Is expropriation of real estate possible?

Real Estate

Japan Small Flag Japan

Yes. While as described below, the government has the power to take private property in certain limited occasions, in market, expropriation itself is very rare and plus, generally, purchasers can check such possibility or if the target property is subject to expropriation plan by reading documents regarding important matters of the properties prepared by broker of seller or purchaser. Thus, the risk that the purchased property becomes subject to unexpected expropriation is quite low.

Expropriation may be made for certain public purposes, such as for infrastructure purposes (roads, railways, airport, highways, etc.), in exchange for appropriate compensation. The relevant authority must draft a plan of public business and convene a meeting to explain such plan, the procedure of acquiring properties, and compensation, etc. to those who could be affected by the plan. The plan must be approved by the Minister of Land, Infrastructure and Transport or relevant authority, and then be approved by the expropriation committee in order to take private property in exchange for compensation. Note that normally the government would first negotiate with residents to purchase properties by offering appropriate compensation, and expropriation occurs only when the government and owner could not reach to the sale of the property.

Portugal Small Flag Portugal

Several legal regimes establish the possibility of expropriation/taking of land and compulsory sale with fair compensation. The legal regimes to take into account vary according to the title and basis on which such expropriation/taking of land or compulsory sale is made.

In this respect, for instance, the Law on the General Foundations of Public Policy of Soils, Territorial and Urban Management establishes that expropriation on public interest grounds (expropriações por utilidade pública) may take place in order to achieve the purposes of public soil policy. Alternatively, and in certain cases (ie failure to comply with performance of rehabilitation or regeneration), the owners may be subject to compulsory sale (venda forçada).

The Legal Regime of the Territorial Management Instruments also establishes that expropriation or compulsory sale may take place in order to perform the territorial plans and programs.

The procedure for expropriation is set forth under the Expropriations Code. According to such legal regime, the expropriation may be agreed or if agreement is not reached a litigation procedure will follow. The latter will be conducted through arbitration. Once a decision is issued, the process will be referred to the court for a judicial phase.

Expropriation gives rise to payment of a fair compensation (justa indemnização) by the expropriating entity to the expropriated parties.

The procedure for compulsory sale states that the competent authority may sell the property in a public tender. For such purpose a resolution on promotion of the sale and other terms to follow is set out in the Expropriations Code.

Ireland Small Flag Ireland

Yes. Local authorities have the statutory power for the purpose of performing any of its functions to acquire land or rights over land, permanently or temporarily, by agreement or compulsorily. Compensation is payable. Other statutory authorities such as transport authorities and the National Asset Management Agency (NAMA) also have similar rights.

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.

The Netherlands Small Flag The Netherlands

The government can expropriate real estate in The Netherlands on the basis of the Expropriation Act (Onteigeningswet). Expropriation of real estate can only take place in the following circumstances:

  • the public interest is demonstrably served by expropriation, and this interest cannot be realized any other way; and
  • the government has demonstrably attempted to obtain the real estate through an amicable settlement with the owner.

If these circumstances are fulfilled but the owner of the real estate can substantiate that he will realize the new designation desired by the government himself, expropriation does not take place. However, if the owner’s plans deviate too much from the government’s, the government can ask the court for permission to expropriate nonetheless.

We also note that according to the Expropriation Act, expropriation cannot financially set back the owner of real estate – in capital nor income. The government must therefore compensate all damages that are the direct result of expropriation.

Norway Small Flag Norway

According to the Norwegian Expropriation Act, real estate, including buildings and other instalments on a real estate, may be subject to expropriation. Further, other interests, rights and burdens, e.g. easements or limitations on construction rights, may be subject to expropriation. The Expropriation Act with associated regulations defines who may be granted right of expropriation, and to which purposes.

In general, there are strict restrictions for both purposes and reasons for expropriation. An application for expropriation may also be granted on the basis of a zoning plan, where both reasoning and purposes are assumed to be examined when adopting the zoning plan. The Norwegian Constitution and the Expropriation Act guarantees full compensation for the loss. The compensation to the affected property owners shall be decided through expropriation appraisement (judicial assessment).

Romania Small Flag Romania

Yes, expropriation of real estate is possible for just cause with compensation due to the expropriated owner at market value. The market value is usually determined by an authorised expert and may be challenged by the expropriated owner before a competent court.

Russia Small Flag Russia

Expropriation of real estate for public needs is possible in Russia. The law contains an exhaustive list of such public needs, e.g., construction of public roads, railways, energy systems, national defence or security needs, etc.

Unless the owner of the real estate concerned agrees, expropriation of property is effected via a court order. In any case, the owner is entitled to compensation equal to the market value of the expropriated property. The market value is estimated by an independent licensed appraiser.

Normally, expropriation is preceded by reservation of real estate for public needs, which is subject to recording in the Realty Register.

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.

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.

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.

Brazil Small Flag Brazil

There are several types of possible expropriation made by the Government: (i) direct expropriation – it is the expropriation made to meet the public interest and public and social need. The indemnity for the expropriation must, in thesis, be previous, fair and in cash, but it is very common to have the parties (former owner and the Government) discussing on the indemnity amount for several years in Brazilian Courts; (ii) inverse expropriation – it occurs when the Government takes possession of private properties, without complying with the requirements of previous notification and indemnity. In this case, the individual is supposed to claim, within five (5) years as of the expropriation act, his right to indemnity; (iii) expropriation as a sanction – it occurs when the property does not comply with its social function (urban or rural); and (iv) confiscatory condemnation or expropriation – in case of expropriation of land used for the cultivation of psychotropic or non-authorized plants.

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 owners who have had their property seized receive "just compensation" and, further to that, the Fourteenth Amendment to the U.S. Constitution affords them 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.

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.

Bulgaria Small Flag Bulgaria

In general, real estate may only be expropriated by the state or municipality if a significant public interest exists (e.g. construction of infrastructure, creation of green space, public parks, etc.), this interest cannot be satisfied with other means and only after a preliminary payment of a just compensation. A specific case of expropriation is envisaged for the purposes of regulation of lands with unapplied initial land regulation or out of regulation. The municipality is allowed to dedicate up to 25 % of the property owned by citizens for social or technical infrastructure by adopting a new Detailed regulatory plan. In this case the municipality is obliged to compensate the former owners with lands with similar characteristics (location, construction parameters, etc.).

France Small Flag France

Expropriation of real estate is possible for public purpose only (e.g. expropriation of land for the construction of a motorway) and is thus led, decided and compensated by the State.

Proceedings start with preliminary enquiries of the project and overall public purpose justifying the expropriation, its impact on the local community and benefits and is followed by a State’s declaration confirming public utility. Some public utilities are legally provided for (e.g. the removal of substandard housing or lands subject to technological risks). Others are controlled by the courts based on a cost-benefit analysis of the situation (e.g. construction of parking lot for public servants, construction of low income housing).

Germany Small Flag Germany

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. However, in practice such powers are relatively rarely exercised due to the financial situations of the communal authorities. Commonly used examples include powers of:

  • Local Authorities to acquire land for urban planning purposes and exercise statutory pre-emption rights;
  • Compulsory acquisition is possible for infrastructure purposes (such as railways, underground, highways, etc.).
  • Authorities decide on apportionment procedures to restructure a region.
  • Authorities decide on redevelopment measures.

With respect to pre-emption rights and compulsory acquisition, compensation is available to an owner and / or occupier for land or rights acquired compulsorily. Redevelopment measures however will regularly incur costs to the land owners for which such redevelopment measure is assessed.

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 as 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 (i) submit a valuation report that sets out the assessed market value of every unit; (ii) justify the redevelopment on the ground of the age or state of repair of the building and; (iii) 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.

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 the Government 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.

Nigeria Small Flag Nigeria

Yes. By virtue of section 28(1) of the LUA, it is lawful for the Governor of a State to revoke a right of occupancy on the basis of ‘overriding public interest’, which includes “the requirement of the land by the Government of the State or by a Local Government in the State, in either case for public purposes within the State, or the requirement of the land by the Government of the Federation for public purposes of the Federation”.

The LUA makes it mandatory for legitimate holders of a right of occupancy to be compensated but the value of compensation is restricted to the value of the buildings or leasehold interest that existed during the year of the compulsory acquisition. The Supreme Court (Nigeria’s apex court) has also decided that “for a valid revocation of a right of occupancy, whether statutory or that of a deemed holder, section 29 of the Act [i.e. the LUA] makes the prior payment of compensation to the holder a sine qua non.” The implication of this judicial pronouncement is that until compensation has been paid to the title holder, the process for revocation of a right of occupancy is not complete.

Section 28(4) of the LUA provides that compensation for revocation of a right of occupancy for overriding public interest shall be, as respects –

“(a) the land, for an amount equal to the rent, if any, paid by the occupier during the year in which the right of occupancy was revoked;

(b) buildings, installation or improvements thereon, for the amount of the replacement cost of the building, installation or improvement, that is to say, such cost as may be assessed on the basis of the prescribed method of assessment as determined by the appropriate officer less any depreciation, together with interest at the bank rate for delayed payment of compensation and in respect of any improvement in the nature of reclamation works, being such cost thereof as may be substantiated by documentary evidence and proof to the satisfaction of the appropriate officer;

(c) crops on land apart from any building, installation or improvement thereon, for an amount equal to the value as prescribed and determined by the appropriate officer”

Updated: January 25, 2018