Almost every constitution of a democratic country guarantees the right of ownership of things (property rights) to its citizens. The Constitution of the Republic of Serbia is no exception to this rule, and Article 86 guarantees the right to private property. However, this right also has certain exceptions. One of those exceptions is expropriation, which we will deal with in more detail in this text.
What is expropriation?
Expropriation is a legal institute that represents the transition of real estate from private to public ownership. Expropriation in Serbia is regulated by the provisions of a special law - the Law on Expropriation. Land, buildings and other construction objects are considered immovable property. In practice, land expropriation is the most common, so the focus in this blog will be on land expropriation, although other immovable properties can also be expropriated.
The Law on Expropriation prescribes important characteristics of expropriation, the first of which is that expropriation is carried out for the purpose of achieving public interest. This means that there are certain reasons of importance for the wider social community for the real estate in question to be in public ownership - most often for the construction of infrastructure facilities (roads, railways, bridges, gas pipelines, etc.).
Another important characteristic of expropriation is that it is carried out with a fair compensation, which means that the owner of the real estate that passes into public ownership is entitled to a monetary compensation that cannot be lower than the market price of that real estate.
What does the expropriation procedure look like?
Before submitting a proposal for expropriation, it is necessary to establish the existence of public interest. The authority competent to determine the existence of public interest is the Government of the Republic of Serbia, which is obliged to decide on the proposal for determining the public interest within 90 days. Against this decision of the Government, it is possible to initiate an administrative dispute before the competent court within 30 days.
The expropriation procedure begins with the submission of a proposal for expropriation by the authorized entity, which is called the expropriation beneficiary. It can be the Republic of Serbia, an autonomous province, a unit of local self-government, a public company and a company whose founder is the Republic of Serbia. It is an administrative legal procedure.
The expropriation procedure is carried out before the competent municipal administration bodies. In addition to the beneficiary of the expropriation as the proponent, the owner of the real estate to which the expropriation refers also participates in the procedure as an opponent of the proponent.
If all conditions stipulated by the law on expropriation are met, the municipal administrative body will pass a decision on expropriation, against which the owner of the real estate has the right to appeal. The authority responsible for resolving the appeal is the Ministry of Finance.
The owner of the expropriated real estate changes on the day the decision on expropriation becomes legally binding, and this is called complete expropriation.
However, expropriation can also establish an easement or lease on real estate for a certain period of time, and this is called incomplete expropriation. This type of expropriation can exist for a maximum of three years, and is most often established for the purpose of exploration of ore and other resources, extraction of sand, gravel, clay, etc. After this period expires, the beneficiary of the expropriation is obliged to return the real estate to its original condition.
In the event that a proposal for the expropriation of only one part of the land has been submitted, however, the owner of the real estate has no economic interest in using the remaining part of the land,
Compensation for land expropriation
A) Proceedings before the competent administrative body
In the event that the appeal of the owner of the real estate is not resolved positively, and the decision on expropriation becomes legally binding, the procedure for determining the compensation for the expropriated real estate is carried out (that is, the price that will be paid for the real estate to its former owner). The beneficiary of the expropriation is obliged to submit an offer on the amount of compensation for the expropriation of the land. The beneficiary of expropriation forms the specified offer on the basis of certain criteria, such as the assessment of the value of the land by the tax administration and the value of the buildings on the land determined by experts.
In case the real estate owner considers that the price offered by the expropriation beneficiary is realistic and fair, they will reach an agreement on the amount of compensation, which ends this procedure and the agreement acquires the force of an enforceable document. This ends the procedure of land expropriation.
However, what often happens in practice is that the owner of the real estate considers that the compensation offered by the beneficiary of expropriation is too low, and that its value is not properly assessed. In that case, there is usually no agreement on compensation with the expropriation beneficiary, but this issue is resolved by the court in non-litigation proceedings.
B) Proceedings before the Court
As already stated, the proceedings before the court will not take place at all if the beneficiary of the expropriation and the former owner agree on the amount of compensation, and this stage in the expropriation procedure is not mandatory, but only occurs in case of dissatisfaction of the real estate owner with the offered price. This court procedure is initiated ex-officio in the event that an agreement has not been reached within the statutory period of two months from the date of the decision on expropriation becoming legally binding. The expropriation of the land and this procedure that is conducted before the court is the most important part for the former owner. Jurisprudence regarding compensation for land expropriation is varied and depends on the location and other qualities of the real estate.
In this court procedure, the decision is made by a three-member panel composed of one professional judge as the president of the panel and two lay judges. After determining all the relevant facts, the court will determine the scope and form, that is, the amount of the compensation. The costs of the procedure will be borne by the beneficiary of the expropriation, except in the case of costs caused by unjustified actions of the previous owner of the real estate.
What is the market amount for compensation for expropriation?
Court practice has shown that the compensation (price) for land expropriation depends on several factors (location, type of land, market conditions, etc.). What can be concluded in court practice is that, in court proceedings, the owners are awarded a significantly higher amount in the name of compensation for expropriation compared to the amount initially offered. Sometimes, twice as much as the first offer is awarded in the process.
De facto expropriation
Everything we have written so far represents a legally regulated procedure for realizing expropriation, so we could conditionally call it "legal expropriation". On the other hand, in practice there are cases when the expropriation was carried out outside the legal regulations and the prescribed procedure, and we call this situation de facto expropriation.
For example, if a road was built across your plot of land without prior land expropriation, that is, the purchase of a part of the plot that was necessary for the construction of that road, it is a de facto expropriation.
In this case, it is necessary to initiate court proceedings to determine compensation for the actual expropriation. The compensation will depend on several factors - eg. whether the construction of the road affected the value of the real estate, what percentage of the private plot was occupied by the road, etc. Judicial practice in proceedings regarding de facto expropriation is diverse, but it is recognized by the court's tendency to award higher amounts in order to better protect the interests of private property owners. Of course, even with de facto expropriation, it is understood that the compensation should not be lower than the market value of the part of the real estate that was usurped outside of the legally implemented expropriation procedure.
Attorney for expropriation
If the administrative body has submitted a proposal for the expropriation of your real estate and you want to be sure that you will receive a fair compensation for it, a smart choice of a lawyer who will represent you in this procedure is of crucial importance. In addition, if in your case there has been a de facto expropriation, the lawyer will help you realize your right to compensation for the part of the real estate that was de facto expropriated.
The Pekić law office is at your disposal for all types of legal work in this procedure - from representation before the administrative body to representation in court proceedings regarding the expropriation of land or other immovable property. If you are interested in the amount of costs charged by our office or if you are interested in representation, you can contact us via the e-mail address [email protected], or by sending a message on Facebook messenger or Linkedin.
