A Statement Regarding New Rules and Prices needed to Compensate Compulsory Agricultural Land Expropriation (18.09.19)

BAALO claims compensation packages are too low and therefore irrelevant to market conditions

The Bulgarian Association of Owners of Agricultural Land (BAALO) insists on regulatory changes to create safeguards for owners of private estates, by reconsidering the rules for determining the compensation offered in cases of compulsory expropriation of agricultural land and the establishment of servitudes upon it for state and municipal needs. The owners of agricultural land pointed out their arguments in a letter to the Council of Ministers, the Ministry of Agriculture, Food and Forestry, the Ministry of Regional Development and Public Works, the Ministry of Justice, the Ministry of Economy, the Ministry of Environment and Water, the National Association of Municipalities in the Republic of Bulgaria.

In recent years, the infrastructure network, the construction of roads and highways in the country has grown, which is important for the economy, comments BAALO. At the same time, however, BAALO believes that this process should not be done by disregarding the constitutional rights of private landowners. In this respect, compensation for compulsory expropriation of agricultural property or parts thereof for state and municipal needs requires that the rules for calculating and determining the benefits be regulated so that they are truly adequate to the real market conditions, considers the inter branch organisations. They believe the problem concerns all private landowners and, most of all, the small ones, who tend to be less acquainted with the legal and normative basis and have a limited ability to challenge the benefits ruled by the courts.

In the last two years, as BAALO reports, a high number of cases of compulsory land expropriation and the establishment of servitudes on private land for state and municipal needs for the construction of national sites, has been witnessed. In their view, this often happens in violation to the rights of the owners with regard to determining the amount of compensation payable to them. The Constitution of the Republic of Bulgaria clearly states that the compulsory expropriation of property for state and municipal needs can only take place after a preliminary and equivalent compensation.

Although the State Property Act provides an equivalent compensation, the Association reminds of the hundreds of cases of involuntary expropriation without equivalent property compensation in accordance with the law. The lack of fairness causes the owners to seek their rights by judicial means, which aggravates both their situation and the process of developing key infrastructure for both the state and the local municipalities.

BAALO also points out to cases where a long period of time has passed from the time when the compensation amount was determined to its actual repayment, during which the real property market has changed, the prices have risen, and therefore, the initial compensation becomes inadequate. Thus, with the price determined by the state or the municipality for the respective property, at the time of the expropriation (payment of the fixed compensation), makes it impossible for the same amount of agricultural land to be purchased.

BAALO believes that at the heart of the problem lie the inadequate rules for setting the price levels, at which benefits and compensations are paid. According to the Municipal Property Act the term “market prices” is formed on the basis of the average prices of all transactions of properties for sale, exchange, mortgage, as well as other transactions, concluded a year earlier than the award of the valuation. For this purpose, the last twenty transactions registered with the registry office based on the location of the property, are taken into account. According to the BAALO, the fact that, in most cases when a reimbursable real estate transaction takes place, it is concluded at much lower prices (for example, based on the tax valuation of the property or at a cost slightly above the tax assessment), in order to avoid the payment of unaffordable notary fees and taxes. Therefore, the average prices of all property transactions rarely correspond to the actual “market prices”. “We, in our position of agricultural land owners, who purchase agricultural land at its real market price, feel deeply affected and harmed by the compulsory expropriation of our property or parts of it because of the inadequate financial compensation offered, which is in no way equivalent or corresponding to market prices.”, quotes the Association’s letter to the institutions.

BAALO offers a number of changes related to updating and modernisation of compensatory prices for compulsory land expropriation and the establishment of servitudes in agricultural lands. Some of them call for a minimum compensation prices to be set and elimination of land categorizing to be put to a halt. The main factor to be considered must be the size of the expropriated or affected land because often the category of the land does not correspond to its workability and yields.

Another suggestion is that in the case of compulsory expropriation, the owners of agricultural land should be exempted from the costs related to the procedures of obtaining the necessary documents, which the institutions can themselves acquire. There are cases where the administrative costs of the owners, whose properties are expropriated, exceed the compensation amount offered by the municipality or the state.

BAALO insists the start of constructions on the establishment of easements, to start after the harvest period so as not to inflict considerable damage to land tenants.