Expropriation: Legal Nature, Conditions of Validity and Procedural Stages

Expropriation is an administrative act which, where the public interest so requires, enables the State and public legal entities to acquire privately owned immovable property compulsorily against payment of its price. This exercise of power, directed squarely at the right of property, is subject to detailed rules of procedure and substance within the framework drawn by the Expropriation Act No. 2942 and Articles 35 and 46 of the Constitution.

Under that framework, the lawfulness of the act depends on several conditions being satisfied together: a public interest decision must have been taken, funding sufficient to meet the price must have been allocated, the real value of the property must be paid in advance or in the manner prescribed by law, and the statutory procedures must be complied with in full.

Below we examine, systematically and with regard to both the legislation and practice, the legal nature of expropriation, the conditions under which it may be carried out and the principal stages of the process.

The Concept of Expropriation and Its Legal Nature

Expropriation is the transfer into public ownership, by an administrative act and on condition that the consideration is paid in advance, of the whole or part (partial expropriation) of a privately owned immovable property by the State or a public legal entity where the public interest so requires. Founded on public power, this exercise has the character of an administrative act producing a direct interference with the right of property.

Viewed in terms of its nature, expropriation ranks among the gravest restrictions that may be placed on property. The immovable changes hands irrespective of the owner’s consent; that change of hands, however, does not occur arbitrarily but under the supervision of strict rules of form and procedure.

Normative Bases of Expropriation

The power conferred on the administration is not unlimited; it derives directly from higher norms of law.

The constitutional basis is the following provision:

Constitution of the Republic of Türkiye, Art. 46
“The State and public legal entities shall be empowered, where the public interest so requires, and on condition that the real value thereof is paid in advance, to expropriate privately owned immovable property in whole or in part, and to establish administrative servitudes thereon, in accordance with the principles and procedures prescribed by law…”

The Constitution guarantees property; Article 46 draws the boundary of that guarantee by reference to the criterion of public interest. The critical point here is the requirement that the sum to be paid be calculated on the basis of real value and be provided in cash and in advance. Although payment in instalments is possible in exceptional cases such as agrarian reform, the principal rule is payment in advance.

The statutory basis is found in the following provision:

Expropriation Act No. 2942, Art. 3
“Administrations may expropriate the immovable property, resources and easement rights necessary for the performance of the public services or undertakings which they are obliged to carry out under laws and Presidential decrees, by paying the price thereof in cash and in advance or, in the cases set out below, in equal instalments.”

Act No. 2942 is the principal text regulating the procedure and substance of the process in detail. In particular, the amendments made in 2001 introduced the requirement that the price determined by the court be blocked in a bank account before ownership passes to the administration, thereby placing property under guarantee.

The Public Interest Criterion and the Purpose of the Act

The element which lends the act its legitimacy is the public interest. The administration may not resort to expropriation in order to enlarge its own assets or to obtain commercial gain.

• Balance of interests: The legal order here strikes a balance between individual property and the common need of society. Where that balance is upset, that is to say where no concrete public interest can be demonstrated, owners acquire the right to bring an action for annulment before the Administrative Court.
• The public interest decision: This is the first and most decisive link in the process. The decision is taken by competent organs such as the relevant ministry, the governorship or the municipal executive committee, and gives concrete expression to the contribution which the planned project (a state road or an energy transmission line, for example) will make to the general welfare of society.
• Necessity and proportionality: Where the same project may be realised on more than one immovable, the administration is obliged to choose the option which impairs property least. Where the expropriated area exceeds the requirements of the project, this constitutes unlawfulness on the ground that the limits required by the service have been exceeded.

Under What Conditions May Expropriation Be Carried Out?

The power of expropriation is conferred on the administration in its capacity as a public authority; its exercise, however, is not unconditional. Under Article 46 of the Constitution and Act No. 2942, the validity of the act depends on a series of conditions being satisfied simultaneously. Those conditions function as guarantees which maintain the balance between the protection of property and the performance of the public service.

The validity of the act depends not only on the existence of a public interest but also on the complete fulfilment of the procedures and principles laid down by law. A procedural error committed in the course of the process may give rise to a defect extending as far as the annulment of the act.

A Public Interest Decision Must Have Been Taken

The fundamental condition is that a public interest decision must have been taken beforehand. That decision is a legal finding establishing that the immovable to be expropriated is necessary for the performance of a particular public service, and it must be taken by the competent organ of the administration concerned.

Where the decision has not been taken at all, or has been formed unlawfully, the expropriation becomes defective and may be made the subject of an application for annulment before the administrative courts by the owner.

Sufficient Funding Must Be Available

Before the administration may embark upon expropriation, it must have financial resources capable of meeting the price. This condition is intended to secure the act in financial terms and to eliminate the risk that the rightholder will be unable to obtain the price.

It is not legally possible for an administration without funding to carry out an expropriation; such a deficiency constitutes an irregularity capable of leading to the annulment of the act.

The Price Must Be Determined and Paid on the Basis of Real Value

The validity of the act depends on the consideration for the immovable being fixed on the basis of its real value and, as a rule, being paid in cash and in advance. This principle, expressly set out in Article 46 of the Constitution, is one of the most important guarantees relating to the protection of property.

In practice the price is determined by a court-appointed expert, having regard to objective criteria such as the type, surface area and location of the immovable, its zoning status and comparable sales. Ownership passes to the administration once the sum determined by the court is deposited in a bank in the name of the rightholder.

Statutory Procedural and Formal Rules Must Be Observed

Expropriation must be carried out following a particular sequence of steps. Before resorting to litigation, the administration is obliged to attempt the purchase and settlement method prescribed by law. The purpose of this stage is to bring the process to a conclusion by agreement between the parties, so far as possible without recourse to the courts.

A breach of the procedural rules — for example, bringing an action directly without holding a settlement meeting, or failing to effect service in the proper form — may render the act unlawful and result in its annulment.

How Does the Expropriation Process Work, Step by Step?

The process is a whole composed of administrative and judicial links and regulated in detail in Act No. 2942. Compliance with the procedural and formal rules prescribed by law is mandatory at every stage; otherwise the act may become defective and be annulled.

The matters about which owners are most curious in practice are the links through which the act passes, when service will be effected, and the precise moment at which ownership passes to the administration. For that reason, grasping the process in chronological terms is of great value in preventing the loss of rights.

Taking the Public Interest Decision

The first link is the formation of the public interest decision. At this stage the administration establishes in law that a particular immovable is required for the public service it has planned. Expropriation proceedings cannot begin without that decision.

The decision is given by the competent organ of the administration concerned; as a rule it becomes final once the approval of the superior authority has been obtained. No step such as valuation, settlement or litigation may be taken before it becomes final. In this respect the public interest decision constitutes the legal starting point of the process.

Identification of the Property and the Valuation Exercise

Once the public interest decision has become final, the administration determines the legal and factual position of the immovable it is to expropriate. At this stage the valuation commission constituted within the administration carries out the examinations directed at establishing value.

The principal matters addressed in the course of that examination are the following:

• The location of the parcel and the transport facilities available
• The type and surface area of the immovable
• Whether any building or installation stands upon the land
• The form of use envisaged in the plan
• Similar sales concluded nearby in the recent past and the general state of the market
• The net income obtained in the case of income-producing immovables

The figure arrived at during this stage constitutes the first offer to be put to the owner at the settlement negotiations. It is not, however, the final price; if no agreement is reached, the court will order a fresh expert examination and the real value will be definitively established in the course of the proceedings.

Settlement Negotiations with the Owner (Purchase Procedure)

It is not open to the administration to go directly to court; it must first seek common ground with the owner and attempt to purchase the immovable. Article 8 of the Expropriation Act No. 2942 regulates this link under the name of the purchase (settlement) procedure.

The administration applies to the owner in writing, offers the price determined and invites the owner to a meeting. That invitation is one of the most critical links in the process.

The stage proceeds as follows:

• A written invitation is sent to the owner calling the owner to a meeting
• The figure determined by the commission is put forward as an offer
• If the offer is accepted, a contract of sale is concluded between the parties
• The transfer at the land registry is effected and the file is closed without reaching the courts
• If the offer is refused, or the owner does not attend the meeting, the process moves to the judicial stage

In practice a great many expropriations are concluded at this link, and where no agreement can be reached the file is taken to court.

Bringing the Action for Determination of Price and Registration

If no settlement is reached, the administration brings an action seeking the determination of the expropriation price and the registration of the immovable in its own name. The proceedings are conducted before the Civil Court of First Instance for the place in which the parcel is situated, and constitute the judicial link of the process.

The proceedings advance through the following steps:

• The action is brought by the administration
• A panel of court-appointed experts is instructed in the case
• The real value of the immovable is recalculated
• The parties are given the opportunity to object to the report
• The price is fixed by decision of the court

Ownership does not pass to the administration unless the sum determined by the court is deposited in a bank in the name of the owner. In this respect the deposit of the price in a bank is one of the strongest legal guarantees in the process.

Registration of the Property by Court Decision

The final link in the chain consists of two operations: the blocking of the sum awarded in a bank in the name of the rightholder, and the entry of the title deed record in favour of the administration.

At this point, in sequence:

• The sum awarded is deposited in a bank account in the name of the rightholder
• The fact that the money has not been withdrawn does not mean that payment has not been made
• The record is entered in the name of the administration by the land registry directorate
• The expropriation is legally complete

This is the point at which ownership passes to the administration and the process comes to an end in law.

How Is the Expropriation Price Determined?

The price is arrived at by establishing the real value of the immovable as at the date of expropriation. That sum is not left to the unilateral appreciation of the administration; it is calculated on the basis of the objective criteria indicated in the statute and, where no agreement can be reached, is definitively fixed by the court. Indeed, placing the valuation on scientific and technical foundations is the express requirement of Article 11 of the Expropriation Act No. 2942.

The aim of the valuation is to ensure that the real value of the loss of property suffered by the owner is paid in a fair manner. For that reason, account is taken not only of the present condition of the immovable but also of its economic value and its characteristics of use. Prospective increases in value that may arise in future, and speculative expectations, are by contrast excluded from the assessment.

The principal factors taken into consideration in fixing the price are the following:

• Comparable sales: Sales of immovables of similar character concluded in the same area in the recent past
• Location: Distance from the centre, transport facilities and environmental conditions
• Character: Whether the immovable is a building plot, land, a field, a vineyard, a garden or a structure
• Zoning status: The intended use envisaged in the plan and the conditions of development
• Income position: The net income obtained, particularly in the case of immovables let out or of agricultural land
• Surface area: The size of the immovable and its usable area

While these criteria draw the general framework, the particular characteristics of the immovable in each case may call for different assessments. If no agreement is reached, the value is redetermined by the panel of court-appointed experts instructed by the court and becomes final by judicial decision.

Legal Remedies Available Against the Act

Although expropriation is established unilaterally, it is an exercise of public power open to judicial review. Various avenues of recourse are therefore provided for owners and other rightholders. These avenues serve both to test the lawfulness of the act and to ensure that the price is determined equitably.

The principal types of action which may arise in this connection are the following:

• Action for the determination of the expropriation price and for registration: This is the basic type of action, brought where no agreement can be reached between the administration and the owner, in order that the real value of the immovable may be established by the court.
• Action for the annulment of the expropriation act: This is an action brought before the administrative courts against the public interest decision underlying the act or against the procedure followed.
• Action for de facto expropriation: This is an action for damages brought where the administration takes physical possession of the immovable without carrying out a proper expropriation or without paying the price.
• Appeal against the price (application for an increase): This consists in having recourse to appeal and appeal on points of law where the sum determined by the court is thought not to reflect the real value of the immovable.
• Action for the recovery of the expropriated immovable: This is the right of recovery afforded to the former owner where, notwithstanding the expropriation, the immovable has not been used in accordance with the public interest for a period of five years.
• Urgent expropriation proceedings: Where national defence so requires, or in extraordinary circumstances, the parcel is taken into possession immediately, with the steps other than valuation deferred to a later date; this denotes the legal procedure conducted in relation to that process.

Which avenue is to be pursued varies according to the nature of the act and the subject matter of the dispute. In some actions the aim is the removal of the act, while in others it is an increase in the price or the obtaining of damages on account of de facto expropriation.

The Difference Between Expropriation and De Facto Expropriation

Both institutions denote an interference by the administration with immovable property; their legal characters, the consequences they produce and the avenues of action to be pursued nevertheless differ from one another. Expropriation is a lawful administrative act established in accordance with the procedure laid down by the statute. De facto expropriation, by contrast, is the administration’s dealing with an immovable without carrying out an expropriation or without completing the process; in that respect it is an unlawful interference.

That distinction determines which action is to be brought, in which branch of the judiciary the dispute will be heard and which claims may be advanced. The table below sets out together the points most frequently compared in practice.

A Comparative View of the Two Institutions

As the table shows, the difference between the two is not merely a matter of procedural debate; it also determines the content of the rights the owner may claim and the court in which the action will be heard.

Independent Legal Assessment

The most common difficulty faced by owners in expropriation files is that they act late, because of the technical appearance of the process. In fact, at every link in the chain running from the finalisation of the public interest decision to registration there are points of review capable of affecting the lawfulness of the act. The response given to the settlement invitation, the objections raised against the valuation commission’s report and the comparables submitted to the expert examination all bear directly on the final price.

It should also not be overlooked that the debate over the price and the debate over the unlawfulness of the act are conducted in different branches of the judiciary. Claims for the determination of price and for registration are dealt with in the ordinary courts, whereas annulment of the act falls to the administrative courts. Clarifying that distinction at the very outset of the file prevents the loss of time limits and of rights.

In a concrete dispute, the following heads should be addressed first:

• Reviewing whether the public interest decision was taken by the competent organ, and the approval process
• Responding to the settlement invitation in writing and within the time limit
• Testing the currency and comparability of the comparables used in the valuation
• Examining, from the standpoint of proportionality, whether the expropriated area exceeds the genuine requirements of the project
• Monitoring whether the price has been deposited in a bank, and the date of registration
• Assessing whether the right of recovery may arise in the event of five years’ non-use

Independent Legal provides advisory and litigation services throughout the whole of the expropriation process, from the conduct of the settlement stage to the pursuit of actions for the determination of price and for annulment.