Special Expropriation Law – Blog IV: Compensation for Third Parties

Special Expropriation Law – Blog IV: Compensation for Third Parties

When you, as the owner of a plot, are expropriated, it is naturally logical that you are compensated. However, owners are not the only parties who can suffer damage from expropriation. Third parties can also experience losses. In this fourth and final part of the special blog series on expropriation, we address the situation of these groups.

In the first blog, we discussed the change effective from 1 January 2024, shifting from expropriation via a Crown decision to expropriation via an expropriation order and the associated administrative procedure. In the second blog, we covered the criteria for expropriation. The third blog focused on the procedure for determining compensation. Finally, in this last blog, we explore compensation for third parties.

Based on the 'clearing effect' of the registration of an expropriation deed, all charges and rights attached to the expropriated property are lost upon registration. The damage caused to those whose names those charges and rights were registered under is called third-party damage. The extent to which third parties can claim compensation for expropriation is provided by law.

Although expropriation is initially thought to only cause damage to the owner of the expropriated property, many more people can suffer losses due to expropriation. For example, the expropriated property could be a house rented to third parties. These third parties must vacate the house before the lease term expires and must find alternative accommodation.

Additionally, the property owner may not be the property occupant. For instance, if the property owner allowed a family to live in the house decades ago, and the grandson of this family eventually occupies the house believing it to be his own, expropriation reveals otherwise. The grandson suffers a loss as he no longer has a home and must find new accommodation.

A third and final example is the right of way. The owner of the 'dominant estate' has agreed with the owner of the 'servient estate' to use a path across the servient estate to access their home. When the servient estate is expropriated, this right of way is nullified. The owner of the dominant estate then has a problem as they can no longer access their home, thus suffering a loss due to the expropriation.

Now, let’s examine the legal basis for compensating third parties, such as tenants, occupants, and owners of dominant estates.

Legal Basis for Third-Party Compensation

Article 15.27 of the Expropriation Act (Ow) is a so-called linking provision. This means that this article extends the application of Articles 15.17 to 15.26, which primarily apply to owners, to the list of persons specified in this article.

Article 15.27 Ow provides an exhaustive list of persons who also have the right to compensation after expropriation. These include:

• Leaseholders
• Building right holders
• Owners of a dominant estate
• Right holders to use and habitation rights
• Right holders as per Article 150(5) Transitional Act New Civil Code
• Occupants
• Tenant buyers
• (Sub)tenants
• (Sub)leaseholders
• Creditors as per Article 6:252 of the Civil Code

Anyone not listed in this exhaustive list in this article generally has no independent claim to compensation for expropriation. Generally, because in some cases, it is still possible to be compensated if not included in the exhaustive list. For example, the mortgage holder and the registered lien holder can file a statement of defense in the compensation procedure to have their losses compensated.

To illustrate, let’s explain how tenants are compensated.

The Tenant

The tenant is generally entitled to full compensation. This is different if the lease was entered into after a draft expropriation order was published. In that case, the tenant has no right to compensation but can claim damages from the landlord.

The strength of the tenancy affects the amount of compensation. A capitalization factor is used, which is the annual rent divided by the purchase price of a property. Generally, a capitalization factor of 7 is used, but a lower factor applies if the tenancy is weaker, such as when the lease term is nearly complete. It must be considered whether the tenancy would have continued beyond the lease term. If so, factor 7 is used; otherwise, a lower factor applies.

Conclusion

In conclusion, not only owners but also third parties can be compensated. However, this only applies to those listed in the exhaustive list of Article 15.27 Ow. If a person is not listed, they generally have no independent claim to compensation for expropriation. Generally, because there are some cases where compensation is still possible.

This concludes our special blog series on expropriation. We have aimed to explain the expropriation process as clearly and simply as possible in four blogs. If you have any questions about the expropriation process after reading this blog series, please contact Gerard van der Wende, Petra Lindhout, or Fleur Huisman.