LEGAL MEANING AND CLASSIFICATION OF PROPERTY
Property is the subject matter of valuation. Like value, it is a word of common usage, but unlike value, property, has a precise legal meaning. Both the exact meaning of property and its nature have strong bearing on valuation. What thesis meant by the word property? In popular imagination and common usage, property suggests possession, or better still, the belongings of a person which he can deal with as he likes. This accord with the Latin derivation of property, “properties”, “proritus”, meaning, one’s own, (Ajayi, 2017).
In law property is defined as the highest right a man can have to anything, being that highest right a man can have to anything, being that right while, one has to lands or tenements, goods or chattels which does not depend on anthers courtesy.
Property in law has three different connotations:
a) The Right of Ownership: Where a man lends his goods to a friend, the property is still the man’s own. While the goods are with the friend, the property and the goods remains in the lender. We thus speak of property in land, which is in the possession of another. This includes right to use, right to alienate, right to assimilation, right to succession, right to claim to title.
b) The Objective of Ownership: It may be said that certain goods are the property of a certain many or speaking of land, that the property of one man adjoins the property of another, or that the property may consist either of immovable things, such as Lander of movable things as coined money.
c) Valuable Things: Such as assets or things which can be owned and which can be turned into money or assessed at a money value. In other words, rights and assets, which may be exchange for the ownership of money, are valuable and therefore property. It is the last sense that the word property seems to be used when a man speaks of all his property, or of his real as opposed to his per soured property.
MEANING OF PROPERTY FOR APPRAISAL
Appraisal usage perceives property as importing into itself all these ingredients, both in law and common usage, namely tangible, intangible and Rights, ownership, monetary value and legal assertion.
One can thus define property for valuation purposes as “Corporeal and incorporeal, tangible and intangible things, capable of pecuniary and legal assertion, over which ownership gives control” (Ifediora, 2000).
The meaning of the word property, when used in connection with value and valuation, is closely associated with the idea of ownership. In fact, a “valuation” can be defined as the determination of the monetary value at some specific date, of the property right encompassed in the ownership. According to Ifediora (2000) these right are the exclusive rights to possess, to enjoy, and (in some case) to dispose of a thing owned. Property rights devolve on the legal concept of ownership. In general, the rights of ownership are rights which are defined and protected by law. It is the exercise of rights of ownership that animals, property to attain its value potential or usefulness (utility).
Property rights may vary widely depending on various factors. However, under most conditions, the three most significant ones are,
i) The use and enjoyment of the income and benefit
ii) The use and enjoyment of the property
iii) The right to alienate, dispose of, transfer and other wise transact with the property.
In practical as well as legal terms, property is the right to the use of an economic good. The light of use and enjoyment of property is one of the fundamental elements of ownership. The valuation of property is indeed, the valuation of the right to the use of the property. This provides one of the value concepts, value in use or value to the owner, the right of use and enjoyment. To gather these two groups of property right from the fundamental underpinning of the income or investment valve concept. The right of alienation enables an owner to transact with the property by way of lease, mortgage, lien or indeed any other means. It is this right which results in the exchange or market value concept. The right of ownership are however not absolute. They may be limited, usually be statues or acts of government or by previous actions and creations of the owner. The scope of property rights and limitation thereto are very pertinent, since valuation is an attempt to put monetary value to these rights (Enamidem & Ogunba 2015).
NATURE OF PROPERTY
What are the scopes of these property rights? For a more detailed consideration of the nature of property, we shall for ease of reference and convenience in consideration, adopt the general legal classification of property under:
a. Immovable property; lands;
b. Movable property; chattels;
c. Intangible property; rights
a) IMMOVABLE PROPERTY – LANDS
According to Enamidem and Ogunba (2015), land or landed property is commonly used in Nigeria and most of common wealth in referring to ownership of land as district from ownership of other chattels. Real estate or real property, though known and used is a term for the same thing; they are more commonly used in United State of America, Canada. The use of the term land or real estate appears to refer to the physical land and appurtenances including structures affixed thereto. The chief characteristics of land or real estate are its immobility and tangibility. It comprises land and all things of a permanent and substantial nature affixed thereto, whether by nature or by the hand of man. By nature, is meant trees, natural resources; while by the hand of man refers to those objects – buildings structures, fences and bridge – which the owner erects upon the land.
Real property or landed property may be said to be a composite term because it embraces the tangible (physical) elements of land or real estate plus those intangible attributes which are rights of ownership.
b) MOVEABLE PROPERTY (CHATTELS)
Chattels are goods possession over which the rights for ownership here in discussed apply. The determination of the monetary value of property rights encompassed in ownership brings chattels within the orbit of appraisal. The rights of property in chattels include the three significant rights of ownership.
i) The rights to use and enjoyment of the chattels.
ii) The rights to use and enjoyment of the income from the chattels.
iii) The right to sale traffic or dispose of the chattels.
Most chattels are owned for their use and enjoyment consumable goods and possession, because of their very nature, are not generally subject to appraisal functions. Some movable properties are owned for some purpose other than use and enjoyment, for example, investment, that is for the receipt of future income or for capital appreciation (Olujimi and Bello, 2014)
Such chattels are capable of valuation and do feature in appraisal application.
They Include:
i) Machinery
ii) Equipment and vehicles
iii) Furniture and furnishing
iv) Painting, art collection and anti goes
v) Stamp collection
Machinery, equipment, furniture and fitting generally constitute fixed assets of undertaking or enterprises. As capital goods, they have income potentials as factors of production. Furthermore, some of them are commonly leased or rented and produce direct income.
c) INCORPOREAL PROPERTIES (INTANGIBLE)
Incorporeal properties are rights of ownership not backed by the physical incident of property. Otherwise, such rights satisfy the other attributes of property, to wit – capable of ownership, valuable and legally enforceable. These intangible rights include: Patent, copyright, license, royalties, debenture stocks and dealers’ franchise.
Ownership of any of the above, like ownership of other properties, conveys rights of enjoyment devolve in the enjoyment of the returns of ownership and the right of sale and enjoyment of the proceeds of the sale.