Cases in which the administration does not require the whole of an immovable and takes only the portion necessary for its project are examined in practice under the heading of partial expropriation. In such a transaction part of the parcel passes into public hands, while ownership of the remaining portion continues to rest with the owner.
The division of the parcel, however, frequently has an adverse effect on the economic value of the area left to the owner, on the possibilities of its use or on the benefit it affords. Partial expropriation is therefore not a process completed simply by paying the consideration for the portion taken; the diminution suffered by the portion left behind is also addressed separately in law and must, where the conditions are met, be made good.
Below we address the circumstances in which, and the manner in which, the diminution in value of the remaining portion may be claimed, the method by which the compensation is calculated, the time limit to which the claim is subject and the conduct of the proceedings.
The Concept of Partial Expropriation
What is meant by partial expropriation is that the administration, pursuing an aim of public interest, takes not the whole of the immovable but only the portion it requires. As a result of the transaction part of the parcel passes to the administration, while the remaining portion stays in the ownership of the owner. This course is resorted to particularly in public projects such as roads, energy lines and infrastructure, where the whole of the immovable is not required.
Legal Basis
The legal foundation of this transaction is formed by the Expropriation Act No. 2942 and the connected provisions of the legislation. Article 12 of the Act expressly provides that, where only a portion of the parcel is expropriated, the diminution in value of the portion left behind is to be taken into account. By that provision the legislature did not regard payment of the price of the portion taken as sufficient in itself; it also required that the adverse effects arising in the portion left behind be made good to the owner.
The conclusion to be drawn is this: partial expropriation is not merely the passing of an area to the administration, but a transaction which must be assessed together with its effect on the immovable as a whole.
For the general framework of the subject, reference may be made to our note entitled What Is Expropriation? Its Conditions and the Legal Process.
What Does the Remaining Portion Mean?
The remaining portion denotes that part which, following a partial expropriation, is not expropriated and continues in the ownership of the owner. That portion may be directly affected by the transaction and frequently can no longer serve its previous purpose of use as it once did.
Where, for instance, the portion of a parcel expropriated for road construction is separated off, the shape of the area left behind may be spoiled, its surface area may be reduced, its transport connection may be weakened or its economic integrity may be impaired. The position of the portion left behind therefore constitutes a dimension of expropriation which must be addressed separately.
The Concept of Diminution in Value
The concept of diminution in value denotes the decline seen in the economic value of the portion left to the owner following a partial expropriation. That fall does not arise solely from the reduction in surface area; a narrowing of the possibilities of use of the immovable, a spoiling of its shape, a reduction in the means of access or a decline in its economic productivity may produce the same result.
Our law allows compensation for such diminution arising in the remaining portion. Moreover, in certain cases where the remaining portion has become economically unusable, the owner may request that this portion too be expropriated in its entirety.
Principles Governing Diminution in Value and Compensation
The passing of a portion of the parcel to the administration frequently produces a direct effect on the possibilities of use and the economic value of the area left behind. It is therefore not sufficient, in the expropriation process, merely to establish the consideration for the portion taken; the diminution arising in the remaining portion must also be assessed separately. The principle accepted in our law is that, where a fall has occurred in the value of the immovable left to the owner by reason of the partial expropriation, that fall is to be paid to the owner.
Not every partial expropriation, however, gives rise of itself to a loss of value. Where the remaining portion is able to continue serving its previous purpose of use, is able to preserve its economic integrity, or where the new situation does not appreciably affect the value of the immovable, compensation may not arise. Whether or not there is a loss of value is accordingly established in each file by technical examination and expert assessment.
For detailed information on the price determination process as a whole, our note entitled The Action for Determination and Registration of the Expropriation Price may be consulted.
Principal Circumstances Giving Rise to Diminution in Value
A great many situations may reduce the value of the portion left to the owner. These circumstances directly affect the physical structure, the purpose of use or the economic value of the immovable. Those most frequently encountered in practice are the following:
- A weakening, and in some cases a complete severance, of the parcel’s road or transport connection
- The spoiling of geometric integrity, leaving the parcel with an irregular shape
- The remaining surface area becoming unsuitable in terms of use
- A loss of value in zoning terms, or a narrowing of the possibility of development
- The spoiling of productive integrity or a decline in yield in the case of agricultural land
- A fall in use value on account of noise, vibration, environmental effects or safety risks
- A change in, or a restriction of, the economic purpose of use of the immovable
Where circumstances of this kind exist, the market value of the remaining immovable may decline and an economic loss arises for the owner. Whether or not there is a loss of value is determined not merely by looking at the change in surface area, but by having regard together to the general characteristics of use of the immovable and its economic value.
Calculation of the Compensation for Loss of Value
Because establishing the diminution in the remaining immovable calls for a technical assessment, it is generally carried out by an examination by court-appointed experts. The panel instructed by the court compares the position of the immovable before and after the expropriation and sets out the change occurring in the value of the remaining portion. In that exercise the location, surface area, zoning status, type, purpose of use and economic value of the parcel are considered together.
The basis of the calculation is the difference between the value of the immovable before the expropriation and the value of the portion remaining after the transaction. Put another way, the foundation of the compensation is the actual reduction occurring in the economic value of the immovable. In making the determination, market conditions, comparable sales data, the forward-looking economic potential of the immovable and the possibilities of its use are also included in the assessment.
Establishing the compensation for loss of value accurately and fairly is in practice often the most critical stage of the action. For that reason the content of the expert report, the methods chosen and the criteria of calculation are scrutinised closely throughout the proceedings and may be made the subject of objection by the parties.
The Timing of the Claim and the Manner of Advancing It
Where a reduction has arisen in the value of the remaining immovable following a partial expropriation, the owner may seek compensation for it. That claim is nevertheless subject to particular procedural rules and, in particular, to a time limit. Compensation for loss of value is most often raised within the action for determination of price and registration; in some cases it may also arise as an independent claim or objection. It is therefore of great importance that the owner follow the process closely and exercise those rights in good time.
At What Stage Is the Claim Advanced?
This sum is most often claimed while the action for the determination of the expropriation price and for registration is being heard. The owner may allege that the value of the portion remaining has fallen and request that this allegation be investigated by means of court-appointed experts. If the court considers it necessary, it will order an on-site examination of the immovable and the drawing up of a report.
It is important that the claim be raised clearly and in terms leaving no room for doubt. Otherwise the court may confine itself to determining the price of the expropriated portion alone.
The Thirty-Day Preclusive Period
One of the most critical matters in this field is the 30-day preclusive period. Under the Expropriation Act No. 2942, an owner who intends to allege that the value of the portion left following the transaction has declined must notify that claim to the court within the period prescribed by the statute.
As a rule the period begins to run from the date on which the expropriation act, or the steps relating to the price, are served on the owner. If the period is missed, the right to advance a claim for loss of value is extinguished.
What Happens If the Period Is Missed?
If no claim is made within the preclusive period, that loss cannot be claimed afterwards, even where a reduction has genuinely arisen in the remaining portion. This is precisely one of the most frequently encountered losses of rights in practice: the failure to advance the claim for loss of value within the time limit.
Owners often direct their attention solely to the price of the expropriated portion, and become aware of the diminution in the portion left behind only after the period has expired. The statute, however, requires that this claim be raised expressly and within a particular period.
The Court Process
Courts with Subject-Matter and Territorial Jurisdiction
Claims founded on the diminution in value of the remaining portion are, as a rule, directed to the court with subject-matter jurisdiction to hear the action for determination of price and registration. In these disputes subject-matter jurisdiction lies with the Civil Court of First Instance, and territorial jurisdiction with the court for the place in which the immovable is situated.
Although in practice this claim is most often raised within the same file, it may also be brought forward by way of an independent action. The existence of the preclusive period nevertheless makes it decisive that the claim be directed in good time and to the correct forum.
Evidence and Proof
Proving that a fall in value has arisen in the portion remaining is the most critical link in the proceedings. For that reason the court most often orders an on-site examination and a technical examination by court-appointed experts.
The evidence which comes to the fore in establishing the diminution is the following:
- The expert report and the records of the on-site examination
- Title deed records and cadastral documents
- Records of comparable sales
- Zoning plans and documents showing the zoning status
- Information and documents relating to the actual use of the immovable
- Official documents concerning the expropriation formalities
The expert report plays a decisive role in practice as regards the existence and amount of the loss of value. The scope of the examination and the methods of calculation used should therefore be reviewed carefully by the parties, and the report should be objected to where necessary.
Litigation Costs and Legal Fees
In actions for compensation arising from partial expropriation, the costs of the proceedings and the legal fees are apportioned between the parties according to the outcome of the action. Where the claim is upheld, these items are as a rule left with the administration; where the action is dismissed, they may be imposed on the claimant.
In files of this kind, the expenses of the on-site examination, experts’ fees and similar outlays also count as costs of the proceedings. It is therefore important, before recourse is had to the courts, that the likely cost and the process be calculated with care, so as to prevent the loss of rights.
Independent Legal Assessment
The most frequent mistake made by owners in partial expropriation files is to direct their attention solely to the consideration for the square metres taken by the administration. In most cases, however, the real loss arises from the spoiling of the shape of the parcel left behind, from the loss of its frontage onto the road or from the break-up of its agricultural integrity, and that loss may exceed the price of the portion taken. The fact that the claim is subject to a preclusive period renders the mistake impossible to remedy.
For that reason an owner who receives notice of expropriation should, before even entering into the debate over the price, assess in technical terms the state of the parcel after the expropriation. In a concrete file the following heads should be prioritised:
- Documenting the date of service and putting the thirty-day preclusive period into the calendar
- Advancing the claim for loss of value expressly and as a separate item in the statement of claim or in the written submissions
- Placing before the court, in comparative form, the cadastral and zoning data relating to the position before and after the expropriation
- Raising the request that the remaining portion be expropriated in its entirety, should it become economically unusable
- Reviewing in good time the comparables, the method and the comparison dates used in the expert report
- Anticipating from the outset the cost of the proceedings, including the expenses of the on-site examination and of the experts
Independent Legal provides advisory and litigation services at every stage of expropriation disputes, from establishing the loss of value of the remaining portion to the process of objecting to the expert report.