Property expropriation and appraisement

If grounds for expropriation exist, for example when a development plan is passed that includes a new road route, the acquiring party can apply for an expropriation permit. The actual expropriation case can commence once such a permit has been issued. The process starts when the acquiring party submits an application for appraisal to the local District Court. At the same time, the acquiring party will usually also apply for an advance access permit, i.e., permission to enter the land even though the compensation has not been settled.

In parallel with the formal expropriation procedure, negotiations will (usually) take place between the acquiring party and the landowners affected. Such negotiations will normally commence when the development plan has finally been passed.

If the parties are unable to agree on the compensation to be paid, then this is set by the court of assessment where, although it forms part of the district court, the legal procedure is governed by separate legislation. The court of assessment consists of a professional judge and four (in some cases two) expert assessors, who are normally drawn from a permanent board. From time to time certain court districts may lack the requisite expertise among the assessors on their boards, making it necessary to nominate external experts.

The acquiring party is responsible for meeting all the costs of the court of assessment including the landowners’ costs for legal and other necessary aid, cf. also below.

If one of the parties is dissatisfied with the amount of compensation set by the court of assessment, this party can appeal for a revaluation (this is similar to appealing to the Court of Appeal in an ordinary court case).

If an acquiring party petitions for a revaluation, then it must also pay all of the costs involved. If it is the landowner who does so, the question of who pays the costs will be subject to consideration, a vital element here being whether the compensation is higher or lower than the amount set in the District Court.

Entitlement to compensation due to expropriation is laid down in Article 1905 of the Norwegian Constitution, which declares that if any person is required to surrender their movable or immovable property, they shall receive full compensation. The main question remains as to what constitutes “full compensation”. The rules governing this are set out in the Expropriation Compensation Act, which states that the main rule is for compensation to be paid commensurate with utility value or sales value, whichever gives the highest amount of compensation.

One is entitled to compensation only for the financial loss due to an expropriation. There are no provisions in Norwegian expropriation legislation for the payment of compensation due to non-pecuniary damage. The compensation shall however cover the cost involved in surrendering one’s land and the detriment suffered as a result of the project.

Compensation may be equivalent to either the sales value or the utility value. Sales value is most widely used when residential property plots or entire properties are surrendered. The basis for determining the compensation to be paid is in such cases the so-called difference principle – i.e., the difference in the value of the property before and after the expropriation. If the expropriation is so invasive that for example there is no longer any possibility of developing the property, then compensation shall be paid for this lost development opportunity.

In order to obtain detriment compensation, the detriment must normally be of a material nature. The so-called normal inconvenience that a roadway causes will not usually constitute grounds for compensation. On the other hand, the Norwegian Public Roads Administration will implement the necessary measures to reduce noise levels so that they do not exceed the regulatory limits. If a property is exposed to so much noise that a noise reduction barrier is not an adequate remedy, then the property will be expropriated and compensation paid to the owner.

In the case of an expropriated property where someone is living, the inhabitant is entitled to compensation based on replacement cost, or compensation enabling him/her to buy a similar property to the expropriated one. Factors taken into consideration here will be the district in which the property is located, distance to school/day-care centre, and the age and size of the house etc. However, one is not entitled to exactly the same house as one’s previous abode, as one is expected to accept a smaller plot or smaller house as long as the functions are more or less the same.

When surrendering commercial property, for example cultivated land or forest, it is the utility value that will form the basis for valuation. This means that one is entitled to compensation for loss of income in the form of a lump-sum payment. In a case of utility value compensation, it may also be possible to claim compensation for detriment due for example to the fact that an agricultural property might be more difficult to run after an expropriation has been carried out.

A court of appraisal can determine only pecuniary compensation, with a few exceptions such as those laid down in the Watercourse Regulation Act. Thus, the court cannot compel the acquiring party to implement measures to limit the impact of the expropriation.

As a result of negotiation, however, the acquiring party may be willing to implement such measures as part of the compensation.