Is expropriation of real estate possible?

Real Estate (2nd edition)

Cayman Islands Small Flag Cayman Islands

Yes – the Cayman Islands government can compulsorily acquire any land. This is normally the result of establishing new public roads, but can also be done in other circumstances. Compensation is payable, and is generally at the property's market value.

France Small Flag France

Expropriation of real estate is possible but only for the development of projects declared to be in the public interest (for example, the improvement of the roads' network or the construction of an educational institution or hospital).

Once the project is declared as being of public interest after a preliminary public enquiry, the court can determine the expropriation compensation if the public entity and the expropriated owner fail to agree its amount on an amicable basis.

The compensation should correspond to the value of the expropriated real estate property.

Germany Small Flag Germany

Powers are available to public bodies, and other bodies exercising public functions, to acquire land by expropriation (or other means) in a variety of situations. These powers of compulsory acquisition are given to help such bodies to fulfil their statutory responsibilities. However, in practice such powers are relatively rarely exercised due to the financial situation of the communal authorities and/or expected heavy opposition by property owners. Common examples of such rights include:

  • the right of local authorities to acquire land for urban planning purposes and exercise statutory pre-emption rights;
  • expropriation rights in particular where land is needed for large infrastructure purposes (such as railways, underground, highways, etc.);
  • the ability to carry out a re-apportionment of land in order to restructure a given area with very fragmented pieces of land; or
  • redevelopment measures in urban areas where properties may also be reapportioned or other instructions (including development orders) be given if required to modernize or improve the relevant area.

When a pre-emption right is exercised, or expropriation is carried out, compensation is awarded to the affected owner and / or occupier according to applicable laws (which does not necessarily correspond to the market value of the lost asset!). Redevelopment measures however will regularly result in costs to the land owners (which are generally not compensated by the public, because the law assumes that such redevelopment is also beneficial for each individual owner).

Hong Kong Small Flag Hong Kong

The Urban Renewal Authority has the power to apply for a compulsory sale of property to the government for urban renewal purposes. Affected owners will be entitled to a compensation equivalent to the market value assessed at the date of reversion of ownership back to the government of the expropriated properties. An order for resumption is made only if there is a "public purpose" to do so which is decided by the Chief Executive in Council at its sole discretion.

Expropriation may also occur if a majority applicant (owning no less than 80% of the undivided shares of the building), makes an application to the Lands Tribunal for the compulsory sale of a building that is 50 years old or more. Such majority applicant has to

(a) submit a valuation report that sets out the assessed market value of every unit;

(b) justify the redevelopment on the ground of the age or state of repair of the building and;

(c) show the applicant has taken reasonable steps to acquire all the undivided shares of the minority owners of the building.

The Lands Tribunal will then order a public auction to sell the building with a set reserve price only if all the above conditions are met.

Hungary Small Flag Hungary

Expropriation of real estate is possible subject to, inter alia, the following conditions:

  1. the expropriation shall serve a specific public policy purpose specified under law (e.g. urban development, energy supply, mining);
  2. the owner of the real estate shall receive full and immediate indemnification;
  3. it was not possible to acquire the real estate through sale and purchase or swap.
    The expropriation may be initiated by (1) the state, (2) the local municipality or (3) a third party tasked with carrying out the relevant public policy purpose or mandated by law to carry out expropriation.

Spain Small Flag Spain

The right to property is enshrined in Article 33 of the Spanish Constitution which nevertheless expressly states that the exercise of this right shall be limited by public interest. Therefore, it should be borne in mind that in Spain public administrations holding expropriation powers may expropriate under constitutional authority in the cases set out in, and with the safeguards contained in, the appropriate implementing legislation.

Different from an expropriation, it is worth pointing out that in recent years, several Autonomous Governments have passed laws establishing a preferential purchase right in favour of the Public Administration over vacated dwellings foreclosed by the banks, their real estate subsidiaries and real estate asset management companies for the purposes of solving housing needs faced by evicted families.

In addition, certain Public Administrations benefit from pre-emption rights in relation to properties of historical, architectural or environmental importance.

India Small Flag India

Yes. The State has the right and authority to compulsorily acquire property required for a public purpose or for a company in accordance with the laws relating to acquisition, on payment of compensation at a rate which shall not be less than market value.

Town Planning Schemes, Regional Plans and Development Plans for urban and urbanisable areas prepared by the planning authorities provide for reservation of lands for public purposes for which the land can be acquired. In other cases, compulsory acquisition has to be preceded by a hearing on objections to the proposed acquisition.

There are several State laws providing for temporary requisitioning of properties and premises and for laying of electricity supply, gas pipe lines, water pipe lines, drainage and other utilities through properties on payment of reasonable compensation.

Ireland Small Flag Ireland

Yes. Local authorities can compulsorily acquire lands in limited circumstances such as (1) where a site is derelict and poses a danger in the community, (2) for the purpose of developing infrastructure and (3) for conservation/preservation purposes. Where property is compulsorily acquired by a local authority, compensation is payable to all persons with an interest in the lands. The assessment of compensation generally falls under a number of headings of claim to include the value of the land acquired, compensation for disturbance and any diminution in value of any retained lands.

Section 158 of the National Asset Management Agency Act, 2009 (the “NAMA Act”) outlines the National Asset Management Agency ("NAMA") powers to acquire land compulsorily in certain circumstances where the compulsory acquisition is necessary to allow NAMA to deal with the property charged to NAMA.

Section 16 Industrial Development Act, 1986 (the “IDA Act”) enables the Industrial Development Agency (the “IDA”) to acquire lands either compulsorily or by agreement for the purpose of industrial development. A large part of the IDA’s role, under legislation, is acquiring land for development and, as a result, the IDA’s power to compulsorily acquire land was considered broad. However, in a recent decision of the Supreme Court delivered in November 2015, this view was somewhat curtailed. The IDA sought to compulsorily acquire land for which it had no immediate use so that if and when a particular undertaking should seek to develop the land, it would be immediately available at such time. The court, considering the constitutional protection given to property rights and applying the appropriate principles of construction, held that the IDA Act does not confer any power on the IDA to acquire lands not required for immediate use, but which might be utilised at some future time.

Russia Small Flag Russia

Under Russian law, real estate objects can be forcibly expropriated (taken) for public needs. Generally, the taking of private property requires a court order, whereby fair compensation should be determined. However, in many cases the authorities undervalue the expropriated property, and it is difficult for the owner to obtain a market price compensation.
Furthermore, land may be forcibly sold off public auction in case the owner fails to use the land plot in accordance with its designated purpose (especially relevant for agricultural land plots).

Switzerland Small Flag Switzerland

Expropriation of real estate is only possible if (i) it is based on a formal and clear legal basis, (ii) it is in the public interest, (iii) it complies with the proportionality principle and (iv) the same goal cannot be reached with any other reasonable measures. Compensation must be paid to the owner of the expropriated real estate, based on the market value of the property. Only the Confederation and the Cantons have the right to expropriate. The procedure of expropriation provides for judicial review both with regards to the legality and the valuation.

United Kingdom Small Flag United Kingdom

Powers are available to public bodies, and other bodies exercising public functions (an "authority"), to acquire land compulsorily in a variety of situations. These powers of compulsory acquisition are given to help such bodies to fulfil their statutory responsibilities. Commonly used examples include powers of:

  • Local Authorities to acquire land for regeneration or housing purposes;
  • Highway authorities to acquire land for construction or improvement of highways; and
  • Other infrastructure providers and utilities to acquire land to provide major infrastructure – such as railways, airports, ports, power generation facilities or transmission networks, pipelines, and telecommunications.

Some powers are generally applicable and contained in Acts of Parliament, such as the power to acquire land for regeneration purposes. In other cases, particularly for large projects, powers are included in legislation authorising the project to proceed, (e.g. by Act of Parliament in relation to the High Speed 2 rail project, or by Development Consent Order in relation to a nationally significant infrastructure project – see Q17).

While such powers are often exercised by an authority to acquire the land itself, powers of compulsory acquisition can also be used to acquire existing rights over land, or, in many cases, create new rights over land (e.g. rights of way). Powers of compulsory acquisition are mostly given by statute. An authority will make or obtain a "compulsory purchase order" in order to crystallise the power to acquire the land or rights. The complex process to make or obtain a compulsory purchase order will require significant consultation with affected parties. Often some form of public inquiry in front of an Inspector will be involved to consider objections against the order. An order will only be made if it is demonstrated to be in the public interest.
Statutory compensation is available to an owner and / or occupier for land or rights acquired compulsorily. Where land is acquired, this broadly comprises three key elements:

  • the open market value of the land; there is a considerable amount of law on the subject of how this value is determined;
  • any loss caused by reason of losing possession of the land (known as "disturbance"); this can include business losses; and
  • loss of value caused to land held by the person claiming compensation by reason of it being severed from the land taken or otherwise detrimentally affected (known as "severance" and "injurious affection").
    To the extent compensation cannot be agreed by the parties, the matter can be referred to a tribunal for determination as to the correct amount of compensation due.

Often for large infrastructure projects, the authority will offer additional compensation to compensate for losses or expenses that would not otherwise be covered by statutory compensation.

United States Small Flag United States

Yes. Expropriation, known as the power of "eminent domain" or "condemnation" or a "taking," is the power of the federal or state government to take private property for a public purpose in exchange for just compensation. Additionally, private corporations (such as utility companies) may also have eminent domain powers if such powers were delegated by law. Eminent domain can be effected through the taking of a fee interest, easement, leasehold or other real property interest. The Fifth Amendment to the U.S. Constitution requires that any such taking be for a "public purpose" and that the owners thereof receive "just compensation" and, further to that, the Fourteenth Amendment to the U.S. Constitution affords such owners due process rights including the opportunity to be heard in an impartial judicial setting. Appraisals are commissioned in order to assist with determining the amount of compensation to be awarded to a property owner. Other factors that are considered include business losses and, if applicable, the loss in value to the remainder of the property.

Peru Small Flag Peru

Yes, Section 70 of the Political Constitution of Peru establishes that the State may expropriate real estate for national security or public necessity reasons established by law, in exchange for the payment of fair price.

Legislative Decree No. 1192 regulates the expropriation procedure, stating that it must be expressly authorized by a law enacted by Congress and can only be carried out in favor of the State.

Fair compensation includes the assessed commercial value of the property determined by the Ministry of Housing, and the proven damages suffered by the owner.

Mexico Small Flag Mexico

Yes, Federal and local governments, through the executive branch, have the constitutional authority to expropriate and take private real estate for public use. An expropriation must be accompanied by payment of “just compensation” to the owner. In practice, courts have limited compensation to the property's fair market value.

The most common uses of property taken by expropriation are for roads, railways, pipelines as well as the development of infrastructure and public utilities. Expropriation is not very common given the fact that the government usually negotiates easements or sale of land with owners.

Turkey Small Flag Turkey

In order to conduct the public services and for public interest, the administrations can expropriate the real estates, resources and easement rights provided that their values are paid in cash or instalments. In case the parties cannot reach a settlement about the value, the administration shall apply to the court of first instance where the real estate is located and shall request for the determination of the expropriation value and registration of such real estate in the name of the administration provided that the expropriation price determined by the court is paid in cash or in instalments. After the determination of the price the judge grants 15 days to the Administration to pay the amount agreed between the parties or set by the court as the expropriation price. The court orders the registration of the real estate in the name of the administration and the payment of the value to the owner, upon the submittal of the receipt by the administration indicating that the amount is deposited in the name of the owner or blocked in the bank account to be given to the owner. This decision shall be notified to the title deed office and the related bank. The order of such registration is final but the parties can appeal the order only in terms of the expropriation price.

Italy Small Flag Italy

Expropriation of real estate is possible only (i) for public purpose, (ii) if the public purpose is validly declared and (iii) if an adequate indemnity is paid in compensation to the owner.

The expropriation procedure consists of:

  • When approving the general masterplan, the public authority identifies the areas where works of public interest shall be realized and imposes an easement on such areas for a five-years period (apposizione del vincolo).
  • The public authority declares the public interest of the works to be carried out on the eased area (dichiarazione di pubblica utilità dell’opera) (e.g. for infrastructure purposes or town planning purposes).
  • The public authority defines the amount of the indemnity to be paid in compensation to the owner (determinazione dell’indennità di esproprio).
  • Following the fulfillment of the payment of the indemnity, the authority adopts a decree of expropriation (decreto di esproprio).

The public authority shall notify all the interested parties at every stage of the procedure in order to allow them to take part in the procedure. If the works of public interest are not realized, the expropriated estate is returned to the owner.

Cyprus Small Flag Cyprus

Ν/Α

Japan Small Flag Japan

The Compulsory Purchase of Land Law establishes the requirements and procedures for the expropriation of privately owned real estate by the government. The expropriation is processed by evaluating whether the project that requires the expropriation will be in the public interest, and then determining the appropriate manner and amount of compensation. Owners of expropriated assets are generally entitled to reasonable compensation, which is decided upon by the expropriation committee. In principle, the compensation should be in the form of money, but there are some exceptions, such as the provision of substitute real estate.

In practice, land expropriation is very rare, and purchasers can check the likelihood of this occurring, or whether the target property is subject to an expropriation plan, by reviewing the “explanation sheet of important matters” (juyo jiko setsumei sho) or other documents prepared by the broker.

Thailand Small Flag Thailand

Yes, it is. There is a specific act regulating the process and necessity for expropriation of real estate: Real Estate Expropriation Act 1987 (the “Expropriation Act”).

Expropriation by the State under the Expropriation will occur when the State deems that the expropriation is necessary for the case of public utility, national defence, obtaining natural resources, city planning, or other economic-wise purposes, for example: agriculture development, agro-industry or industry and trading. A specific Royal Decree will be enacted for any expropriation – which stipulates, at a minimum, the purpose of the expropriation, the authorized expropriation officer and the area.

The owner of the real estate will be given notice by the authorized expropriation office where he will begin the process after the enactment of the Royal Decree. Any person who disrupts the duties of the authorized expropriation office will be subject to six-month imprisonment or a fine not exceeding THB 6,000, or both.

The authorized expropriation office has the authority under the Expropriation Act to determine the compensation amount to be given to (1) the owner of the land plot to be expropriated; (2) the owner of the construction thereon; (3) the lessee of the land or the construction thereon, provided that the lease must be in writing, and the sum that will be paid is for the actual damage caused for an early withdrawal from the land/construction before termination of the lease period; (4) the owner of the perennial agriculture on the land on the date on which the Royal Decree comes into force and effect; and (5) any person who is deprived of rights of way or water pipeline or electricity line due to such expropriation.

In the event that the real estate subject to expropriation is under mortgage or jus in rem (right in property), a written notice issued by the authorized expropriation office will be served on the mortgagee or the beneficial owner of such jus in rem (right in property) notifying that there is a 60-day notice period for the repayment request. However, the compensation for the expropriation will be paid to such mortgagee or beneficial owner only on the condition that it is duly agreed/settled by the parties.

Greece Small Flag Greece

The right of ownership is protected by the Constitution as a fundamental right. Within this context, the Constitution imposes a restriction or deprivation of property (expropriation) for the sake of public interest, always under the prerequisite of a prior reasonable indemnification of the owner.

The expropriation process is deemed to be perfected upon publication in the Government’s Gazette of notification by the expropriating party that payment of the lawful consideration in favour of the parties, whose property is being expropriated, has been made in a special account with the Loans and Deposits Fund. Unless full payment is made, the beneficiary of the expropriation cannot take possession of the expropriated asset. The State fixes the expropriation price which is subject to judicial review by the Court of First Instance, which may either accept it or fix a new price. If the owner of the real estate or the State object to such price, they may file with the Court of Appeals for the determination of the price, which then becomes final.

Expropriations declared for public interest do not need to be registered with either the Land Registry or the National Cadastre; thus, ownership rights are transferred to the beneficiary of the expropriation as of the date of payment of the compensation amount to the ex-owners of the expropriated parcels. However, rural and zoning expropriations are required to be registered with the competent Land Registry.

Bulgaria Small Flag Bulgaria

Real estate may only be expropriated by the state/ municipality if a significant public interest exists (e.g. construction of infrastructure, creation of green space, etc.), cannot be satisfied otherwise and only after payment of a fair compensation. A specific case of expropriation is envisaged for the purposes of regulation of lands with unapplied initial land regulation or out of regulation.

Brazil Small Flag Brazil

Yes. The public government may expropriate real estate due to public necessity, public utility or social interest, by means of an administrative and/or judicial procedure (initially declaratory and then execution) a with prior compensation or, in certain cases, with public debt bonds, payable in annual and successive installments.

Sweden Small Flag Sweden

Expropriation of real estate is possible under Swedish law, but not commonly practiced as public access to privately owned land normally can be secured with use of development plans (see Q16). Expropriation may be exercised by the state, a municipality or a private entity after receiving permission from the Swedish government. Expropriation is only allowed for certain purposes as prescribed under statutory law, and must serve a “particular public interest”. Expropriation may be permitted for e.g. large scale development, infrastructure or defence projects or to preserve areas of environmental, cultural or historical importance.

Property owners forfeiting land to expropriation have a statutory right to compensation from the expropriating party, corresponding to 125 percent of an estimated market value of the forfeited property, or if applicable, the market value reduction caused by the expropriation.

Indonesia Small Flag Indonesia

Yes. If a registered land title such as HGB expires, the land title will cease to exist and the title holder will lose ownership rights over the land. In most cases, the land in question will be converted to state‐owned land. Any buildings constructed on the land must be demolished so that the land can be returned to the government in a vacant condition.

In addition, any plot of land that is not utilised in line with the purpose for which land ownership was granted (e.g., if manufacturing activities are undertaken on land under a HGB certificate) may be declared “abandoned land”, which may be acquired by the state. Before declaring the land “abandoned”, the Ministry of Agrarian and Spatial Affairs (being the ministry charged with oversight of land, spatial planning and utilisation in Indonesia) through regional land agencies must undergo several procedural stages, including issuing warning letters to the land title holders. The land area being declared abandoned may be the entire area coveerd by the land title or just a part of it, depending on the assessment by the relevant authorities of the level of land utilisation and abandonment during the government’s identification and due diligence stages.

Updated: February 1, 2019