Legal Definitions - fair cash market value

Fair cash market value refers to the estimated price an asset would sell for on the open market. This value is determined under specific conditions: a transaction between a willing buyer and a willing seller, both of whom are knowledgeable about the asset and are not under any compulsion or pressure to buy or sell quickly. The "cash" aspect emphasizes that this value is expressed in monetary terms, reflecting a typical transaction where payment is made in cash or its equivalent. It represents the most probable price an asset would bring in a competitive and open market setting.

Here are some examples to illustrate this concept:

• Property Tax Assessment: A local government needs to assess property taxes for a residential home. The tax assessor determines the fair cash market value of the home by analyzing recent sales of comparable properties in the neighborhood, considering factors like the home's size, age, condition, and unique features. This estimated value is what a typical buyer would likely pay for the home in a cash transaction on the open market, and it forms the basis for calculating the homeowner's property tax bill.

• Insurance Payout for a Damaged Item: An individual's rare coin collection is severely damaged in a flood. When filing an insurance claim, the insurance company will determine the fair cash market value of the collection immediately before the damage occurred. They would consult with expert appraisers who research recent auction results and private sales of similar rare coins to establish what a knowledgeable collector would have paid a willing seller for the undamaged collection in a cash transaction.

• Valuation of Business Equipment for Sale: A construction company decides to upgrade its fleet and sell an older, but still functional, bulldozer. To price the bulldozer appropriately, the company would seek its fair cash market value. They might consult with equipment dealers or review recent sales data for similar used bulldozers, taking into account its make, model, year, hours of operation, and overall condition. This helps them determine the price a knowledgeable buyer would pay for the equipment in a cash sale on the used machinery market.