Expropriation of real estate represents a limitation of property rights in the public interest, with mandatory fair compensation for the owner. The process of determining compensation often leads to disputes, especially when the appraised value of the real estate does not align with market conditions. The legislative amendments of 2023 further specified the criteria for determining compensation, particularly in cases of land expropriation for the construction of linear infrastructure projects.
Compensation Determination Process
The process of determining compensation for expropriated real estate begins before the authority of the local government unit, after the expropriation decision becomes final. In the so-called administrative procedure of negotiated compensation determination, the competent tax administration provides an appraisal of the real estate’s value, followed by the former owner's statement on the offered estimated amount of compensation.
Considering that the obtained appraisal, in most cases, does not correspond to the real market value, former owners of the real estate do not accept it, and the compensation determination process is then conducted before the competent court in non-contentious proceedings.
Key Factor in Compensation Determination
The issue of determining compensation for expropriated real estate has emerged as highly significant, given that judicial practice has established the position that the land use status at the time of the expropriation decision - specifically, the moment when its designation changed from agricultural/forestry to construction - is crucial for correctly determining the compensation for the expropriated real estate.
Regulatory Changes in the Field of Expropriation
Amendments to the Law on Planning and Construction from 2023 (Official Gazette of the Republic of Serbia No. 62/23) have first established the obligation of the competent tax administration to take into account the estimated market value of land with the same or similar characteristics in neighboring local government units when determining the market value of expropriated real estate, provided that the expropriation was carried out for the construction of linear infrastructure projects.
Additionally, in cases where the expropriation process has been initiated for land that was first reclassified as construction land for the purpose of building a linear infrastructure project that has been determined to be of special importance for the Republic of Serbia, compensation for expropriation is determined based on its classification as agricultural land or forest and forest land until the moment of submitting an application for a construction permit, for the purpose of bringing the land to its intended use.
These amendments emphasize the concept of linear infrastructure projects, for which the Government of the Republic of Serbia has determined that they are of special importance for the Republic of Serbia. Consequently, in cases where the subject of expropriation is land whose designation was changed from agricultural/forestry to construction for the purpose of building such a project, compensation for expropriation will be determined as for agricultural/forest land.
It is important to note that, according to the Law on Planning and Construction, linear infrastructure projects include:
Final Remarks
The process of determining compensation for expropriated real estate remains a challenge in practice, particularly in aligning the appraised and market values of land. The legislative amendments introduced more precise rules but also potential legal dilemmas, especially in cases of expropriation for infrastructure projects of national significance.
Author:
Velibor Pejčić, Counsel
Email: velibor.pejcic@prlegal.rs