer under special arrangements for simultaneously leasing it on a long-term basis to the original seller, usually with an option to renew the lease. These transactions are also referred to as sale and leaseback and sale-leaseback. Leasebacks occur in the commercial and industrial class of property. Sales involving leasebacks should be analyzed to ensure that they are market transactions. This can be determined only by further verification of the sale (see Appendix B for questions involving leasebacks). Typically, the land and location is purchased, the building erected, and the property sold with a long-term leaseback clause. A major benefit of the leaseback is cash-flow issues.