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.
When an expropriation is approved by an “approving authority” (as defined by the Expropriations Act in Ontario), the expropriating authority will register a plan of expropriation on the title to the expropriated lands.
Once the plan of expropriation has been registered, title, or ownership of that portion of the expropriated land “vests” in the expropriating authority (but this does not give the expropriating authority the right of possession).
After the plan of expropriation has been registered on title, the expropriating authority will serve all registered owners with: (i) a Notice of Expropriation, which provides notice that the lands have been expropriated; (ii) a Notice of Possession, indicating the date on which the expropriating authority requires possession of the lands; and (iii) a Notice of Election, which permits the owner to select one of three dates upon which compensation for the lands expropriated will be based.
After service of the notice of expropriation, the expropriating authority may enter on the expropriated lands (with the owner’s consent, or upon an order issued by the Local Planning Appeals Tribunal) in order to view the lands for the purpose of preparing an appraisal report, which is intended to support of Offer of Compensation for the expropriated lands in accordance with Section 25 of the Expropriations Act.
Once an appraisal report has been prepared, the expropriating authority will provide a copy of the report to each registered owner, along with an offer of compensation for the owner’s interest in the lands expropriated. Owners then have two options: (1) accept the offer in full settlement of all claims under the Expropriations Act; or (2) accept the offer while preserving the right to claim additional compensation from the expropriating authority. Where the second option is selected, owners can assert their claim for additional compensation through formal or informal negotiation, or through arbitration at the Local Planning Appeals Tribunal (formerly the Ontario Municipal Board). Often, negotiation and arbitration proceedings are pursued simultaneously.
Please note that the above-referenced expropriation procedures are only applicable to expropriations in Ontario – and expropriation legislation and the associated processes and procedures vary from province to province.
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!
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.
Government authorities such as municipalities, school boards, and provincial and federal governments undertake projects which require them to obtain land from private property owners. In many cases, the authorities only require a small portion of the private property owners’ land for an easement or for related purposes such as utilities, although, in certain instances, entire properties are required (i.e., full vs. partial expropriation).
The authorities will attempt to purchase the land required from a project through a negotiated process with the affected property owners. The first step in the negotiation process is a hearing with the Board of Negotiation at the Local Planning Appeals Tribunal (formerly Ontario Municipal Board). Absent successful negotiations, the authorities may use the expropriation process to ensure that the land is obtained in a specific timeline to suit their project needs. Simply, an expropriation is a transfer of lands or an easement to an authority for reasonable compensation, including payment for the fair market value of the transferred lands, without the property owners consent.
In Ontario, an expropriation by an authority must follow the process set out in the Ontario Expropriations Act to ensure that the rights of the property owners are protected.
Sometimes, authorities will seek a negotiated resolution while the expropriation process is underway. This approach is necessary to ensure that the lands are in the authorities possession in the necessary timeframe; however, it can also save costs of both sides. Expropriation proceedings can be discontinued and the land transferred to the authorities in exchange for the payment of the negotiated compensation.
If your land has been expropriated or the authorities require an easement on your property to accommodate a public work, call the expropriation lawyer at Goldstein Law Firm to ensure you maximize the compensation that you deserve in conjunction with an expropriation in Ontario.