The Superior Court of Justice (STJ) recently issued an important ruling that directly affects landowners and property owners facing expropriation proceedings initiated by the government. In a unanimous decision (Theme 1,454), the Court established new time limits (“temporal cutoffs”) for experts to determine the property’s market value. The purpose of the change is to prevent proceedings from dragging on for years while awaiting real estate appreciation and to ensure a “fair price” for both the property owner and the government.
Until then, the amount of compensation was generally calculated based on the property’s value at the time the court-ordered appraisal was conducted—which often took years to occur. The STJ has now established specific dates for determining that value, depending on the type of expropriation:
Ordinary expropriation (public works and public utility): the amount of compensation must be calculated based on the property’s market value no later than one year after the commencement of judicial proceedings.
Expropriation for agrarian reform: for unproductive land, the amount of compensation must be calculated based on the property’s market value no later than 90 days after the action is filed.
Indirect expropriation: These are cases in which the government takes possession of the property unlawfully, without prior expropriation proceedings. In such cases, the amount of compensation will be based on the property’s value on the exact date the government took possession of the area, plus monetary adjustment and interest as provided by law.
If the expert appraisal is conducted after these deadlines, the expert must use scientifically recognized valuation methods to determine the property’s value as of the applicable past cutoff date – whether 90 days or one year after the commencement of the proceedings.
The only exception applies when the delay in conducting the appraisal is attributable exclusively to the government. In such cases, the applicable deadline is extended by the length of that delay.
In addition, the STJ held that any increase in the property’s value resulting from the government’s own actions – such as the construction of a new nearby road, for example – must be deducted from the amount of compensation.
The new rule does not affect appraisals that have already been completed or commenced. It will apply only to proceedings in which the court orders an appraisal after the official publication of this new STJ decision.
With stricter time limits for property valuation, property owners must have qualified legal counsel from the very outset of expropriation proceedings to ensure that the valuation of their assets is not adversely affected and that the amount paid truly reflects the just compensation guaranteed by the Constitution.