Compulsory purchase and expropriation are two related concepts that refer to the situation when the title to a property is transferred with an element of coercion, whether on the part of the acquirer – usually the State or a municipality – or of the property owner.
Compulsory purchase is a property owner’s right and is regulated in the Swedish Planning & Building Act (PBL). This right arises when a decision, usually by a municipality, affects the property owner’s use of the property in a sufficiently restrictive way that it is not reasonable to force the property owner to retain title to all or part of the property. This is expressed in the Act as when the land use would be made especially difficult as a result of the decision. Such decisions may entitle a property owner to demand compulsory purchase of the land when, for example, building permits for reconstruction, site improvement permits, or demolition permits are refused. A property owner is also entitled to demand compulsory purchase for land which, in accordance with the detailed development plan, is to be used for certain public or communal purchases.
If the above-mentioned preconditions are met, therefore, a property owner is entitled to demand compulsory purchase of the land affected. This means that the municipality is obliged to redeem the land from the property owner, i.e. to acquire the land. The compensation payable for the land is determined pursuant to the provisions of the Expropriation Act and corresponds to the market value plus compensation for any financial damage incurred by the property owner as a result of the decision that led to the demand for compulsory purchase.
Expropriation is the other side of the coin and regulates the reverse situation from compulsory purchase, i.e. when the State compulsorily acquires the title or certain other rights to a property from the property owner. The rules governing expropriation are set out in the Expropriation Act.
Expropriation may only occur in order to achieve certain public objectives specified in the Act, such as constructing facilities for public transport, transport, or other means of communication, or to meet requirements for electricity, water, heating, or other similar benefit. A proportionality assessment must be made in every case, even if such an interest exists, which means that it should not be possible to meet the objective in another way and that the inconvenience caused by expropriation must not outweigh the benefits that can be gained by its execution.
Expropriation permit matters are usually heard formally by the Government, but delegation decisions have given county councils and the Swedish Land Survey the authority to hear these issues, and they are, in practice therefore, the bodies where these issues are most usually heard.
If an expropriation ruling is issued, the property owner is entitled to compensation. The compensation is paid as a redemption price corresponding to the market value of the property or, if expropriation of part of a property has occurred, as an encroachment compensation corresponding to the reduction effected in the market value of the property. A standard surcharge of 25% of the redemption price or encroachment compensation is also payable, thereby taking into account that the sale did not occur voluntarily. The property owner is also entitled to compensation for the damage arising as a result of the expropriation decision.
Landahl assists property owners who have either been the subject of expropriation decisions or who wish to exercise their compulsory purchase rights in connection with all possible issues arising. We also provide legal representation for property owners in disputes arising from these issues.