(2022.08.02-ний өдрийн орчуулга)  Unofficial translation

LAW OF MONGOLIA

January 21, 2010                                                                                                                Ulaanbaatar city

This law shall be invalidated starting from the effective date of the Law on Property appraisal (Revised version) enacted on June 17, 2022. 

ON PROPERTY APPRAISAL

CHAPTER ONE

GENERAL PROVISIONS

Article 1. Purpose of law

1.1   This law determines the legal and organizational basis for property appraisal and regulates the relations with respect to rights, obligations and responsibilities of state authorities, citizens and legal entities, or actions or activities to be taken in the field.

Article 2. Legislation on property appraisal

2.1 The legislation on property appraisal shall consist of the Constitution of Mongolia, the Civil Code, the law on licenses of business entities, this Law and other legislative acts enacted in compliance with them.

The part “the law on licenses of business entities” of this paragraph  was amended as “Law on permission” by the law as of June 17, 2022 and it will be effective from January 1, 2023/

2.2 If an international treaty, to which Mongolia is a party, provides otherwise, the provisions of the international treaty shall prevail.

Article 3. Terms and definitions

3.1 Any words or expressions used in this Law have the following meaning:

3.1.1. “appraiser” is a citizen of Mongolia, a foreign citizen or a non-citizen who holds a property appraisal license;

3.1.2. “client" means a citizen of Mongolia, a foreign citizen, or a non-citizen or a legal entity whose property is being appraised or assessed;

3.1.3. "subject property" means the right to own tangible or intangible assets, business activities and finances to be valued or being appraised at a certain value;

3.1.4. "property appraisal" means an independent action of an appraiser focused on determining a value of a subject property;

3.1.5. "value" is the monetary worth of an asset or property item at this moment in time determined as a result of the property appraisal;

3.1.6. “valuation basis" is the grounds for market and non-market value applied to estimate an asset or property’s value;

CHAPTER TWO

PROPERTY APPRAISAL 

Article 4. Principles to be applied to property appraisal:

4.1.1 to be independent;

4.1.2. to keep confidentiality of citizens or organizations;

4.1.3 to be honest;

4.1.4. to ensure compliance with legislations;

4.2. It is prohibited for any person to interfere in the property appraisal.

4.3. The appraiser shall not disclose any information of a client to others obtained during the appraisal process and use it for the interests of himself/herself or third parties.

4.4. Appraisal and valuation of assets should be aligned with international standards approved by the International Valuation Standards Committee and the national standards and methodologies specified in Articles 4.5 and 8.2 of this law.

4.5. The Central Standardization Body shall approve the national valuation standard in accordance with the principles of the international valuation standards and this law.

Article 5. Grounds for property appraisal

5.1 Property appraisal shall be made on the following grounds:

5.1.1. The appraiser and the client have reached an agreement;

5.1.2 A decision of an authorized person must be issued in case specifically provided by law.

Article 6. Property appraisal agreement

6.1 If the client and the appraiser have agreed, a property appraisal shall be made on a contractual basis.

6.2 A property appraisal agreement shall be concluded in writing.

6.3 A property appraisal agreement shall outline the followings:

6.3.1. Purpose of property appraisal;

6.3.2. Subject property and its nature or characteristics;

6.3.3 Rights and obligations of parties;

6.3.4. Information on the appraiser's liability insurance;

6.3.5. Property appraisal service fee;

6.3.6. Procedure for submission of property appraisal report;

6.4. The appraiser shall compile and keep a property appraisal agreement, a property appraisal report and other attached documents for at least 5 years.

Article 7. Preparation for property appraisal

7.1 Preparation for property appraisal shall meet the following requirements:

7.1.1. To conclude a property appraisal agreement with the client;

7.1.2. To ensure a preparation of property appraisal or valuation standards, methodology, rules, procedures, norms, normative and other necessary materials;

7.1.3 To develop and approve a plan and schedule for property appraisal;

7.1.4. To obtain any documents from the client required for property appraisal;

7.1.5. To review and analyze any database used for property appraisal or any figures or information submitted by the client;

Article 8. Property valuation methodology

8.1 A property appraisal shall be determined in accordance with international and national property valuation standards and property valuation methodology specified in 8.2 of this law, in combination of its cost, reference price and income approaches, taking into account the nature, characteristics and purpose of the subject property.

8.2 The State Central Administrative Body in charge of finance and budget issues shall approve and enforce the property valuation methodology that is suitable for the nature and purpose of the subject property solely or in cooperation with relevant state authorities.

Article 9. Property appraisal report

9.1 A property appraisal report shall be a basic document containing a value of the subject property and the pertinent grounds and evidence for such determination.

9.2 A property appraisal report shall meet the following requirements:

9.2.1. A valuation basis should be based on the nature and characteristics of the subject property;

9.2.2. Any violation of standards, rules, procedures, norms and normative of property appraisal occurred during the appraisal process should be recorded;

9.2.3. A value of the subject property shall be reasonable and clear.

9.3 The property appraisal report shall include the followings:

9.3.1. the name of an appraiser, appraisal license number (“License”), the license term and information on the appraiser's liability insurance;
9.3.2. client's name, address, if it is a citizen, his/her citizen’s registration number, if it is a legal entity, state registration number, and other information deemed necessary;

This sub-paragraph  was added by the law as of June 3, 2022/

9.3.3. grounds and purpose of property appraisal;
9.3.4. the date of a property appraisal and the date of an appraisal report;
9.3.5. description of types, nature and characteristics of the subject property;
9.3.6. information on ownership, possession and use of the subject property;
9.3.7. scope and limitation conditions of a property appraisal report;
9.3.8. documents, information, evidence, analysis, valuation estimates and their grounds used for property appraisal;
9.3.9 methods and procedures used to determine a value of the subject property and their compatibility;
9.3.10. a value of the subject property;
9.3.11. a notice of an appraiser that the subject property has been valued in accordance with the standards and methodology set forth in this law.

9.4 The property appraisal report shall be signed and stamped by the appraiser.

Article 10. Property appraisal service fee

10.1. If an appraiser has appraised the subject property, the appraiser shall receive a service fee from the client.

10.2. If the subject property is valued on the grounds specified in 5.1.1 of this Law, the service fee shall be determined by an agreement between the parties.

10.3. If the subject property is valued on the grounds specified in 5.1.2 of this Law, the service fee shall be determined taking into account the standards specified in 10.4 of this Law.
10.4 A member of the Cabinet in charge of finance and budget issues shall set the standard of property appraisal service fee.

Article 11. Rights and obligations of client

11.1. A client has the following rights and obligations:

11.1.1 to select an appraiser;

11.1.2. to submit a complaint to the state central administrative body in charge of finance and budget issues and a professional property valuation organization on issues related to appraiser's activities;

11.1.3. to review a property appraisal report, and if it is deemed as unreasonable or illegal, to file a complaint to the Professional Council specified in article 25.2 of this Law within 30 days after reviewing it;

11.1.4. to receive explanations from the appraiser on the property appraisal report;

11.1.5 to provide an appraiser with accurate facts and information required for property appraisal;

11.1.6. Other rights and obligations specified in the law.

11.2 The appraiser shall not be liable for any damages caused by the client's failure to fulfill any obligations specified in Article 11.1.5 of this Law.

CHAPTER THREE

APPRAISER

Article 12. Code of ethics for appraisers

12.1. The professional property appraisal organization shall approve and enforce the code of ethics of the appraiser.

12.2 The code of ethics shall comply with international evaluation standards.

Article 13. Rights of appraiser

13.1.An appraiser shall have the following rights:

13.1.1 to select the property appraisal approach independently in accordance with the procedures set forth in this law and in compliance with international and national property valuation standards;

13.1.2. to demand the client to provide accurate documents and information required for property appraisal;

13.1.3. to refuse to conduct property appraisal if the client has not provided necessary information on the subject property and has not fulfilled its obligation to create working conditions specified in the contract;

13.1.4. to involve other appraisers or specialists in the property appraisal on a contractual basis;

13.1.5. Other rights specified in legislations;

13.2 An appraiser may conduct its activities in the form of a business entity.

Article 14. Duties of appraiser

14.1 An appraiser shall have the following obligations:

14.1.1 to comply with the code of ethics of appraisers;

14.1.2. to ensure an integrity or completeness of documents obtained from a client or third parties during the property appraisal process;

14.1.3. to compensate any damage caused by his / her wrongful actions;

14.1.4. to participate in trainings organized by a professional property valuation organization;

14.1.5 to have a workplace to conduct operations;

14.1.6. to maintain the appraiser's liability insurance;

14.1.7 to be a member of a professional property valuation organization;

14.1.8 to issue a property appraisal report in accordance with the requirements set forth in Article 9.2 of this law;

14.1.9. Other obligations specified in legislations;

Article 15. Conditions under which a property is not appraised

15.1. An appraiser shall refuse to accept a request for property appraisal of the following persons:

15.1.1. a legal entity in which he / she works, or a citizen or legal entity with which he / she cooperated within the last two years;

15.1.2. a citizen or legal entity that has been or is related to property (owns more than 5 percent of the company's total issued shares or has a relationship concerning to loans, payments and investments) within the last year;

15.1.3. a legal entity whose close relatives (parents, husband, wife, children, siblings) are authorized officials (members of the Board of Directors or the executive board, executive director, chief finance officer, general accountant or general specialist);

15.1.4. a legal entity which audited the appraiser's financial statements;

15.1.5. a citizen or legal entity that provided legal assistance to the appraiser;

15.1.6. in other cases, provided by law.

15.2 An appraiser may not appraise his / her own property.

CHAPTER FOUR

MONITORING IMPLEMENTATION OF LEGISLATION ON PROPERTY APPRAISAL AND
GRANTING APPRAISAL LICENSE

Article 16. Monitoring the implementation of legislation on property appraisal

16.1 The State Central Administrative Body in charge of finance and budget issues shall monitor the implementation of the legislation on property appraisal as follows:

16.1.1. to inspect the implementation of the legislation on property appraisal;
16.1.2. to approve a standard program of property appraisal training and ensure its implementation;

16.1.3 to approve and enforce the procedure for selection of appraisers and organize its implementation;
16.1.4 to cooperate with professional property valuation organizations;
16.1.5. Others specified in legislations;

Article 17. Licensing procedure

17.1. The license shall be issued on a competitive basis.

Article 18. Announcing the selection of an appraiser

18.1 The selection of an appraiser (“Selection”) shall be announced once a year.

18.2. The selection date shall be announced in the mass or public media at least 60 days prior to the selection tender.

18.3. The time, place, requirements for appraiser selection criteria, documents to be submitted, and scope of selection examination shall be specified in the tender center.

Article 19. Requirements to applicants for selection

19.1. A citizen who meets the following requirements has the right to participate in the tender:

19.1.1. must have higher education in engineering, economics, business, finance, accounting or law;

19.1.2. have at least 5 years of working experience;

19.1.3. have at least 3 years of experience in participating in property valuation activities and has the requisite qualification in property valuation activities;

19.1.4. must obtain a certificate from property valuation training;

19.1.5. have no penalty;

Article 20. Documents to be submitted by applicants for selection

20.1. An applicant shall submit the following documents for selection:

20.1.1. Application letter for selection;

20.1.2. Mongolian citizen's ID card, or a foreign passport in case of a foreign citizen or a non-citizen and legal documents to replace a foreign passport, and its notarized copy;

20.1.3. Diploma of education degree and its notarized copy;

20.1.4. Social insurance book and its notarized copy;

20.1.5. Reference letter confirming that the requirements set forth in Article 19.1.3 of this Law have been met;

20.1.6. List of appraisal reports completed;

20.1.7. Certificate obtained by the training specified in 19.1.4 of this Law and its notarized copy;

20.1.8. Reference letter from the police proving that he / she has no criminal record;

20.1.9. Receipt of state stamp duty;

Article 21. Organizing the selection process

21.1. A State Central Administrative Body in charge of finance and budget issues shall organize a tender selection in cooperation with the professional asset valuation organization specified in Article 25.1 of this law.

21.2. The selection shall be conducted in a form of oral and written examinations to test the theory, methodology, standards and knowledge of financial and property law.

21.3. The professional property valuation organization may prepare the examination materials specified in clause 21.2 of this Law in advance and they shall be kept confidential until the date and time of the selection.

21.4. The selection commission shall number the names of license applicants with a secret code and announce the selection results with this code within 5 working days.

21.5. The code specified in 21.4 of this Law shall remain as an organization's secret until the results of the examinations are issued.

21.6 A member of the Cabinet in charge of finance and budget issues shall approve the composition of the selection commission and detailed inspection procedures.

Article 22. Issuance and renewal of licenses

22.1 A member of the Cabinet in charge of finance and budget issues shall issue a license for a period of at least 3 years based on the selection results.

22.2 A license holder shall be issued a certificate and stamp, and the design of such certificate and stamp shall be approved by a member of the Cabinet in charge of finance and budget issues.

22.3. A license holder shall have the right to apply for an extension at least 1 month prior to expiry of the license.

22.4 The following documents shall be attached to the license extension application:

22.4.1 Notarized copy of the license;

22.4.2 Receipt of state stamp duty;

22.5 A member of the Cabinet in charge of finance and budget issues shall extend a license for up to 3 years based on the conclusion of a professional asset valuation organization.

Article 23. Suspension of a license

23.1 If an appraiser fails to fulfill his/her obligations specified in Articles 9.2 and 14.1 of this Law, a member of the Cabinet in charge of finance and budget shall suspend the license for up to 3 months based on the proposal of the professional asset appraisal organization.

23.2. If an appraiser is prosecuted, the license may be suspended until the final decision is made by the competent authority.

23.3. A member of the Cabinet in charge of finance and budget issues shall restore a license specified in Articles 23.1 and 23.2 of this Law if the conditions of suspension are eliminated.

Article 24. Revocation of a license

24.1 A member of the Cabinet in charge of finance and budget issues shall revoke a license based on the proposal of a professional asset valuation organization in the following cases:

24.1.1. A license holder has submitted a request;

24.1.2. It has been determined that false documents were submitted when obtaining the license;

24.1.3. Repeated or serious violation of the appraiser's code of ethics and license terms and conditions;

24.1.4. Failure to comply with the requirements to eliminate the violation during the period of suspension of the license;

24.1.5. It has been determined by an expert opinion that the property appraisal is unreasonable or unrealistic;

24.1.6. Failure to fulfill obligations specified in Article 15 of this Law;

24.1.7. A court resolution with respect to crimes committed by appraiser has entered into force.

CHAPTER FIVE

PROFESSIONAL APPRAISAL ORGANIZATION

Article 25. Professional property appraisal organization

25.1. A professional property appraisal organization shall be a non-governmental organization that unites appraisers and serves its members in order to protect their interests.

25.2. The Professional Council, which is responsible for reviewing and resolving disputes on the professional error of appraisers, and the Ethical Council, which is responsible for reviewing and resolving complaints on professional errors of appraisers, shall work under the professional property valuation organization.

25.3 The composition and working procedures of the Professional Council specified in Article 25.2 of this Law shall be approved by the organization specified in Article 8.2 of this Law.

25.4. The composition and rules of procedure of the Ethical Council specified in Article 25.2 of this Law shall be approved by a professional asset valuation organization.

25.5. Relations other than those specified in this law related to property valuation organizations shall be regulated by the Law on Non-Governmental Organizations.

Article 26. Powers of a professional property valuation organization

26.1.A professional property valuation organization shall exercise the following powers:

26.1.1 to provide professional guidance to appraisers;

26.1.2. to prepare, train and retrain appraisers;

26.1.3 to monitor the implementation of appraiser's code of ethics;

26.1.4. to conduct research and conclusion on appraiser's activities;

26.1.5. to protect the legitimate interests of an appraiser;

26.1.6 to submit a proposal on suspension or revocation of the license to a member of the Cabinet in charge of finance and budget issues;

26.1.7 to create and maintain a database to be used for property valuation activities;

26.1.8. to participate in organizing the tender specified in 21.1 of this law.

CHAPTER SIX

MISCELLANEOUS

Article 27. Property valuation database

27.1 A professional asset valuation organization shall establish a property valuation database in order to support the appraiser's activities and use it to determine a market value of the subject property.

27.2 The property valuation database shall consist of the following information:

27.2.1. Information or data released by the market pricing research organization;

27.2.2. Information or data on market prices and exchange rates disseminated through the media;

27.2.3. Information on value of the subject property made by a member appraiser;

27.2.4. Other information or data that can be used for property appraisal;

27.3 A non-member entity may use the property valuation database as paid.

27.4. Relevant state organizations specified in Articles 4.5 and 8.2 of this Law shall use the property valuation database free of charge.

27.5 The procedure for compiling and using the property valuation database shall be approved by the professional property valuation organization.

Article 28. Appraiser's liability insurance 

28.1. An appraiser shall be covered by the appraiser's liability insurance in order to compensate any damage caused to the relevant person or entity due to any mistake or fault made in the property appraisal process or due to lack of professional knowledge and skills.

28.2. An appraiser shall choose an insurance organization.

28.3 An amount of the appraiser's liability insurance premium shall be determined by mutual agreement between the appraiser and the insurance organization.

28.4 A minimum amount of appraiser's liability insurance premium shall be set by a professional property valuation organization.

Article 29. Liabilities imposed on appraiser 

29.1. Judge or competent state inspector shall impose the following administrative penalties to the appraiser who violated legislation on property appraisal if it does not have a criminal nature

29.1.1. fine equal to 20 times of minimum labor wage if he or she failed to define property appraisal in accordance with paragraph 8.1 of this law and/or violated Article 15 of this law;

29.1.2. fine equal to 30 times of minimum labor wage if he or she violated Paragraph 4.3 of this law

/ This article 29 was annulled by the law dated on December 4, 2015 /

Article 30. Liability for violators 

30.1 A person or legal entity that violates this Law shall be subject to liability specified in the Criminal Code or the Infringement Law.

/ This article was revised by the Law dated on December 4, 2015 / 
 

D. DEMBEREL, SPEAKER OF THE STATE GREAT KHURAL/PARLIAMENT OF MONGOLIA