The Expropriation of Subdivisions
7/23/2013 8:31 AM
Many parcels of land are capable of being subdivided into smaller parcels. Often, it makes economical sense to subdivide a larger parcel if the value of the smaller lots is greater than the value of the original parcel. When land is expropriated, the question of many expropriated landowners is: Can my land be valued as a subdivision rather than as a single parcel?
This seems like a fairly simple question that should have a straightforward answer. However, it is a complex question at law and one that has multiple answers that depend on the specific facts of each case. The basic legal principle involved is "imminence": how close in time was the land to subdivision potential?
Basically, a large parcel of land can fall into three categories of immanence:
1. Land already under subdivision;
2. Land ready to be subdivided, but not yet under subdivision; and,
3. Land capable of being subdivided, but not ready to be subdivided.
Expropriated land in each of these three categories will usually be treated differently for the purposes of compensation.
In the first scenario, consider a parcel of land that has received subdivision approval from the municipality, the lots have been surveyed, the roads are in place, the services are in place and several lots have been sold. In this instance, there is a subdivision in fact. If that larger parcel is expropriated, the landowner should receive compensation for the profit that would have been earned had the individual lots been sold.
In the second scenario, consider a parcel of land that is next to a fully developed subdivision and there will be a demand for lots from the parcel. The owner of the parcel has made plans to subdivide the parcel, put in basic roads and cleared the trees from the potential lots. In this instance, there is a future subdivision that was very likely to materialize had the expropriation not happened. In this case, the landowner will likely be compensated for the value of the land taken plus the expenses that the landowner invested into the potential subdivision and lost. There would be no compensation for the potential profit that could not be earned because of the expropriation. This is because the law holds that the subdivision was not immanent - it was speculative.
In the third scenario, consider a parcel of land that has the physical characteristics that make it suitable for a subdivision (size, topography, shape and location). However, there was no demand for lots at the time of expropriation and the landowner took no steps toward developing the subdivision. In this instance, the subdivision would not be considered imminent and the landowner would likely be compensated only for the value of the land without any compensation for the profit that could have been earned in the future.
If you have questions or would like to discuss this topic further, please contact Robert H. Pineo at Patterson Law at 1-888-897-2001.
Please note that this article is meant to provide information only and is not intended to confer legal advice or opinion. If you have any further questions please consult a lawyer. Please note as well that many of the statements are general principles which may vary on a case by case basis.