Pre-Expropriation Negotiations: What to Expect and How to Respond
Once an expropriating authority has identified the lands it needs for a project, be it a road widening, new highway or public transit facility, it will send representatives to meet with the impacted landowners. “Typically, the authority will have obtained one, and sometimes two, appraisal reports assessing the market value of the landowner’s holding,” says Frank Sperduti, Senior Partner at BLG LLP. These appraisals form the basis of an offer of compensation, usually given to an owner many months before the expropriation process is formally commenced.
Owners who receive offers to sell or offers of compensation are well advised to have them reviewed by an experienced expropriation lawyer before signing anything, even if the market value being offered seems reasonable at first glance. This is because there are often elements of compensation available to the landowner that may be omitted from the authority’s offer. For example, these early offers of compensation, often referred to as “advance purchase offers”, typically do not include compensation (or include only nominal compensation) for disturbance damages, damages for injurious affection, equivalent reinstatement and/or allowances otherwise payable to the owner – like the 5% of market value premium an owner may qualify for in the case of the acquisition of a residential property. An experienced expropriation lawyer such as Frank Sperduti will help an owner understand the advance purchase offer and point out aspects of compensation that may be available.
Appraising real estate is complex and requires a number of judgment calls. Sometimes, appraisers differ in their opinions of market value and a good lawyer will often refer the owner to an independent appraiser even if the expropriating authority already has one or even two appraisals. In most circumstances, the expropriating authority will reimburse the owner for the cost of an independent appraisal as well as the legal costs incurred in advance of an expropriation, so it makes sense to take advantage of the opportunity for independent legal and appraisal advice.
In most cases, a land agent employed by expropriating authority will not use “pressure tactics” to get an landowner to sign an agreement. However, landowners who are told that they ought not to consult a lawyer because of the cost, or who are encouraged to sign to avoid the hassle of an expropriation, should be wary. If you are being treated fairly, there is no harm in having your deal reviewed by an experienced expropriation lawyer or appraiser.