October 31, 2016
How is Compensation for Market Value Determined in an Expropriation?
“Market Value” is a primary head of compensation prescribed under the Expropriations Act for owners who have had all or a portion of their lands expropriated. The Act provides an objective standard for the determination of market value: “the market value of land expropriated is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.” Compensation for market value can either be determined by way of a negotiated settlement between the owner and the expropriating authority, or can be determined through arbitration before the Ontario Municipal Board.
In addition to the “willing seller / willing buyer” standard, the Act also prescribes additional measures to be applied in the determination of market value. For example, the legislation states that any increase or decrease in land value resulting from the expropriating authority’s development tied to the expropriation must be ignored. This means, for instance, that an owner whose lands are expropriated for the construction of a highway is barred from claiming greater market value on the basis of benefitting from proximity to a new highway. Likewise, an authority cannot argue that the owner’s lands are worth less because they are bisected or negatively impacted by the placement of a noisy highway.
In an expropriation, the authority must base its offer of compensation on an appraisal report. Qualified real estate appraisers will apply the requirements of the Expropriations Act to their review of market data to arrive at an opinion of value. In Ontario, expropriation law allows owners to recover the reasonable legal and appraisal costs they incur themselves in the determination of final compensation.