W. Va. Code R. § 110-1P-2

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-1P-2 - Definitions

For purposes of this rule, the following terms have the meanings ascribed in this section, unless the context in which they are used requires a different meaning.

2.1. "Active industrial or commercial land" means that portion of land used for industrial and commercial purposes.

2.2. "Capitalization rate" means a rate used to convert an estimate of future income to an estimate of present market value.

2.3. "Commercial property" means income producing real property used primarily, but not exclusively, for the sale of goods or services, including but not limited to offices, warehouses, retail stores, apartment buildings, restaurants and motels.

2.4. "Cost approach" means the appraisal process in which replacement cost of improvements, less all types of depreciation, is added to a land value in determining an estimate of the fair market value for improved real property.

2.5. "Economic obsolescence" means a loss in value of property arising from outside forces such as changes in use, legislation that restricts or impairs property rights, or changes in supply and demand relationships.

2.6. "Economic rent" means the rental amount which a space or property would attain in the open market at the time of appraisal, whether it is lower, higher or the same as the actual contract rent.

2.7. "Fair market value" means the highest price in terms of money that a property will bring in a competitive and open market, assuming that the buyer and seller are acting prudently and knowledgeably, allowing sufficient time for the sale and assuming that the price is not affected by undue stimulations.

2.8. "Functional obsolescence." - The loss of value due to factors such as excess capacity, changes in technology, flow of material, seasonal use, part-time use or other like factors. Functional obsolescence includes loss of value due to the inability of an item to perform adequately the function for which the item was designed.

2.9. "Freehold estate" means an estate in land or other real property, of uncertain duration; that is, either of Inheritance or which may possibly last for the life of a tenant at the least, possessing two (2) characteristics:

(1) immobility and

(2) indeterminate duration (no fixed termination of the interest).

2.10. "Gross lease" means a lease agreement where the lessor pays all fixed charges (property taxes, maintenance, etc.).

2.11. "Heavy industrial site" means an industrial site containing five (5) acres or more of land.

2.12. "Income approach" means the appraisal process of discounting an estimate of future income into an expression of present worth.

2.13. "industrial parks" means a parcel or group of parcels dedicated primarily to commercial and industrial development.

2.14. "Leased fee" means the interest remaining in one who has granted possession and occupancy to another for a designated term under a lease contract. Generally, it is the interest of the owner in his or her property after it has been leased.

2.15. "Leasehold" and "leasehold estate" mean an interest in real property created by a lease contract. The leasehold is the right to occupy and use the property for the term fixed in the lease, at a stated rental, and subject to conditions set forth in the contract.

2.16. "Light industrial or commercial site" means an industrial site containing less than five (5) acres of land.

2.17. "Market approach" means the appraisal process of examining sales data and translating the data into an estimate of present worth.

2.18. "Mine site" means a parcel of land containing the mine portal or shaft, parking lots, water treatment facilities, mine fan areas, refuse piles and preparation plant sites.

2.19. "Net rental" means an agreement specification where the lessor receives an annual rent net, with the lessee paying all property taxes, Insurance and cost of building maintenance, as well as operating expenses.

2.20. "Physical depreciation" means a loss in value due to natural wear and tear of property resulting from age, use, abuse, etc.

2.21. "Property residual method of valuation" means that, at the expiration of the term of the lease, even though the building may have little value, the land will have a reversionary value. Both the income stream for the estimated useful life of the building and the reversionary interest in the land are discounted to present worth. This method is applicable where the building is old, the site under-improved, or the improvements have a short remaining useful or economic life.

2.22. "Replacement cost" means the cost of constructing a building or improvement having the same use, but using modern materials, design, and workmanship.

2.23. "Residual industrial or commercial land" means that portion of a parcel of real estate that is currently nonproductive in terms of the industrial or commercial activity located on it. This classification of land would include land held for industrial expansion, land marginally suitable for industrial use and excess acreage.

W. Va. Code R. § 110-1P-2