Expropriated Owners Flow Chart
- What is expropriation?
- How does expropriation work?
- What is the timing for the expropriation process?
- What options do I have if I want to oppose the expropriation of my land?
- What are my entitlements to compensation if I am expropriated?
- When will I receive compensation for my expropriated land?
- How do I assert my additional claims for compensation?
"Expropriation" means the taking of "land" without the consent of an "owner" by an "expropriating authority" in the exercise of its statutory powers. The expropriating authority (the Crown or any person empowered by statute to expropriate land) must pay compensation to the owner for the land taken.
The terms "land" and "owner" are broadly defined in the Expropriations Act. "Land" includes any estate, term, easement, right, or interest in, to, over, or affecting land. "Owner" includes a mortgagee, tenant, execution creditor, a person entitled to a limited estate or interest in land, a guardian of property, and a guardian, executor, administrator or trustee in whom land is vested. Property is expropriated either for government use or by delegation to third parties who will devote it to public or civic use or, in some cases, economic development. The most common uses of property taken by expropriation are for public utilities, transportation corridors, and public facilities.
Prior to any expropriation taking place the expropriating authority will attempt an amicable settlement. If this fails the expropriation process will take place. The key statute that governs the expropriation process, the kinds of claims that can be asserted and the procedure for doing so is the Expropriations Act, R.S.O. 1990, c. E.26 (the "Expropriations Act").
Once a decision is made to expropriate, the expropriating authoring must seek approval to begin the expropriation process from the "approving authority" (typically, the Council of the municipality, the local school board, or the appropriate Minister). A Notice of Intention for Approval to Expropriate is then served on each registered "owner" and published in the local newspaper for 3 consecutive weeks. Owners then have approximately 30 days after service (or publication) of the notice to request an inquiry as to whether the taking of their "land" is "fair, sound and reasonably necessary" in the achievement of the expropriating authority's objectives. Where no inquiry is sought, the approving authority may approve the expropriation. There are special circumstances when in the interest of the public the above process is bypassed, but this is rare.
Where an inquiry is sought, a hearing officer is appointed and an inquiry, also called a "hearing of necessity", is held. After the hearing, the inquiry officer issues a report. The approving authority must "consider" the report of the inquiry officer and decide whether or not to approve the expropriation. The approving authority gives written reasons for its decision and certifies its approval in a prescribed form. It is important to note that the approving authority is only required to "consider" the inquiry officer's report. Where the inquiry officer recommends against the expropriation, the approving authority may still decide to approve the expropriation, provided that it has considered the inquiry officer's report and provided written reasons for proceeding with the expropriation.
Upon approval of the expropriation, the expropriating authority will register a plan of expropriation on title to the affected lands. Once the plan has been registered, title to the expropriated land "vests" in the expropriating authority (but this does not give the expropriating authority the right of possession). After the plan of expropriation has been registered on title, the expropriating authority will serve all registered owners with: (i) a Notice of Expropriation, which provides notice that the lands have been expropriated; (ii) a Notice of Possession, indicating the date on which the expropriating authority requires possession of the lands; and (iii) a Notice of Election, which permits the owner to select one of three dates upon which compensation for the lands expropriated will be based. A copy of the expropriation plan is also forwarded at this time.
After service of the notice of expropriation, the expropriating authority may enter on the expropriated lands (with the owner's consent, or upon an order issued by the Ontario Municipal Board) in order to view the lands for the purpose of preparing an appraisal report.
Once an appraisal report has been prepared, the expropriating authority will provide a copy of the report to each registered owner, along with an offer of compensation for the owner's interest in the lands expropriated. Owners then have two options: (1) accept the offer in full settlement of all claims under the Expropriations Act; or (2) accept the offer while preserving the right to claim additional compensation from the expropriating authority. Where the second option is selected, owners can assert their claim for additional compensation through formal or informal negotiation, or through arbitration at the Ontario Municipal Board. Often, negotiation and arbitration proceedings are pursued simultaneously.
Although a literal reading of the Expropriations Act would appear to suggest that an authority can acquire land within 4 months, the reality is that in most cases the quickest a property can be obtained is within 7 months, assuming no Hearing of Necessity is requested and all steps in the expropriation process are completed properly. In the majority of instances, the expropriation of a property, from the Notice of Intention for Approval to Expropriate until the date of possession, takes 9 to 12 months
You can ask for a Hearing of Necessity to review whether the taking of your land is fair, sound and reasonably necessary for the required construction to proceed. A hearing is only held if it is requested. An inquiry officer, appointed by the Attorney General, will notify the expropriating authority, the property owner and the owner's representative, of the date and place of the hearing. The hearing only deals with the necessity for the expropriating authority to acquire the land. It does not deal with the matter of compensation.
After the hearing, the inquiry officer prepares a report which must be considered by the approving authority before it decides whether or not to approve the expropriation. It is important to note that even where the inquiry officer recommends against the expropriation, the approving authority may still decide to proceed with the expropriation, provided that it has considered the inquiry officer's report and provided written reasons for proceeding with the expropriation. In some cases, the approving authority may decide not to proceed with the expropriation, or it may approve the expropriation with some modifications.
You can also bring a court application to challenge the jurisdiction of the expropriating authority to expropriate, to question whether the expropriation itself complies with the Expropriations Act, or if you believe that the expropriating authority is acting in bad faith.
Many "owners" of a single property might be affected by an expropriation - the person to whom the property belongs, the tenant(s) of the land, the mortgagee(s) and possibly others. Each has the right to assert a claim for compensation in respect of their separate interests.
The Expropriations Act provides that the compensation payable to any "owner" of expropriated land shall be based upon: (a) the market value of the land; (b) damages attributable to disturbance; (c) damages for injurious affection; and (d) any special difficulties in relocation.
A. Market Value
The market value of expropriated land is defined as the "amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer." The valuation of market value is made as of the "valuation date", which is usually the date of expropriation. The appreciation or depreciation in market value after the valuation date is not a factor in the determination of compensation. In determining market value, the Expropriations Act provides that no account shall be taken of: (a) the special use to which the expropriating authority will put the land; (b) any increase or decrease in the value of the land resulting from the expropriation or the development itself, or the imminent prospect thereof; or (c) any increased value resulting from the illegal use of a property.
B. Damages Attributable to Disturbance
In some circumstances, expropriated owners are also entitled to damages attributable to disturbance. The Expropriations Act provides that the expropriating authority must pay to an owner "such reasonable costs as are the natural and reasonable consequences of the expropriation." In other words, "owners" may be entitled to damages, costs and expenses directly attributable to the expropriation, provided that the damages are not too remote and the owner has taken all reasonable action to ensure that the damages are mitigated.
Disturbance damages are somewhat unique to each owner, however, the Expropriations Act provides that the following types of expenses shall be paid by the expropriating authority, provided that they are a natural and reasonable consequence of the expropriation: (a) the reasonable relocation costs, including moving expenses and the legal, survey and other costs incurred in acquiring other premises; (b) where an owner's residence has been expropriated, an allowance of 5% of the market value to compensate for the inconvenience and cost of finding another residence, and an allowance for the value of improvements which are not reflected in the market value of the land; (c) where the owner's residence has not been expropriated, the costs of finding premises to replace those expropriated, provided that the lands were not being offered for sale on the date of expropriation; and (d) business losses resulting from the relocation of a business made necessary by the expropriation.
Business losses can flow from the disruption of a business on the expropriated land, or from a loss of profits resulting from a move to another location, where the new location is not as profitable as the old one. Normally, business losses are not determined until the business has moved and has been in operation at its new location for at least six months, or until a three-year period has elapsed since the date of expropriation, whichever occurs first. Where it is not feasible to relocate the business, the owner may be entitled to a "termination allowance" instead of compensation for business losses. Examples are where an owner is very old or ill and unable to cope with the relocation of the business, or where there are no replacement properties available. This allowance must not exceed the value of the goodwill of the business. However, owners cannot assert a claim for termination allowance if the owner is also asserting a claim for business loss resulting from relocation.
Since the onus of proving a claim for disturbance damages is on the owner, it is important to keep a detailed and accurate record of all costs incurred as a result of the expropriation. Owners should also remember that compensation is only paid for losses arising from the expropriation, and for expenses that are reasonable.
C. Damages for Injurious Affection
Where only a portion of a property has been expropriated, owners may also be entitled to compensation for "injurious affection," which is the reduction in market value caused to the owner's remaining land as a result of the taking. The market value of the owner's remaining property may be affected in many ways. For instance, the remaining land may be of an awkward size and shape, or it may be affected by the construction or use, or both, of a public work by an expropriating authority.
In some circumstances, owners are also entitled to claim for personal and business damages resulting from the construction or use, or both, of a public work.
D. Special Difficulties in Relocation
Where the owner experiences "special difficulties" in relocating to a new property following an expropriation, the owner may be entitled to additional compensation. For example, there may be some particular or unusual feature of the expropriated property which cannot be adequately compensated for under the other provisions of the Expropriations Act.
E. Other Items of Compensation
There is also a provision in the Expropriations Act for payment of other reasonable expenses actually incurred upon final settlement, such as lawyer fees and appraisal fees. In addition, interest is payable at a rate of 6% simple interest on outstanding compensation.
The Expropriations Act requires the expropriating authority to serve the owner(s) with an offer of compensation (along with an appraisal report) within 3 months of the registration of the plan of expropriation on title and before possession is taken.
Once the offer has been served, the owner must decide whether to select one of two options: (1) accept the offer in full and final settlement of any and all claims under the Expropriations Act; or (2) accept the offer as compensation for the market value of the lands expropriated "without prejudice", in other words, while preserving the right to claim additional compensation from the expropriating authority. The expropriating authority will provide an Offer of Acceptance form on which to make your selection. Once the form has been signed and sent back to the expropriating authority, it usually takes 4 weeks or more for the expropriating authority to arrange for payment of the offer.
If you have opted to accept the expropriating authority's offer "without prejudice", there are two ways of asserting your claim for additional compensation: (1) through negotiation, either formally at the Board of Negotiation or informally; or (2) through arbitration before the Ontario Municipal Board. The process of negotiation often continues while formal arbitration proceedings are pursued.
How do I find lawyers and experts to provide me with advice in this process?
You can access the link below to link to our section of available professionals. Contacting a law firm that specializes in expropriation is the recommended first step.
Please Note: The information provided applies only to Ontario.