Changes in the expropriation law

The government plans to change the regulations on expropriation and compensation for expropriated property. Intended changes include amendments to the act on real estate management, as well as to a number of special acts (energy, road and rail). The main purpose is to resign from so-called principle of benefits in the valuation of expropriated property, determining the amount of due compensation.

According to the provisions of Chapter 5 of the act on real estate management that regulates the expropriation issues (more specifically it is the article 134), the basis for determining the value of compensation for the expropriated property is its market value. If this cannot be determined because such properties are not traded often enough, the basis for determining the amount of compensation should be its replacement value. Valuating the expropriated real estate, the appraiser should take into account its type, location, use, purpose, condition and the current prices of comparable properties. Points 3 and 4 of Article 134 are the most important in terms of planned changes, as they stipulate that the value of real estate for the purposes of compensation is determined for its current use, if the designation of the property area, consistent with the purpose of expropriation, does not increase its value. However, if the designation of the property area, consistent with the purpose of expropriation, increases its value, the value of the property for compensation purposes is determined according to the alternative use resulting from this designation. This means that, according to current regulations, the appraiser who evaluates the real estate should make a choice that takes into account purpose of the real estate that is more favourable from the point of view of its value.

Despite the fact that the current solution seems to be beneficial for the owners of expropriated real estate, it has significant disadvantages. The most important of them seems to be limitation of the amount of potential compensation for expropriation, even if it does not cover the costs of searching, purchasing and moving to a new property. The new solution states that the amount of compensation is to be based on the market value of the property (taking into account current use of the property), and the owner of the expropriated property will be additionally paid a bonus, constituting a lump sum for the costs of searching for and moving to a new property. The amount of this bonus is to be 10% of the property value, but in case of expropriation of buildings and premises, this amount will be doubled. A favourable solution included in proposed changes is also granting a civil claim for the expropriated property, if the compensation does not cover the actual damage related to the expropriation. The currently binding regulations do not provide for such possibility.

A civil claim procedure will be important especially for expropriated entrepreneurs. Planned changes provide that the mechanisms allowing for increasing the compensation are to be limited only to residential real estate. It seems that for entrepreneurs, who want to restore their businesses in other locations, receive reimbursement of the costs of moving or obtain compensation for lost profits only judicial path will remain.

The aforementioned legal changes are related to the construction project of the Central Communication Port and the resulting necessity to expropriate some of the people living in its future area. According to recently released information, the location of the CPK, which is planned to be built by 2027, has already been determined. The airport is to cover an area of ​​74 square kilometres in three municipalities – Baranow, Teresin and Wiskitki. The necessity of expropriation, total or partial, will apply to residents of 20 towns and villages located in these communes. The voluntary acquisitions programme is still ongoing, but so far relatively little part of the land has been acquired – only 10 hectares. Compulsory expropriations are to begin in the new year.

Jerzy Ptaszyński
Research and Market Service Director