RESIDENTIAL TERMS and CONDITIONS
The following describes the scope of work and other attributes characterizing any and all valuation services provided by Solovar pertaining to solar photovoltaic (PV) systems associated with residential real property (“Residential Valuation Services”). Specifically, the Residential Valuation Services from Solovar comprise certain services corresponding to the following products selectable by you (“Client”):
- Residential Valuation Report
- Residential Certified Appraisal Report
These terms and conditions, along with any other content provided in association with the Residential Valuation Services, are intended to comply with the personal property reporting requirements described in Standard 8 of the Uniform Standards of Professional Appraisal Practice (USPAP). Unless otherwise specified, the information below pertains to all Residential Valuation Services provided by Solovar.
The intended use or purpose of a given Residential Valuation Services assignment (“Assignment”) shall be selected by the Client and included with the information provided by the Client when initiating the Assignment. The intended users of the results of the Assignment (“Assignment Results”), such as the conclusion of value, will comprise the Client and any other party as identified by the Client, either by name or type, as users of the Assignment Results. The effective valuation date shall also be selected by the Client at Assignment initiation. Some restrictions as to retrospective and/or prospective valuation dates may apply.
Solovar will rely on the information provided by the Client pertaining to the solar PV equipment (“Equipment”) related to the Assignment to sufficiently identify the Equipment. Some identification information is mandatory, such as installation date, installation zip code, system size (e.g., in kW-DC), array type, module type, and/or other mandatory information. Other identification information is optional, such as initial installation costs, utility rate (e.g., in US$ / kWh), array tilt and azimuth, and/or other optional information.
DEFINITION OF VALUE
The definition of fair market value applied in providing the Residential Valuation Services is: an opinion, expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of a specific date. (Source: Machinery & Technical Specialties Committee of the American Society of Appraisers – July 25, 2010.)
SCOPE OF WORK
The scope of work for executing a given Assignment shall comprise at least the following activities: (i) reviewing the information provided by the Client pertaining to the Equipment associated with the Assignment; (ii) confirming the type and definition of value to apply; (iii) collecting other market inputs related to the Equipment from the public domain, such as information related to utility rates, weather patterns, PV cell technology, equipment costs, installation costs, and/or configuration options, or information related to the primary uses or alternative uses of the Equipment, which serve as a general indicator of the (a) trading liquidity, (b) useful life and obsolescence, and c) trading market level of the Equipment; (iv) determining various Assignment Results using an interpretation of applicable appraisal techniques and methodologies as prescribed by the American Society of Appraisers (“ASA”) and described herein; and (v) documenting support for the Assignment Results in a work file associated with the Assignment. No physical inspection of the Equipment will be conducted.
The three recognized approaches for determining value are the market approach, the cost approach, and the income approach. All three of these approaches are considered when providing Residential Valuation Services as described hereunder.
The market approach to determining value uses sales, ask prices, offer prices, and other market inputs from original equipment manufacturers, brokers, and refurbishers involved in used market sales of assets comparable to the Equipment. The appraiser adjusts the prices that have been paid or offered for assets comparable to the Equipment being appraised. Adjustments are made to the comparable sales data to reflect the age, condition, configuration, and salability of the comparable asset relative to the Equipment to arrive at an indication of the most probable selling price for the Equipment.
The cost approach to determining value adjusts the new replacement cost (or sometimes new production cost) of the Equipment for the loss in value due to physical deterioration, functional obsolescence, and economic obsolescence. The cost approach is based on the principle of substitution: a prudent buyer will not pay more for an asset than the cost of acquiring a substitute property of equivalent utility.
The income approach derives an indication of value from the present value of the future economic benefits of owning the asset. With the income approach, the appraiser determines the magnitude and timing of a set of future benefits and a terminal value (e.g., salvage value, residual value, etc.) of the Equipment, subtracts the expenses required to produce those benefits, and applies a discount rate or capitalization rate to determine an aggregate value (e.g., present value) as of the effective valuation date.
While the appraiser will consider all approaches, the income approach will primarily be used for the Residential Valuation Services. Since the primary use of a solar PV system is to generate an ongoing stream of benefits (e.g., electrical energy), and such benefits can be directly attributable to the system, the income approach can provide credible Assignment Results for the Residential Valuation Services. In some cases, cost-based and/or market-based techniques may be applied to verify conclusions and/or certain aspects of the conclusions derived from the income approach.
All Assignment Results provided by the Solovar are presented as a considered opinion, based upon the facts and data obtained during the appraisal process. Information furnished by the Client and/or other parties, upon which all or portions of the Assignment Results are based, is believed to be reliable, but has not been verified in all cases. Solovar provides no warranty as to the accuracy of such information.
Solovar shall not investigate nor assume responsibility for the legal description or other legal matters, including title or encumbrances, pertaining to the Equipment. The Equipment are also assumed to be in good working order and marketable unless otherwise stated. The Equipment is further assumed to be free and clear of all liens or encumbrances unless otherwise stated.
Expert testimony and or attendance in court by the appraiser or appraisers performing the Residential Valuation Services, Solovar or its representatives or agents, and/or any individual signing a certification or otherwise associated with the Residential Valuation Services shall not be required unless previous arrangements have been made.
The Residential Valuation Services and/or Assignment Results have been provided solely for the purpose stated herein and shall not be used for any other purpose.
The estimates of value provided in a given Assignment apply to the respective Equipment identified by the information provided by the Client for that Assignment. Such estimates may not be applicable outside the context in which they were presented and any such use is prohibited. The Assignment Results and related information is the property of both the Client and Solovar and classified as company confidential.
The Equipment is assumed to be maintained to industry standards and expectations and in normal or better condition unless otherwise noted in the Client information or in the corresponding work file. No assumption is made regarding the remaining useful life of the Equipment.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The matters discussed pertaining to the Residential Valuation Services described hereunder may be considered forward-looking statements that may be subject to risks and uncertainties that could cause the actual results to differ materially from those projected, including uncertainties in the market, the timely development and acceptance of new products and upgrades, procurement and manufacturing efficiencies, and other risks detailed from time to time. No responsibility is taken by Solovar for changes in the market conditions and no obligation is assumed to revise any provided Assignment Results to reflect events or conditions, which occur subsequent to the date of reply.
A certification signed by an accredited senior equipment appraiser will be included in the delivered documents associated with any of the Residential Valuation Services comprising a certification component, such as the Residential Certified Appraisal Report.