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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.

Related Blogs

Learning of a Potential Expropriation

Landowners often learn of a potential expropriation long before it actually takes place. Owners will sometimes become aware that their lands are to be acquired/expropriated for an infrastructure project through a public consultation or information session.

Why is My Land Being Expropriated

Land can be expropriated for a variety of public purposes, depending on the institution or government authority carrying out the work. Most expropriation projects arise out of a need for new and improved public infrastructure, and arrive on the heels of environmental assessments which determine the best route or location for the project.

Legal Costs Under the Expropriations Act

The Expropriations Act is a remedial statute with the purpose of rendering the expropriated land owner economically whole. Accordingly, in addition to prescribing compensation for land taken and related impacts, the Act also prescribes the reimbursement of reasonable legal and professional costs incurred by an owner in the determination of compensation. The reimbursement of costs is contemplated under section 32 of the Act.

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