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Compensation for the expropriation of real estate

Compensation for expropriation is the most important element of the entire expropriation process from the point of view of the person affected. Payment of compensation for expropriation is a constitutional and statutory condition for the legality of the procedure – in the Polish legal system, expropriation without compensation is not possible. The expropriated person has a real impact on the course of the compensation proceedings, and therefore also on the amount that could be received. 

INLEGIS Legal Services, with the participation of specialized lawyers and property appraisers, provides comprehensive assistance in obtaining fair compensation.

We represent our Clients in proceedings before the district office, voivode, Minister of Development, Labour and Technology, voivodship administrative court, Supreme Administrative Court, General Directorate of National Roads and Motorways, Polish Waters, State Treasury, local government units, the Commission for Professional Responsibility, professional organizations, etc.

What is a real estate expropriation

Expropriation of real estate may take place for the benefit of the State Treasury or a competent local government unit, often represented by specialized organizational units, such as: General Directorate for National Roads and Motorways, Polish Waters, Central Communication Port, local road authorities, etc. run by the competent district office or voivode. 

The legal basis for the expropriation of real estate is currently a dozen so-called special act. They allow for the deprivation of the ownership or other right to the property of the current owner.

Expropriation of real estate is carried out for public purposes, such as construction of a road, railway line, flood control reservoir, airport, etc. The purpose of public expropriation is the second prerequisite for the legality of the procedure.

Protection against expropriation mainly comes down to the assessment of the fulfilment of this condition and compliance with other statutory obligations; usually obligations to obtain the opinion of competent authorities. INLEGIS Legal Services, at the request of its Clients, assesses the legality of the expropriation procedure and submits appeals, if they are justified.

Expropriation of real estate for the road construction

In recent years, the expropriation of real estate for the road has had by far the largest share in the area intended for public purposes. This is due to the shortage of road infrastructure developed during the Polish People’s Republic and huge targeted subsidies from EU funds. The largest road investments are currently concentrated in the east of the country, i.e., via carpatia and via baltica (S19 and S61); in the north, parallel to the S6 coastline, and large north-south routes such as the S3 and S7. 

Linear investments, which include the construction of public roads, have specific effects for them. In addition to the loss of ownership of the real estate necessary for construction, the remaining land is divided. In this way, a habitat, farm or enterprise may be divided into two or more parts. Unfortunately, the legislator did not provide for any compensation for such damages. 

Expropriation for road purposes takes place on the land of the so-called of the ZRID decision – Permit for the Implementation of a Road Investment. The legal basis for issuing the ZRID decision is the Act of April 10, 2003 on special rules for the preparation and implementation of investments in the field of public roads, the so-called special road act.

Compensation for expropriation of real estate for the road construction

Compensation for the expropriation of real estate for the road is established by the district leader in the case of local roads, or by the voivode in the case of provincial and national roads. Proceedings for the determination of compensation for expropriation for road purposes shall be initiated ex officio after the issuance of the ZRID decision with the pain of immediate liability or after the final decision of the ZRID without the pain of immediate payment. Unfortunately, the statutory deadlines of 60 or 30 days are rarely met. 

The amount of compensation for expropriation should be an objective result of several factors, such as: the intended use of the property, the local property market, the location of the property and other price-related features. Unfortunately, most of these factors are of considerable value. Hence the discrepancies in the valuations made by various property appraisers. Statistics show that appraisers acting on behalf of an authority most often make a mistake in preparing appraisal reports to the detriment of the expropriated – this leads to the underestimation of the value of the compensation. 

INLEGIS Legal Services provides comprehensive services to protect the interests of an expropriated person for road purposes. Firstly, it assesses the legality of the expropriation itself. Secondly, it determines the objective value of the expropriated property. In addition, it prevents the underestimation of the first valuation, provides evidence showing the correct value (e.g., counter attachment), submits appeals (allegations, appeals) aimed at questioning the incorrect value. During the proceedings, we also support our clients in other legal matters, such as compliance with the legality of construction works, initiation and representation in proceedings for the purchase of residual assets.

Expropriation of real estate for flood protection purposes

Expropriation of real estate for flood protection purposes occurs less frequently than for road purposes, which does not change the specific of the practice for the current owners. It is not so severe in the case of smaller areas, purchased for the purpose of extending the embankments, but it is of great importance in the construction of new flood control reservoirs, both dry and wet. Currently, most investments of this type are carried out as part of the Flood Protection Project in the Odra and Vistula Basin. Its coordinator is Polish Waters, operating through its Regional Boards.

The legal basis for expropriation for flood protection purposes is the Act of 8 July 2010 on specific rules for the preparation of investments in the field of flood protection structures. A significant part of the investment is supported financially by the World Bank, so the investor is obliged to comply with additional standards resulting from the cooperation in question.

Expropriation of real estate for the Central Communication Port

The Central Communication Port is the largest structural investment planned in Poland in years. Another special act was created for its implementation: The Act of May 10, 2018 on the Central Communication Port. The act establishes bodies special for investments, such as: Centralny Port Komunikacyjny sp. zoo exercising investor’s supervision over the company in question. 

The assumptions of the legislator and the government show that the preferred form of real estate acquisition for the construction of the Central Communication Port is to be voluntary. The company is conducting negotiations aimed at concluding real estate purchase agreements from the current owners. Persons who do not accept the investor’s proposal will be expropriated.

Expropriation of real estate for railway purposes

In recent years, property expropriation for railway purposes has been quite sporadic. The existing infrastructure was renovated, but not significantly expanded. Most of the railway lines run along the existing routes. The special act allowing for expropriation for this purpose, i.e., the Act of 28 March 2003 on rail transport, was rarely used. This situation is likely to change. The construction of the Central Communication Port provides for a few new high-speed railway lines, which are to constitute the so-called CPK spokes. 

The construction of new railway lines is like the construction of roads – they are the so-called line investments. A big problem for the existing owners will be the division of the existing real estate, and thus interference with their structure.

The amount of compensation for expropriation

The amount of compensation for expropriation is determined in administrative proceedings by the competent district office or voivode. The basis for determining the compensation is an appraisal report drawn up during the proceedings by an authorized property appraiser selected and appointed to perform the function by the authority. As a rule, the amount of compensation corresponds to the market value of the lost right. 

The amount of compensation is determined in accordance with the current purpose of the property, unless the change of purpose causes an increase in the value of the property. The so-called the principle of benefits resulting from Art. 134 of the Act of August 21, 1997 on real estate management, is of key importance for many expropriated.

In accordance with its wording, the property appraiser determines the value of the property in accordance with the current purpose resulting from planning documents (e.g., agricultural, housing, investment), then determines the value of the property in accordance with its future purpose (e.g., road, flood protection, railway) and selects the value to determine compensation. higher. Such application of the statutory principle of benefits often leads to a several-fold increase in value when it comes to the lowest-value real estate, i.e., agricultural and forest real estate.

In 2019, the rulings of the Supreme Administrative Court regarding the application of the benefit principle, unfavorable for the expropriated, appeared. The Supreme Administrative Court orders to apply Art. 134 of the Act on real estate management, including the provisions of the Ordinance of the Council of Ministers of September 21, 2004 on the valuation of real estate and the preparation of an appraisal report. This case law has not yet dominated the principles of valuation, but more and more often it results in unfavorable precedents for the expropriated. 

It can be assumed that the determination of the amount of compensation should be a process that gives an objective value. In practice, the discrepancies between the valuations by various property appraisers are huge.

Increase in the value of compensation for expropriation

INLEGIS Legal Services specializes in compensation proceedings. In the first place, it prevents the underestimation of the value of compensation – it is possible if actions are started at an early stage: ideally immediately after the expropriation decision is issued or earlier. If the compensation has already been underestimated, several steps are taken to change the incorrect valuation. It is often possible during the first instance.

By bringing your own evidence, allegations to the survey, or initiating a hearing in administrative proceedings, it is possible to convince a property appraiser or authority to correct the errors that have occurred, resulting in the underestimation of the value of compensation.

Appeal against the decision establishing compensation

The proceeding for the determination of compensation ends with the issuance of a decision determining its amount and ordering the obligated entity to pay it. A party may appeal against the decision establishing the compensation within 14 days of its receipt. The appeal is filed through this body to a higher authority. The decision of the district office is to be appealed to the locally competent voivode, and the decision of the voivode is to be appealed to the Minister of Development, Labor and Technology. The other party to the proceedings, i.e., the entity obliged to pay the compensation, is also entitled to file an appeal. 

An appeal against a decision establishing compensation may be examined in three possible ways: the body may uphold the appealed decision, may revoke the decision in question and order the case to be reconsidered by the body of first instance, it may change the decision and decide on the amount of compensation on its own. The third case occurs extremely rarely, so as not to deprive the party of the two-instance proceedings. The premise for such a ruling would be the correct collection of evidence, but its incorrect interpretation by the first instance authority.

Compensation proceedings before an administrative court

A decision on the determination of compensation for expropriation, issued by a body of second instance, may be the subject of a complaint to the voivodeship administrative court. It is submitted within 30 days from the date of receipt of the authority’s decision. A complaint to the court is subject to a percentage fee depending on the value of the dispute. The expropriated person is exempt from incurring further procedural costs, e.g., the costs of an expert or the costs of legal representation of the other party in the event of a loss. 

It is possible to submit a cassation appeal to the Supreme Administrative Court against the judgment issued by the voivodeship administrative court.

Negotiations on compensation for expropriation

As a rule, the amount of compensation is determined by the authority by way of a unilateral administrative decision. In various proceedings, however, certain forms of negotiation of compensation for expropriation are allowed.

The first is the general principle derived from the Code of Administrative Procedure. Negotiation is permitted in any case where the two parties have an opposing interest. The parties with opposing interests here are the expropriated and the entity obliged to pay compensation. At the request of a party, the authority will suspend the proceedings for two months and will give the parties time to agree. In the event of reaching an agreement, the authority approves the settlement between the parties by way of a decision.

Effective bargaining takes place extremely rarely, because the payer must bear in mind that he spends public funds. If we are not sure that the other party is ready to negotiate, submitting the application in question will only extend the proceedings. Negotiations are necessary under the special flood protection act. The special act on the CPK prefers the solution of voluntary sale against forced expropriation.

Excessive length of the compensation procedure

In practice, it is extremely rare for the authority to comply with the statutory deadlines for establishing compensation by way of a decision. The procedure is complex and requires the collection and evaluation of specialist evidence. The second reason for this is the excessive burden on the authorities and the inefficiency of their professional staff. 

If the proceedings are not being conducted properly, the party is entitled to submit a reminder to a higher authority. The decision on the second instance authority is subject to a complaint to the voivodship administrative court, and the verdict of this cassation appeal to the Supreme Administrative Court. At each stage of the proceedings, the excessive length of the proceedings or inactivity of the authority may be found. We deal with inaction if the authority does not take actions that are its responsibility. We talk about excessive length when actions are taken, but they are apparent and are not aimed at settling the matter. 

In the event of a ruling stating the excessive length or inactivity with a gross violation of the law, the party will be granted additional funds. Moreover, such a judgment will be a ground for bringing an action for damages on general principles.

Expropriation proceedings with the participation of INLEGIS Legal Services

INLEGIS Legal Services engages its specialized lawyers and cooperating property appraisers at every stage of the expropriation proceedings and determination of compensation for expropriation. The scope of activities includes, among others:

  • examination of the legality of expropriation
  • appeal against the expropriation decision 
  • appeal against environmental decisions
  • issuing real estate on behalf of the expropriated person 
  • participation in the inspection of the property by an expert
  • determining the objective value of the compensation
  • submitting evidence, e.g., counter attachment
  • bringing charges against the collected evidence
  • initiating and representing during a hearing in administrative proceedings 
  • lodging appeals
  • lodging a complaint to the voivodeship administrative court
  • lodging a cassation appeal to the Supreme Administrative Court 
  • examination and enforcement of the legality of acquisition of real estate 
  • examination and enforcement of the legality of construction works
  • initiating and representing in proceedings for the buyout of residual money 
  • making reminders
  • initiating and representing in proceedings for lengthiness and inactivity
  • arrangements for the provision of replacement real estate 
  • arrangements for granting a replacement property 
  • showing the right to real estate with undetermined facts 
  • submitting the survey for evaluation by an authorized professional organization
  • submitting a disciplinary complaint against the expert 
  • submitting applications for the exclusion of an expert from the procedure

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