When the state seizes property: Expropriation explained
What owners need to know
The citizens' initiative Deutsche Wohnen & Co Enteignen wants to propose that entire residential housing corporations be expropriated in Berlin. The possibility of private expropriation is established in the Basic Law of Germany. However, it is only permitted if the seizing of real estate serves the public good. We outline what this means for owners and how they can challenge an expropriation procedure.
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Expropriation: Significance for real estate owners
The term expropriation refers to the state legally taking ownership of property. Owners receive compensation for this. This results in state entities being able to expropriate owners of flats, houses or land, provided that this serves the public good. In principle, compensation corresponding to the value of the property must be offered for this, as expropriation without compensation is illegal. The right of expropriation by the state is stipulated in Article 14(3) of the Basic Law. Legitimate reasons for such expropriation include, for example, the construction of highways, railway tracks, power lines, airport runways or the mining of lignite. All this results in the ownership of the property being transferred to the state and the owner receiving financial compensation.
Feasibility of expropriation by the state
The state can enforce expropriation of property if it serves the public good. When this is the case can be up for interpretation. Frequently, infrastructural measures such as those mentioned above fall under this category. It should be noted that expropriation must always be the last resort. The German Civil Code stipulates that it can only be initiated if the general welfare cannot be achieved by any other measures. For example, an alternative to expropriation can be to oblige owners of undeveloped land to build on it by means of a development proposal. In addition to permanent expropriation, temporary expropriation can also be implemented. This represents a viable route if owners do not provide adequate care and maintenance to a property for years or even decades. In Thuringia, for example, the owners of Reinhardsbrunn Palace was expropriated because they had allowed the historic building to fall increasingly into disrepair.
Before the expropriation procedure is initiated, offers for compensation or replacement land must be made. If these are rejected and an agreement is not in sight, the state can initiate the proceedings. In this case, the competent authority submits an expropriation application to the higher administrative authority, usually the district government, in accordance with § 104 of the Building Code. A date is then set for the applicant, the owner and any other affected parties who have a right to the property to meet for a discussion. If an agreement is reached, the procedure ends. If no agreement is met, then the expropriation application is granted and an expropriation decision follows. All involved parties receive the document. It must state all important data such as the names of the affected parties and beneficiaries of expropriation as well as other parties involved, along with the purpose of the expropriation and the period in which the property is to be assigned. The subject matter of the expropriation, ownership and other legal relationships before and after the expropriation as well as the type and amount of compensation must also be stated here. Furthermore, a legal notice must be included.
How to handle the procedure as an owner
If you as an owner do not agree with the expropriation, you have the possibility to defend yourself legally. This can be done, for example, by filing a lawsuit. In the past, however, it has been shown that legal recourse has often not been successful, especially in the case of large-scale projects such as lignite mining. Those who want to avoid this path can prevent the expropriation of flats, houses or land by selling them beforehand or accepting the compensation offer. This is considered reasonable provided that it does not fall below the compensation value by more than 25%.