Failing amicable agreement between a compulsory vendor and purchaser or between the vendor and the holder of a pre-emptive right, the judge of compulsory purchase will determine the market value of the property.
The expropriation or compulsory purchase procedure comprises two phases: one is administrative (public inquiry, declaration of public utility and compulsory purchase order) and the other judicial (transfer of ownership of the property and compensation for the compulsory vendor). Failing amicable agreement between the parties, the value of the compensation paid by the compulsory purchaser to the compulsory vendor is determined by the judge of compulsory purchase.
This sum consists up of primary compensation equating to the market value of the property and additional compensation designed to redress losses suffered by the compulsory vendor (re-investment compensation, compensation for depreciation in the case of partial expropriation, etc.).
The property is finally valued on the date of the first instance decision and its consistency – i.e. its component parts, quality, condition as well as its rental situation – is assessed on the date of the order enacting the transfer of ownership. In practice, except in a specific situation relating to the property, the market value of the expropriated property is assessed by comparison with data from the real estate market. This data is transmitted by the compulsory vendor and the government commissioner (France Domaine). Expropriated owners may request, free of charge, from the tax authorities, the transmission of information relating to property values declared at the time of transfers occurring within the past five years1.
The judge makes a visit to the premises and hears the parties2. Should he/she encounter specific problems with valuation, he/she may appoint an expert or be accompanied, when visiting the premises, by a solicitor/notary3. The judge must rule within the limits of the parties’ conclusions and those of the government commissioner4.
He/she must take account of amicable agreements between the compulsory purchaser and the various holders of rights within the scope of operations forming the subject of a declaration of public utility5. The value of the primary compensation may not exceed the valuation produced by France Domaine where a previous transfer, less than five years before the date of the decision enacting the transfer of ownership, resulted in either an administrative valuation or a tax return for a sum below this valuation. Nevertheless, the compulsory vendor may demonstrate that the authorities’ valuation does not properly take account of changes in the real estate market or that the property has, since its transfer, undergone changes to its material or legal consistency, its condition or its occupancy situation6.
Urban pre-emptive rights
An owner wishing to dispose of a property that is subject to a pre-emptive right must issue a declaration of intent to dispose of property (DIA)7.
The DIA details the price and conditions for the proposed disposal (in particular payment terms). Should the holder of the pre-emptive right decide to acquire the property within a period of two months following receipt of the DIA and failing agreement on the price, it is up to him to take the case to the judge of compulsory purchase.
The price is determined in accordance with the applicable procedure for compulsory purchase8. It excludes all additional compensation, unlike the compulsory purchase procedure. Should there be a lack of amicable transactions providing sufficient references to value the property in the same area, account may be taken of transfers occurring for similar properties located in comparable areas.
1. Art. L. 322-10 C. Exp.
2. Art. R. 311-14 C. Exp.
3. Art. R. 322-1 C. Exp.
4. Art. R. 311-22 C. Exp.
5. Art. L. 322-8 C. Exp.
6. Art. L. 322-9 C. Exp.
7. Art. L. 211-1 - L. 213-18 C. Urb.
8. Art. R213-11 C. Urb.