McClelland Minute - July 11, 2010

When Governments Need Land

So what happens when a local, provincial, or federal government decides that they need land that you own?  Bottom line – in Canada a municipality or similar public body has the right to acquire private property for public use.  This is called the “power of eminent domain”, the roots of which goes back to English common law established in about the year 1000 or so.  If the Queen wants a road through your front lawn to quickly move her troops between villages, then it shall be so.

Of course there is legislation that states you shall be compensated based on current market values within the immediate area.  How this is determined can be fairly complex using appraisal principles tested in a number of jurisdictions.  There are two recognized approaches used to measure change in value; one being the “Before and After Method” and the other “Summation or Aggregate Method”, involving sales of comparable properties, income, or cost to replace.

If we go back to the aforementioned public use, and there is a partial taking of land for the roadway, the following questions will likely be asked by the appraiser.  Does the highest and best use of the parcel you own change?  Is the land use or zoning expected to change?  Will the utility or current function of the land be affected?  For example, if your lawn is now split into two pieces, one of each side of the road, will this diminish its usefulness or purpose for you as landowner? 

How are building placements changed?  Is your front porch now on the edge of a highway?    The purpose of taking land will also affect value. The noise caused by an access ramp for the Trans-Canada Highway is considerably different than a simple road widening for local and farm traffic.  Or that quarter across the road that previously grew alfalfa is now to be a regional waste management land fill.

The changes that a property owner will suffer are also taken into account. Let’s say you run a greenhouse and the new road makes it considerably more difficult for your customers to access, leading to a loss of business. Is this one time damage during construction, or permanent?  What would be the “cost to cure”?

Will an existing structure need to be demolished to make way for construction?  This can be as simple as a barb wire pasture fence or as complex as a house or shop.  How about crop loss during construction activity or shelterbelts that may take years to be replaced?

Admittedly, there are times when land taking can increase the value of an adjacent property such as the conversion of a gravel road to pavement or all weather access into a recreational area.  Either way, the Courts are to rule that a citizen is not to be left in a “worse” position after the change. Can you stop the Queen from doing what is felt to be in the public interest?  Highly unlikely unless you can find a rare breed of spotted toad; it is only a matter of addressing what is appropriate compensation.

Vern McClelland is associate broker with RE/MAX of Lloydminster.  If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the McClelland Group website www.mcclelland.ca

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