Which legal document outlines the definition of fair market value?

The definition of fair market value is typically found in property tax regulations. This is because these regulations often provide the legal framework and guidelines for how property values are assessed for taxation purposes. Fair market value refers to the price a willing buyer would pay to a willing seller in an arms-length transaction, and property tax regulations frequently establish this definition to determine the taxable value of properties.

While real estate appraisal standards do provide methodologies and approaches to determine fair market value, they are not legally binding documents. They serve more as guidelines for appraisers rather than specific legal definitions. State constitutions and local municipality codes may cover various aspects of property law but do not generally define fair market value with the specificity needed in the context of taxation. Hence, property tax regulations are the most definitive source for understanding fair market value within the scope of property assessments.