Principal compensation (indemnité principale)

The principal compensation is what the expropriated owner receives in exchange for his property. It corresponds, as closely as possible, to the market value of the property as it is, occupied or vacant, with its qualities and its defects. Everything else, reinvestment costs, loss of value of the retained land, loss of rent, removal, falls under the ancillary heads, which are added to it without being merged with it.

Its particularity lies in the dates. The value is that of the market at the date of the first-instance judgment, but the property is taken in its condition at the date of the expropriation order and in its use at the reference date, generally one year before the public inquiry. These three dates are rarely the same and the report must keep all of them in view.

Where the rule comes from

Article L. 321-1 of the French Expropriation Code requires compensation for the whole of the direct, material and certain loss. Article L. 322-1 provides that the judge fixes the compensation according to the condition of the property at the date of the order transferring ownership, disregarding improvements made to obtain higher compensation. Article L. 322-2 specifies that the property is valued at the date of the first-instance decision, according to its actual use at the reference date.

The Charte de l’expertise en évaluation immobilière (French property valuation charter, Title III § 1.20) states that the principal compensation is as close as possible to the market value of the property in its state of occupation. The Cour de cassation held on 6 March 2025 (appeal no. 23-22.427) that, on a partial compulsory purchase, the classification of the land is assessed by reference to the whole plot from which the land taken is detached.

In a valuation report

I classify the property at the reference date, then value it by comparison with sales of property of the same kind and the same use, as close as possible to the date of judgment. I take occupation into account: a let building is valued with a discount, or by capitalising the income. I apply the allowances or premiums justified by the particular situation, without any unexplained flat rate. The report presents the comparables in a table, with their source, date and price per m², and explains each adjustment. This rigour is necessary because the government commissioner produces a competing valuation.

Example

A building of two let flats in FOUGÈRES is expropriated for an urban renewal scheme. The annual rents amount to €13,200. I value the property at €210,000 with vacant possession by comparison, and at €178,000 occupied by applying a 15 % discount justified by recent lets; capitalisation of the net rents at 6.5 % gives €175,000. I adopt a principal compensation of €177,000. The reinvestment allowance, calculated on that amount, and the loss of rent during reinvestment are added as ancillary heads.

Not to be confused with

The reinvestment allowance, an ancillary head covering the costs of acquiring a replacement property, and the eviction compensation of a commercial tenant, owed by the acquiring authority to the business operator and not to the owner.