Real Estate Investor Magazine South Africa October 2016 | Page 24

FINANCE
LEGAL

The Expropriation Bill
Compensation: The Vexed Question
BY SIMON DIPPENAAR

L

ast month we looked at the Expropriation Bill
2015 and what it means for property owners.
In the second part of this article we deal
with an aspect beset by controversy – compensation:
How much and when.

How is compensation determined?

What is ‘just and equitable’? How and when will
compensation be paid?
It’s worth noting that one of the better features of
the 2015 bill, compared to the 2008 version, is that
compensation is decided by the courts, not by the
state.

Issues affecting the amount of
compensation to be paid are:

• Current use of the property
• History
• Market value
• The extent of direct state investment and subsidy in
the acquisition and beneficial capital improvement to
the property
• Purpose of the acquisition
An expert, unbiased opinion might be useful at this
stage – property and its value, apart from being a
financial transaction, can arouse strong emotions.
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OCTOBER 2016 SA Real Estate Investor

You should be aware of some factors the
authority will ignore when determining
compensation:
• The fact that the property has been taken without
the consent of the expropriated owner/right-holder
• Any special suitability or usefulness of the property,
if it is unlikely that the property could have been
purchased on the open market for that specific stated
purpose
• Any improvements made to the property resulting in
illegal use are not included in the valuation
• Improvements made after the notice of expropriation
was served (unless an agreement has been reached
prior to expropriation)
• Anything that was done with the aim of claiming
compensation
What to do when you receive notice of expropriation
If you are the owner or holder of an unregistered right,
you should respond to the notice of expropriation
within a 20-day period (which can be extended),
whether or not you agree to the expropriation or the
amount of compensation payable.
If you claim an amount of compensation and this
is rejected by the authority, the authority has to
propose a ‘just and equitable’ amount, detailing how
this amount has been calculated and what is included.
In this situation, you will need to provide supporting
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