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Valuations in Expropriation

What is Expropriation?

Expropriation occurs when an authorized public authority takes private property without consent of the owner. In Canada, public authorities have the right to take private property, as long as the appropriate government body approves the acquisition.

Given the imbalance of power between the landowner and the government, numerous safeguards are in place to protect the property owner in the expropriation process. One of these safeguards ensures the property owner is entitled to “be made whole” for any property taken. This may include:

  • The fair market value of the expropriated property at the date of expropriation;
  • Losses attributable to the adjoining land;
  • Compensation for reasonable legal or accounting fees associated with the expropriation;
  • Relocation costs for a business, or if a business cannot be relocated, the value of the goodwill of the business;
  • Reasonable business losses attributable to downtime; and/or
  • Interest for unpaid parts of the claim at a prescribed rate

As a practical matter, Chartered Business Valuators (“CBV”) and other professionals are usually retained to assess the quantum of damages suffered by the expropriated business owner.

Why do I need a Valuation?

Generally, a CBV becomes involved in expropriation matters when the taking of real property adversely affects a business. Examples include:

  • Business Closure: When a business’s property is taken and the business is unable to relocate and must close;
  • Business Relocation: When a business’s property is taken and the business is forced to relocate;
  • Business Disruption: When part of the business’s property is taken and the reduced utility of the remaining property results in extra costs for the business; or
  • Construction Loss: in an injurious affection scenario, where no property is taken, but a business is impacted by construction-related activities that occur in close proximity to its property.

In general, these losses exist in one of two categories: past losses and future losses.

Past losses occur between the date of the expropriation and the date of the valuation. Past losses are calculated by assuming that, had the expropriation not occurred, the business would have continued as normal. The CBV will use the historical profitability of the business as the basis of the quantification, adjusted for any industry trends, market trends, and other factors deemed appropriate.

Future losses occur after the date of the valuation. Unlike past losses, future losses are, by their very nature, speculative and involve many assumptions. If the business is unable to continue operating, the CBV may quantify the businesses goodwill [hyperlink to goodwill blog] as the future loss. If the business is able to relocate and continue operations, the CBV may need to estimate how profitable the business will be at the new location, and estimate how far in the future the losses attributable to the expropriation will continue.

Registered Property Owners in Expropriations

Municipalities in Ontario are engaging in the expropriation process to involuntarily purchase private property for various infrastructure works.  For example, in the City of Toronto, the authorities have acquired an interest in private property in order to accommodate the upgrading and enhanced of Donlands Subway Station.  See a copy of the summary of the project and of the expropriated property interests here.  This project is an important insofar as it enhances accessibility requirements at this subway station and complies with the legislative changes as implemented by the Accessibility for Ontarian’s with Disabilities Act, 2005 (AODA).

The City of Toronto posts a partial list of expropriated properties here.  In addition, prior to expropriation, the authorities are required to publish a notice of the application of intention to expropriate land once a week for three weeks in a local newspaper where the lands are situated (section 6(1) of the Expropriations Act).  In addition, the notice of the application of intention to expropriate is served on the registered owner(s) of the property.

Registered Owner is defined by the Expropriations Act as follows:

An owner of land whose interest in the land is defined and whose name is specified in an instrument in the proper land registry or sheriff’s office, and includes a person shown as a tenant of land on the last revised assessment roll; (“propriétaire enregistré”)

The above-referenced definition of the registered owner is rather broad and encompasses anyone with an interest in the property.  Tenants in common, individuals with small and limited ownership interests, mortgagees, other security-interest holders, lien-holders, those with spousal interests, and otherwise, are all entitled to notice of the expropriation and to have their rights preserved and protected in the expropriation process.  Authorities will generally require a Full and Final Release from all registered owners of the property in order to effectuate a payout on account of expropriation. As such, it can often require extensive time and coordination amongst the registered owners of the property if their interests are not all aligned.

Authorities typically prefer an amicable resolution with property owners related to expropriation claims, especially with respect to smaller, partial takings and temporary easement. However, given construction timelines and public budgets, authorities typically commence the expropriation process in parallel with attempts at an amicable resolution.  If a negotiated settlement with the expropriated property owner is not attainable, the more formal timelines and procedures of the Expropriations Act will be employed by the authorities in order to take possession of the lands and commence construction works.

 

Notice of Application for Approval to Exproriate Land

As has been discussed, expropriation is a taking of land without consent of the owner by an expropriating authority. An understanding of the expropriation process is essential for lawyers and appraisers to properly consult property owners and business owners that are subject to land acquisition by governmental authorities.

Time Requirements in Expropriations in Ontario 

The first step in the formal expropriation process is for the authority to serve a Notice of Application for Approval to Expropriate Land on the registered owner of the property.  A registered owner is an owner whose interest in land is registered or specified in an instrument in the Land Registry Office.  The authority is required to publish the Notice of Application for Approval to Expropriate Land for three consecutive weeks in a local newspaper where the lands are situated.

Once served with the document, the owner has 30 days to request a hearing of necessity, where the authority must demonstrate that the expropriation is fair, sound and reasonably necessary. Often, the hearing has reduced the scope of an acquisition from a fee simple taking to easement takings or to amend construction plans to minimize the impacts on the property.

Once the expropriation plan is approved, the authority must register the Plan of Expropriation within 3 months, at which time legal title to the expropriated lands vests with the expropriating authority. An owner can remain in possession of the land following registration of the expropriation plan, the owner is no longer the legal owner of the lands specified in the plan.

Other Time Requirements

After registering the Plan of Expropriation, the authority has 30 days to serve Notices of Expropriation and Election. The Notice of Expropriation notifies the owner that an expropriation has occurred and the legal title has vested with the authority. The Notice of Election provides the owner with a valuation date to select for the purposes of determining compensation. The valuation dates are either:

a. the date the notice of hearing for an inquiry was served;

b. the date of the registration of the Expropriation Plan; or

c. The date on which the owner was served the Notice of Expropriation.

In addition, the authorities will serve a Notice of Possession, indicating that the authorities will take possession of the lands at least 3 months after the date of service, before which, an offer of compensation pursuant to Section 25 of the Expropriations Act must be served on the property owner.

For more information about timelines and provisions of the Expropriations Act, it is imperative to consult with a lawyer and land appraiser early in the process in order to document the state of the property prior to the expropriation for comparison purposes in order to maximize the value of the property on the valuation date.

Expropriation in Ontario

As we have discussed in our expropriation law blog posts, we represent property owners and business owners in claims against government authorities when land is involuntarily purchased for a public purpose. The Municipal Act 2001 S.O. 2001, c. 25, in Ontario, provides that the power of a Municipality to acquire land under the Municipal Act, or any other Act, includes the power to expropriate land in accordance with the Expropriations Act.

In order to authorize an expropriation of land, the municipality must obtain the consent of the governing council to carry out the property acquisition. Once approval is obtained from municipal council to proceed with the purchase of land, a Notice of Application for Approval to Expropriate Land is delivered to the property owner, following which a series of steps is taken by the authorities, typically including but not limited to as follows:

a) a Plan of Expropriation be obtained and registered on title to the Lands;

b) the Notice of Expropriation, Notice of Possession and Notice of Election be served upon the owners of the Lands;

c) an appraisal report for expropriation purposes be obtained to establish the market value of the Lands;

d) the owners of the Lands be served with an offer in accordance with Section 25 of the Expropriations Act;

e) payment of compensation offered pursuant to Section 25 of the Expropriations Act, be made upon acceptance by the owners of the Lands;

f) all necessary steps required to be taken to obtain possession of the expropriated Lands.

If the property owner does not accept the section 25 offer of compensation in full and final satisfaction of their rights in the property, the owner may commence further legal action, engage their own property appraiser, and proceed with negotiation at the Board of Negotiation or an arbitration process through the Local Planning Appeals Tribunal (LPAT) for a determination of the proceeds of expropriation.

Expropriations Update in Ontario

As we have discussed here and has been discussed here and here the municipal governments across Ontario are undertaking various infrastructure projects that require the expropriation of land from private property owners.  As Goldstein Law Firm, we specialize in expropriation law, having helped property and business owners in various projects across Ontario, including but not limited to the following:

Eglinton Crosstown
Hurontario LRT
Hamilton LRT
Speers Road Widening
Trafalgar Road Widening
Yonge Street Road Widening

If you are a property owner being impacted by any of the above-referenced construction projects or any other project across Ontario and you have received a Notice of Application for Approval to Expropriate Land, it is best to consult with an experienced expropriation lawyer to advise you of your rights.  We do not charge any up-front fees in expropriation matter, and authorities are required to reimburse all reasonable legal and professional fees incurred by the property owner through the course of the expropriation.

As such, there is absolutely no cost to you for contacting and consulting with an expropriation lawyer.  Call Goldstein Law at 647.838.6740 today!

Road Widening Expropriations

As we have discussed here and here, an expropriation or taking of land typically occurs when a municipality, town, or other government agency requires land for the purposes of public works (i.e., infrastructure project).  The project could be large in scope, including new subways or light rail transit lines (for examples, see the Eglinton Crosstown, Hurontario LRT, and Hamilton LRT) where the authorities in each region have been undertaking expropriations to accommodate the mass transit projects. Conversely, small projects such as road widening and improvements can require the authorities to purchase small tracts of land from various property owners to accommodate the widening road.

Reasons for road widening typically include adding public transit along the route to reduce congestion or to add bike lanes. When the road is widening, the property abutting the new, expanded roadway, must be purchased by the authorities in order to carry out the work.  The private property owners do not have a choice as to whether their property is purchased or not – this is referred to as expropriation – the purchase of private property without consent.

Authorities will typically commence the expropriation process prior to starting the public works, to ensure that lands are acquired in time to meet project timelines and for the authorities to receive clear title to lands. In order to start the expropriations process, the authority will serve an Application for Approval to Expropriate Land (form 2), typically with a reference plan or survey which shows the lands required for the expropriation.

If you have received a Notice of Expropriation from the authorities as a result of a road widening or otherwise, you have the right to consult with legal counsel at no cost of your own.  In fact, the underlying principle of expropriations is that the property owner should be “made whole.”  Accordingly, property owners are not required to pay legal fees as the authorities are required to reimburse reasonable professional fees under the Expropriations Act.

If you have a question about expropriation in Ontario, contact our law firm today for a consultation.

Hamilton LRT Expropriations

Expropriation is the government taking of land. In preparation for constructing the Hamilton LRT, the government is purchasing property from private owners. A large quantity of land is being acquired by the government to accommodate the LRT project in Hamilton.

The City of Hamilton and Metrolinx are acquiring property in collaboration as required for the Hamilton LRT.  Metrolinx is responsible for all costs of acquiring the properties, including any injurious affection claims under the Expropriations Act.  The City acquires real property (i.e., fee simple interests, leaseholds, easements whether temporary or permanent, depending on the case) for the Project on behalf of Metrolinx.

For each property, the City obtains an appraisal or opinion of value to identify the market value of the property. Also, a survey is required.  Ultimately, the property owner and authorities will enter into an Agreement of Purchase and Sale for payment to the Owner of the following:

-Legal and appraisal costs incurred by the property owner;

-Penalties for prepayment and/or partial discharges of any mortgage or charge registered against the property;

-Relocation and/or equivalent reinstatement costs of the property owner;

-Disturbance damages, including business loss;

-Land transfer and other applicable taxes;

-Any other compensation as required by the Expropriations Act.

If you are a property owner subject to expropriation as a result of the Hamilton LRT project, please contact Goldstein Law for a free consultation today!

Served With a Notice of Expropriation. What Now?

If you have been served with a Notice of Expropriation (Form 7) under the Expropriations Act, R. R.O. 1990, Reg. 636 (the “Act”) in Ontario, this suggests that the authorities will be undertaking the process of taking all or a portion of your land for a public purpose.

Under the Act, the expropriating authority will notify the property owner of the amount of compensation it is willing to pay for the interest in your land. If you are not satisfied with the offer, you are entitled to have compensation negotiated by the Board of Negotiation established under the Act or to have compensation determined by the Local Planning Appeal Tribunal if an agreement with respect to compensation cannot be reached by negotiation.

It is imperative that the property owner understands that they are entitled to compensation for the fair market value of their land taken, and the diminution in value of the remaining lands in which they retain ownership (also referred to as injurious affection).  Injurious affection may occur where, for example, a large retaining wall has been built at the end of their property, or aerial transmission lines, which impact the view of the property and result in a general decline in appraised value. Though these instances do not represent a direct taking of property, the property owner has the right to claim for compensation as a result of the value destruction.

The property owner and expropriating authority may agree to dispense with the negotiation procedures and refer the matter directly to the LPAT to have compensation determined by arbitration.

With respect to legal and professional fees, Section 32(1) of the Act provides that the Board shall make an order directing the statutory authority to pay the reasonable legal, appraisal and other costs actually incurred by the owner for the purposes of determining the compensation payable, and may fix the costs in a lump sum or may order that the determination of the amount of such costs be referred to an assessment officer.

Contact an Expropriation Lawyer in Toronto today for a free consultation on your rights if your property is subject to an expropriation in Ontario.