Reinvestment allowance (indemnité de remploi)

Receiving the market value of one’s property is not enough to be put back in the same position as before: to buy an equivalent property, one has to pay registration duties, notaire’s fees and sometimes an agency commission. The reinvestment allowance covers those costs. It is owed to the expropriated owner in addition to the principal compensation, and its amount is calculated on that compensation according to a tapering scale which the courts apply consistently.

An allowance of the same kind exists within the eviction compensation of a commercial tenant, where article L. 145-14 of the French Commercial Code refers to the costs and transfer duties payable for a business of the same value.

Where the rule comes from

Article R. 322-5 of the French Expropriation Code provides that the reinvestment allowance is calculated with regard to the costs of every kind normally incurred in acquiring property of the same nature at a price equal to the principal compensation. The same article reserves the cases in which it is not due, notably where the property was notoriously intended for sale. It is an application of the principle of full compensation in article L. 321-1.

The most widespread scale before the expropriation courts takes 20 % of the principal compensation up to €5,000, 15 % from €5,000 to €15,000, and 10 % above that. This scale is not in the statute; it reflects practice and may be argued, for instance downwards for agricultural land whose acquisition costs are lower.

In a valuation report

I calculate the reinvestment allowance on the principal compensation I propose, setting out the bands, and recalculate it as a variant on the acquiring authority’s offer so that the parties can see the gap. I check that the property does not fall within an exclusion and point out any circumstances that might lead the judge to adjust the rate. In an eviction compensation claim, I apply the same logic to the registration duties on the sale of a business and the related fees.

Example

The principal compensation for an expropriated house is fixed at €230,000. The reinvestment allowance comes to 20 % of €5,000 (€1,000), plus 15 % of €10,000 (€1,500), plus 10 % of €215,000 (€21,500), or €24,000. The total compensation, excluding other ancillary heads, is €254,000. If the judge adopted the municipality’s offer of €195,000, the reinvestment allowance would be €20,500.

Not to be confused with

The compensation for loss of rental income during the time needed to reinvest, a separate head accepted by the Cour de cassation, and removal costs, reimbursed on supporting documents.