Our Council member Vladimír Kulil informs about current standards for experts in the Czech Republic. According to Czech legal regulations, every oral and written expert opinion must be true, which is a unique requirement that does not occur in other valuation standards. Satisfiability is problematic because Truth is a philosophical concept and is often defined as a subjective reflection of objective reality. Thus, there is the possibility of a different subjective view of the truth by each expert. Therefore, in Czech law, the requirement is a thorough requirement regarding the veracity of the input data, their proper justification and the possibility to determine the result in the price range. 

Czech Act No. 254/2019 Coll.:

§ 28 Requirements of an expert opinion

(1) The submitted expert opinion must be complete, true and verifiable.

(2) The expert opinion must contain the following particulars:

a) title page,

b) assignment,

c) list of documents,

d) finding,

e) opinion,

f) justification to the extent that the expert opinion can be reviewed,

g) conclusion,

h) if possible, the annexes needed to ensure the verifiability of the expert opinion,

(i) an expert clause; and

j) imprint of the expert seal.

(5) The expert opinion must, except in justified cases, be prepared in accordance with generally accepted procedures and standards of the given field and sector. In accordance with generally accepted procedures and standards, the conclusion of the opinion contains clear answers to the questions asked; if the evidence or method does not allow the expert to make an unambiguous conclusion, the expert shall state the facts which reduce the accuracy of the conclusion.

(6) The expert is obliged to personally confirm, supplement or explain the content of the expert opinion at the request of the public authority before which the expert opinion is to be used.

OFFENSES: Fine of up to CZK 500,000, in violation of this law.

Czech Act No. 151/1997 Coll. With changes 2020 year on Property Valuation and on Amendments to Certain Acts (Act on Property Valuation):

(1) Unless this Act stipulates another method of valuation, property and services shall be valued at the usual price.

(2) For the purposes of this Act, the usual price means the price that would have been achieved in the sale of the same or similar property or in the provision of the same or similar service in the ordinary course of business in the country on the valuation date. In doing so, all circumstances that affect the price are considered, but the amount does not reflect the effects of extraordinary market circumstances, personal circumstances of the seller or buyer or the effect of special popularity. Extraordinary market circumstances include, for example, the state of distress of the seller or buyer, the consequences of natural or other calamities. Personal relationships are understood in particular as property, family or other personal relationships between the seller and the buyer. Special popularity means a special value attached to an property or service resulting from a personal relationship with them. The usual price expresses the value of the property or service and is determined from the agreed prices by comparison.

(3) In justified cases where the usual price cannot be determined, the property and service are valued at market value, unless a special legal regulation provides otherwise. In doing so, all circumstances that affect the market value are considered. Reasons for not determining the usual price must be stated in the valuation.

(4) For the purposes of this Act, market value means the estimated amount for which an asset or service should be exchanged on the valuation date between a willing buyer and a willing seller, in a business relationship conducted in accordance with the arm's length principle, after appropriate marketing, when each party acted in an informed, judicious manner and not in distress. For the purposes of this Act, the principle of market distance means that the participants in an exchange are persons who have no special relationship with each other and act independently of each other.

(5) The determination of the usual price and market value and the procedure for this determination must be clear from the valuation, their use, including the data used, must be justified and correspond to the type of valuation, the purpose of the valuation and the availability of objective data usable for valuation. Details on determining the usual price and market value are set out in a decree.

488/2020 Coll., on the implementation of the Property Valuation Act (Valuation Decree)

§ 1a Determination of the usual price

(1) The usual price is determined by comparing the agreed prices of the same or similar valuation items in the usual business dealings in the Czech Republic on the valuation date. The comparison does not include prices agreed under the influence of extraordinary market circumstances, personal circumstances of the seller and buyer or the influence of special popularity.

(2) The procedure for determining the usual price includes

a) selection of data into a file for comparison with the subject of valuation from at least 3 similar subjects on the basis of criteria according to the type of subject of valuation and its peculiarities as of the valuation date,

b) a comparative analysis of data from a selected set of similar valuation items with data on the valued subject of valuation,

c) determination of the basic unit for comparison and parameters with a significant share in the amount of the price, determination of differences in parameters between the valued objects of valuation and similar objects of valuation,

d) adjustment of agreed prices in connection with the difference between similar items of valuation and items valued by their corrections, while the deviation caused by the correction must be duly justified,

(e) the selection, justification and analysis with an assessment of the set of adjusted prices, including the justified possible exclusion of outliers; and

(f) determination of the usual price, based on an evaluation of a set of adjusted prices.

(3) The data used to determine the usual price must be verifiable and the procedure for their processing must be clear and documented from the valuation.

(4) The impossibility of determining the usual price pursuant to paragraphs 1 and 2 must be documented, in particular the procedures that were performed to determine the realized prices of similar valuation items and their results.

§ 1b Determination of market value

(1) The market value of the subject of valuation is the estimated amount, which is usually determined on the basis of a choice of several valuation methods, in particular the comparative, revenue or cost method. In determining the market value of the subject of valuation, market risks and expected developments in the partial or local market on which it would be traded are taken into account.

(2) In determining the market value of the subject of valuation, with the exception of services, account shall be taken of the possibility of its highest and best use, which is possible, physically achievable, legally permissible and economically feasible on the valuation date.

(3) The data used to determine the market value must be verifiable and the procedure for their processing, including the use of individual valuation methods, must be clear and documented from the valuation.

Conclusion

According to the valuation Czech legal regulations, there is a requirement for the method of elaboration of an expert opinion with detailed definitions of procedures.