What is Expropriation?
Section 1(1) of the Expropriations Act (the “Act”) defines expropriation as “the taking of land without the consent of the owner by an expropriating authority in the exercise of its statutory powers. Expropriation is one of the most powerful exercises of a public authority’s power. Expropriation may take all of a property, part of a property, or it may take only a partial interest in a property.
An Expropriation Authority is any entity empowered by statute to expropriate an interest inland. Expropriating authorities can include municipalities, the provincial government, the Ministry of Transportation, utility companies, and universities.
Expropriation takes place when the government requires private land for public purposes, such as construction or expansion of roadways, transit projects, or improvements to infrastructure and utilities.
How do I find out if my land will be expropriated?
According to the Expropriations Act, the formal process of expropriation begins with the Notice of Application for Approval to Expropriate. Pursuant to Section 6 of the Act, the expropriating authority must serve each of the registered owners a Notice of Application for Approval to Expropriate. This notice must also be published in a local newspaper for three consecutive weeks. Once the landowner receives this notice, they have 30 days to exercise their right to request a Hearing of Necessity at which an Inquiry Officer hears evidence and determines if the expropriation is fair, sound and reasonably necessary to achieve the objectives of the expropriating authority.
How will I be compensated if my property is expropriated?
Land for new developments can come in many forms other than the farmer’s field on the edge of town oThe intent of the Act is to be compensatory, and to place the landowner in the same position he or she would have been in but for the expropriation. In other words, it seeks to put owners in the same economic position they would have been in had the expropriation not taken place. The Act requires a landowner to be paid an amount equal to the market value of the expropriated property as if it were sold on the open market between a willing buyer and a willing seller.
What are the types of compensation?
The following is a list of the areas that may be compensable to those who have been expropriated:
- The market value of land
- Damages attributable to disturbance
- Equivalent reinstatement
- Equivalent accommodation
- Cost of improvements
- Cost for inconvenience
- Moving, legal, and survey costs
- Business relocation
- Damages for injurious affection
- Reduction in market value to the remaining lands
- Personal loss
- Business loss
- Special difficulties in relocation
- Interest on market value
- Interest on injurious affection
- Appraisal costs
- Legal costs
Many property and business owners are surprised to learn that they are entitled to interest. Section 33(1) of the Act states:
The owner of lands expropriated is entitled to be paid interest on the portion of the market value of the owner’s interest in the land and on the portion of any allowance for injurious affection to which the owner is entitled, outstanding from time to time, at the rate of six percent a year calculated from the date the owner ceases to reside on or make productive use of the lands.
Who decides how much compensation I will receive if my property is expropriated?
The Planning Act (
In the event that the property owner and the expropriating authority are unable to agree on compensation, a hearing will take place before the Local Planning Appeal Tribunal to determine fair and reasonable compensation under the Act.
A hearing before the Local Planning Appeal Tribunal is similar to a trial in court and involves the presentation of evidence, expert testimony and a formal decision made by the presiding members of the Local Planning Tribunal.
Owners and expropriating authorities rely upon experts such as professional appraisers that value the expropriated land to determine fair compensation. After these expert reports are considered the property owner and the expropriating authority try to work towards an agreeable resolution.
Before a property is taken by the expropriating authority, it is obligated to provide an expropriated owner with an appraisal report estimating the market value of the land expropriated and any injurious affect that would apply. The expropriating authority also has to offer to pay 100% of the authority’s estimate of fair market value, based on its report. This advance can be accepted by the owner without prejudice to the owner’s rights to pursue additional compensation in accordance with the Act.
What is Partial Taking Appraisal?
An expropriated property owner is entitled to the market value of the land taken, plus any reduction in value sustained by land not taken. Depending on the nature and extent of taking, the land not taken can have its value impacted. The extent of the impact on value is a function of whether the land not taken is a viable or non-viable remainder. After a partial taking, the remainder constitutes an entirely new property, which requires the preparation of a separate stand-alone appraisal, independent of the appraisal of the original property. Appraisals are required to assist in ascertaining the amount of compensation to which an affected property owner is entitled.
A partial taking always leaves behind unexpropriated property. That land not taken is known as the remainder and can possess varying degrees of functionality, depending on the nature and characteristics of the land. There are two types of remainders in a property expropriation:
- A viable remainder is one that is marketable as a standalone entity; and
- A non-viable remainder has negligible economic utility or value due to its size, shape, location or other detrimental characteristics.
Every remainder should be appraised as a new property, prepared independently of the before-taking appraisal. For a reminder to have value, it must have four economic factors:
- Purchasing power
The role of the appraiser is to conduct a broad enquiry into relevant economic factors and develop well-supported opinions of value within a statutory framework. According to the Appraisal Institute of Canada, when addressing a remainder, the appraiser should:
- Identify the larger parcel(s) in the context of the remainder, while simultaneously conducting the highest and best use analysis
- Identify the property rights to be appraised
- Identify relevant value-influencing property characteristics
- Identify the most likely purchaser(s) of the remainder
- Identify the appropriate method(s) of valuation
- Ascertain the type of market data to be collected
- Derive an estimate of value (i.e., market value or value in contribution)
What is Market Value?
Market value is the principal focus of most appraisers and is defined as “the most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, as of a specified date, in cash, or in terms equivalent to cash, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, for self-interest, and assuming that neither is under duress” (The Appraisal Journal, 2018).
Market value is based on the highest and best use of the property, without considering the impact of the proposed project on value.
What are my options if I do not agree with the compensation I am offered?
If you do not agree with the offer of compensation received from an expropriating authority, you have options:
- Under the Act, the property owner and the expropriating authority are to attend before the Board of Negotiation, if they cannot agree to final compensation. The Board of Negotiation cannot give a binding decision with respect to compensation but can encourage negotiations and the facilitation of a settlement between both parties.
- If an agreement still has not been reached, a proceeding can be brought before the Local Planning Appeal Tribunal to have fair compensation determined in accordance with the Act.
Should I contact a lawyer if my land is being expropriated?
Legal advice is often helpful to ensure the rights of the landowner are protected and that they receive compensation in full. The Act has provisions relating to costs that are intended to ensure that expropriated owners have access to justice and fair treatment.