Expropriation is a institute through which the state, in the public interest, takes or limits the ownership rights over real estate with appropriate compensation. It is a institute that represents an exception to the rule that ownership rights cannot be taken away. Although property rights are considered one of the fundamental rights guaranteed by the constitution, in certain situations, public interest may take precedence over private rights. This institute is regulated by a special law – the Law on Expropriation. The law regulates the concept, conditions, and rules of the expropriation process. If expropriation is carried out through a special, formal procedure in accordance with the law, it is referred to as legal expropriation. In situations where the state takes land or another real property that is privately owned by an individual for the purpose of achieving a public interest (such as road construction, railways, etc.), without following the procedure and without paying appropriate compensation corresponding to the market value of the expropriated property, it is referred to as factual expropriation.
In both cases, the owner from whom the property was taken is entitled to compensation that corresponds to the market value of the expropriated property, with the difference being in the way the compensation is recognized. In the case of legal expropriation, the amount of compensation is determined by mutual agreement, and if such an agreement is not reached within two months of the final decision on expropriation, the parties have the option to initiate a special non-litigation procedure. On the other hand, in the case of factual expropriation, the landowner can claim compensation through a litigation procedure by filing a lawsuit for the determination of compensation due to factual expropriation.
Legal Expropriation
The first phase of the legal expropriation process is the determination of public interest. The Government of the Republic of Serbia, through a special decision, determines the existence of public interest for the construction of facilities in the following areas: education, healthcare, social protection, culture, water management, sports, transportation, energy, and utility infrastructure, facilities for the needs of state authorities and territorial autonomy bodies and local self-government, defense facilities, and the construction of apartments to address the housing needs of socially vulnerable individuals. After the determination of the existence of public interest, the expropriation user can submit a proposal for expropriation to the municipal administration of the municipality where the real estate proposed for expropriation is located, within one year from the date of determination of public interest for expropriation, and the necessary documentation must be attached to the proposal. The proposal for expropriation on behalf of the Republic of Serbia, autonomous province, and local self-government unit is submitted by the competent public attorney.
After the finalization of the expropriation decision, the municipal administration is obliged to immediately schedule and hold a hearing for the amicable determination of compensation for the expropriated property. The expropriation user submits a written offer regarding the form and amount of compensation and delivers it to the municipal administration within 15 days from the finalization of the expropriation decision. If the parties reach an agreement, and the municipal administration does not reject it, the agreement on compensation has the force of an enforceable document. The municipal administration may reject the agreement if it determines that the agreement is contrary to positive regulations. The agreement on monetary compensation is enforced by the competent court, while the agreement on other forms of compensation is enforced by the municipal administration.
If the compensation agreement is not fully reached within two months from the finalization of the expropriation decision, the municipal administration will deliver the final expropriation decision with all the records to the competent municipal court for the determination of compensation. If the municipal administration fails to take this action, the former owner and the expropriation user can directly approach the court for the determination of compensation by initiating a special non-litigation procedure.
Factual Expropriation
When the expropriation procedure is not conducted, but land or another real estate has been taken, and the previous owner has not received any compensation for the taken property, this is referred to as factual expropriation, provided the taking occurred for the purpose of achieving public interests.
Our law does not recognize the term “factual expropriation.” This term emerged from judicial practice. In the case of factual expropriation, there has been a taking of real property without the appropriate legal basis, i.e., without the issuance of a decision on the taking of property. However, according to the Constitution of the Republic of Serbia, even when private property is taken for public interest, the owner must be paid appropriate compensation.
The affected owner can protect their violated right by filing a lawsuit for the determination of compensation for the property that has been taken or expropriated. Of course, the burden of proof lies with the plaintiff to prove all relevant facts, starting from the fact that their private property was taken, the area of the taken property, and the fact that the taking occurred for the public interest.