Compulsory Purchase of Property for Public Needs and Compensation Development of Procedures and the

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Compulsory Purchase of Property for Public Needs
and Compensation Development of Procedures and
the Role of Valuation in Lithuania

• Steponas DEVEIKIS, Albina ALEKSIENE, Birute
  GALINIENE, Vilnius, Lithuania
• Joint Seminar, Helsinki, September 6-8, 2007

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Contents of presentation

• Development of legislation on compulsory purchase
  in Lithuania
• Stages and procedures of compulsory purchase or
  expropriation of land for public needs
• Development of methodology and background of
  property valuation practice
• Good management of the process and role of the SE
  Centre of Registers registration, database, GIS
  and cadastral maps
• Valuation. Disputes and appeals procedures
• Problems and suggestions. Final remarks

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Legislation on compulsory

• Constitution of Lithuania, 1992 (art. 23 46)
• Civil Code, 2000
• Law on Land, 1994, 2004 (art. 37 45, 46, 47)
• Rules approved by the Government (2005) for
  Application and Investigation of Land
  Expropriation for Public Needs
• and Rules for Arrangement and Implementation
  of Land Expropriation Projects, 2005
• Law on Territorial Planning, 1995, 2005
• Laws on Cadastre/Register,

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Public needs are

• Defence and national boundaries,
• Airports and harbours development,
• Railways, roads, infrastructure of communication
  and electricity,
• Social infrastructure, recreational leisure
  infrastructure,
• Territories of mineral resources mining,
• Construction sites of waste treatment objects,
• Cemeteries,
• Natural and cultural heritage protection sites,
• Business projects of state significance the
  importance of which is recognised by the
  Government and the Seimas (Parliament).

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Project examples and procedures

• Via Baltica development and road construction
  Klaipeda harbour development FEZ and industrial
  parks development projects
• Two steps
• Application submitted by the Municipal Council or
  State institution to the County Administration
• Having investigated soundness and feasibility of
  an application, the Head of the County
  Administration makes a decision. When making such
  a decision, a plan of boundaries of the territory
  where land expropriation project is to be
  implemented shall be prepared and when such a
  decision is made information is transferred to
  the Administrator of RPR.

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Organisational structure of Lithuanian Real
Property Administration System
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Project of land expropriation

• When a decision is made to start implementing the
  land expropriation project, the Administrator of
  RPR enters a note. From that moment property
  owner has no right to transfer this property,
  mortgage it or create any other encumbrances.
• Projects of land expropriation for public needs
  are considered as special territorial planning
  documents, which must be prepared in accordance
  with the Law on Territorial Planning. The stages
  of this process/ project are as follows
• Project preparatory stage
• Project arrangement stage
• Project solution impact assessment stage
• Project finalisation stage (discussing and
  approval)
• After approval of the project new cadastral land
  parcels are formed which are registered in the
  cadastre and Real Property Register. Property and
  other losses need to be valued. Value is
  calculated according to Article 47 of the Law on
  Land and the Law on the Basics of Property and
  Business Valuation.

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Single property valuation and mass appraisal
development in Lithuania
Single property appraisal / valuation
Starting point -
System development
System improvement
Mass appraisal
Mass appraisal system development
Normative values
Transition to market values
Year
2002
1999
1993
2006
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Methodology background of valuation

• The Law on the Basics of Property and Business
  Valuation (BPBV) provides for property valuation
  methods used in the international practice (IVSC
  Standards, European Valuation Standards).
• Article 6 of the Law on BPBV establishes
  definite principles for setting value of a
  property, wherein it is stated that
• Property value is determined in accordance with
  market economy logics and criteria, and the
  results of the analysis of market and economic
  conditions
• Property value is determined with precaution and
  reserve so as to avoid violating the rights of
  land owners, and in keeping with property
  exchange and alternative property use principles
• The basis for determining property value
  considers the foreseeable income and profit from
  using the property or its sale-purchase, or the
  satisfaction of personal needs
• Property value may be determined according to
  sale-purchase trade agreements, property creation
  or acquisition costs, and the income generated
  through using the property.

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Web-site Centre of Register database for
valuations
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Role of the Centre of Registers

• Good practice in cadastre and real property
  registration in Lithuania is a background for
  good practice in compulsory purchase.
• Information on market transactions is very
  relevant and important in the real property
  valuation, particularly in valuation in case of
  expropriation.
• Access to the latest information on market
  transactions is possible for all Lithuanian
  valuers.
• One hopes that with the Law on Real Property Tax
  (2005) and mass valuation results coming into
  force, the process of compulsory purchase will be
  coordinated with valuation regulations. More
  definite regulation of mass valuation and
  individual valuation remains a very important
  issue from both a methodical and legal point of
  view in expropriation.

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Market transactions database system
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Fair compensation and appeals

• According to laws and legal acts, the types of
  fair compensation are as follows
• Monetary compensation based on market price (ad
  valorem)
• Land plot of equal value.
• Lithuanian legal acts entitle each landowner,
  whose land plot was expropriated for public
  needs, to make an appeal against the type and
  amount of compensation.
• Fair compensation fair and objective valuation?
  When agreeing to undertake work in this field,
  Lithuanian valuers must also be prepared for long
  appeal and court processes.
• If the landowner of the expropriated land does
  not agree with the amount of compensation, i.e.
  the value determined by the property valuer, the
  expropriated land rights may not be registered,
  nor may the expropriation procedure be
  terminated. The appeals process in many cases
  takes a long time.

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Final remarks

• In practice, the process of land expropriation
  for public needs in Lithuania is quite long.
  Legal acts establish fair procedures on
  compensation for land and other real property
  expropriated for public needs.
• The appeals process is more instrumental in
  securing property owners rights than public
  interests. If the expropriated landowner
  disagrees with the offered compensation (i.e. the
  sum of money), the land expropriation procedure
  is not finalised and public rights are not
  registered.
• Property valuation as a prerequisite of fair
  compensation for expropriated land, must be
  always based on the latest information and
  updated databases. The Real Property Register and
  Cadastre system and the market transactions
  database of the Centre of Registers constitute a
  solid base for the implementation and
  administration of land expropriation for public
  needs.
• Legislation on expropriation will be developed
  safeguarding against possible abuse of the land
  expropriation procedures.

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Thank You for your attention
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Invitation to next Baltic Valuation Conference
2008

• BVC2008 will be held in Klaipeda, Lithuania in
  September 2008 The theme of this Conference will
  be
• Recreational Leisure Property Valuation Around
  Baltic Sea
• This Conference will be organised in co-operation
  LTVA and Klaipeda University, and other bodies.
• Social programme will include a walk in the Old
  town of Klaipeda, other
• city places and Palanga Park with the Amber
  Museum
• We look forward to meet you in Klaipeda -
  Palanga, Lithuania, September 2008