What is land expropriation? Land expropriation is the compulsory acquisition of private land by public bodies for public needs.
Those public needs include building roads, running water and electricity lines, constructing ports, public buildings, kindergartens, police stations, military camps, fire stations, and more.
There is no question that expropriation is an aggressive act, given the serious harm it does to the ownership and property rights of private owners. Sometimes, though, there is no way around it when land is genuinely needed for legitimate public purposes. What must be ensured is that expropriation is used only when there is no other reasonable way to meet those public needs.
What is the source of the authority to expropriate real estate?
In Israel, land can be expropriated under many different laws, each of which grants the power to expropriate to certain public bodies and for certain public purposes.
The two main expropriation laws in Israel are the Lands (Acquisition for Public Purposes) Ordinance 1943, known for short as the “Land Ordinance“, and the Planning and Building Law, 1965.
The Land Ordinance is an old Mandate-era ordinance, enacted before the establishment of the state, which places the power to expropriate in the hands of the Minister of Finance. The Planning and Building Law gives that power to the local planning and building committees.
Alongside them there is the Water Law, 1959, which gives Mekorot the authority to expropriate land in order to transport water, and the Antiquities Law, 1978, which gives the Israel Antiquities Authority the power to expropriate land containing historical and ancient treasures, among others.
Incidentally, another Mandate-era ordinance granting expropriation powers was once in force in Israel, called the “Roads and Railways (Defence and Development) Ordinance 1943“, which dealt with expropriating land for building roads and railways. It was repealed in 2010, so land can no longer be expropriated under it, but expropriations already carried out under it remain valid and in force.
How the real estate expropriation process works
The expropriation process generally includes the following stages: decision, publication, taking possession, transfer of ownership, and payment of compensation.
The decision stage naturally requires a lawful decision on the expropriation itself, in accordance with the relevant law. At this stage it must be verified that the decision is made by a public body authorized to make it, and for a public purpose defined by law. It must also be verified that the public purpose cannot reasonably be achieved except through expropriation.
The publication stage involves publicly announcing the decision, so that anyone who may be affected by the expropriation learns of it and can file objections. At this stage the public body must publish a detailed notice announcing its intention to expropriate, specifying the land intended for expropriation, the purpose of the expropriation, and the timing. The notice must be published in the Official Gazette (Reshumot), in the press, and on a sign placed on or near the land. In addition, the notice must be delivered personally to each of the registered owners of the land at the Land Registry Office (Tabu), and a warning note about the expropriation must be recorded in the Tabu.
The taking-possession stage involves publishing a further notice in the Official Gazette instructing whoever holds the land to hand possession of it to the expropriating public body on the date specified in the notice. On that date the body takes physical possession of the land.
The ownership transfer stage involves registering the transfer of ownership and other legal rights in the land at the Land Registry Office (Tabu) from the private owners to the public body. If only part of the land was expropriated, a new survey is carried out so that the transfer is registered only for the part actually expropriated.
The compensation stage involves paying compensation to the private owners for the land expropriated from them.
What are the rights of an owner of expropriated land?
The main rights of an owner of expropriated land are the right to object to the expropriation itself and the right to receive compensation for the expropriated land.
As noted above, over 20 laws in Israel deal with the expropriation of real estate. Each of them also sets the conditions for paying expropriation compensation and its rate, so for every expropriation you must check which law it was carried out under and what that law provides on compensation.
For example, under the Land Ordinance, expropriation of up to 25% of the land area generally carries no right to compensation, while under the Planning and Building Law the threshold is 40% of the land area.
In practice, two compensation claims can be filed over the expropriation of real estate, one at the planning stage of the process and one at its proprietary stage.
The planning stage is the stage at which the land’s designation is changed to a public-purpose designation.
The proprietary stage is the stage at which the expropriation is actually carried out and the land passes to its new designation.
The planning stage harms the land’s value even before the expropriation is carried out. A claim can therefore be filed at this stage for the decrease in the land’s value, but only within 3 years from the approval of the urban planning scheme that changed the land’s designation to a public purpose.
After the expropriation itself has been carried out, a claim for expropriation compensation can be filed based on the value of the land. This claim must be accompanied by a professional real estate appraisal, assessing the property’s value on the determining date for the compensation, as if it were being sold voluntarily on the open market.
If the public body that expropriated the land rejects the owner’s appraisal, a claim can be filed against it in court, which will decide the dispute between the parties.
In some cases there are additional routes for resolving a dispute over the amount of expropriation compensation, depending on the law under which the expropriation was carried out. For example, where the expropriation was carried out under the Land Ordinance, an objection over the amount of compensation can be filed with the Objections Committee for Expropriation Compensation established under that Ordinance, or before a decisive appraiser, appointed with the consent of all the owners covered by that expropriation notice.
As for the statute of limitations on expropriation compensation claims, it is important to know that the Supreme Court ruled in 2013, in the Aridor rule, that the 7-year limitation period for filing a compensation claim over an expropriation carried out under the Land Ordinance begins at the latest on the date the public body took possession of the expropriated land. The Supreme Court also ruled, however, that this rule would only take effect after 3 years, from 2016 onward (CFH 1595/06 Aridor Estate v. Petah Tikva Municipality).
