While we all love new train lines and roads, what if your home is in the way of a nation-building project, is this necessarily bad news? Is it a disaster or maybe a lottery win?
Compulsory land acquisition is happening all across the country as state and federal governments pour billions of dollars into new infrastructure projects. NSW is spending $12.5 billion on the Sydney Metro project, Victoria is spending $11bn on their Melbourne Metro while in Queensland, $8.5bn is being spent upgrading the Bruce Highway.
So what happens if the roads department comes knocking on your door to make a compulsory acquisition?
Paul Colagiuri, director and principal lawyer at PC Law, which specialises in compulsory land acquisition law, says, “If your property is going to be acquired it is a real hassle. You have to go through a valuation process with the government to assess the value of your property which is time consuming and costly”. Registered valuers are engaged by both property owner and government, which is then followed by a round of negotiations between the parties.
But if you cannot agree, Colagiuri says “the matter is then referred to the Valuer-General who will assess the value and set the sales price.
3. Prospect of court action
If you still don’t agree then you can take the matter to court. However, all this is time consuming and costly and there is no guarantee that you will get a satisfactory outcome. There have been instances where owners get less compensation than their property may be worth and instances where they get more”.
In general property owners are usually contacted well in advance sometime during the planning stage of the project by the relevant state department.
Once the project is approved and the acquisition becomes likely, the time varies depending on how urgently the government requires the land but an average time might be six to nine months.
Colagiuri says, “If the project is very urgent, the time period could be as short as a few months because the government has the power to expedite the process, however this is rare”.
State to state
One of the most notable aspects of this issue is that the laws differ from state to state and you can be entitled to more dollars in compensation depending on where you live. If you receive correspondence which mentions the word “solatium”, it’s worth knowing this is the legal term for the provision for relocation costs and compensation for the inconvenience of moving.
In NSW, solatium, which is a payment for the inconvenience of being forced to move, is capped at a maximum of $27,235, whereas in Victoria, solatium is capped at 10 per cent of the property value.
In terms of property ownership rights, Daniel Corbett, director of Full Property Advice, says don’t overestimate your chances of taking on a state government, even if you have been inspired by local heroes who have hit the headlines.
Corbett references the 1997 Australian movie The Castle where Michael Caton’s character successfully challenged a compulsory acquisition of his property.
“Although one’s home is one’s castle, The Castle was a fictional movie but the story of having your home compulsorily acquired can be an unpleasant reality” says Corbett.
“Property owners do not have the right to decline an approach by government to acquire their property. Instead, they have the right to be paid just compensation under their state’s legislation. They also have the right to get legal and valuation representation and be reimbursed reasonable fees for those” say Colagiuri. In NSW they have the right to remain on the land until they are paid at least 90 per cent of their compensation and if it is their principal place of residence, have the right to remain living there for three months after the compulsory acquisition has occurred.
To minimise the chances of having your property sold under compulsory acquisition rules, Trevor Chan, licensed real estate agent from Northshore Property Sales in Sydney, says that prospective property buyers should “check the zoning of the land they intend to buy as set out in the planning certificate.
In NSW, this on the section 149 certificate attached to the contract for sale and in Victoria it is found in the section 32 Vendors Statement of the contract for sale”.
Colagiuri adds “if the land is in part or wholly zoned for a public purpose such as a railway or road, then it means the land has been earmarked for this use and it is likely that it will be acquired at some point in the future for this purpose.
Ordinarily your solicitor should point out if this is the case upon reviewing the contract”. Chan suggests property buyers “check council, state and federal planning websites for proposed projects that may affect the property”.
If your property does end up being subject to government compulsory acquisition, the most important thing is to get good legal and valuation experts on your side, as it is a very difficult and technical process.
Having the right team on your side will allow you to navigate the process and help to maximise your chances of receiving achieving full compensation.
James Gerrard is the principal and director of independently owned Sydney financial planning firm FinancialAdvisor.com.au