Three reported rulings of 2017 concern the price of a pre-empted property (préemption, the right of a public body to step into the buyer’s place when a property is sold). In the first, a public land agency pre-empts plots in Bayonne located in zone UAd, and the court of appeal values them from three sales of neighbouring plots in zone UAg, with more generous height rules, without examining whether the occupation of the premises justified a discount. The Cour de cassation (the French supreme court for civil matters), on 14 December 2017, quashed: the court of appeal’s reasons were “unfit to justify how the comparables retained, which concerned plots in zone UAg, were suitable comparison elements for valuing the expropriated plots, located in zone UAd, subject to more restrictive planning rules”. The same ruling held that the expropriation judge, who has jurisdiction to say whether the pre-empting body owes the agency fee mentioned in the notice of intention to sell, “does not have jurisdiction to reduce or remove that fee”. On 29 June 2017 the Court held that a withdrawal from pre-emption after the judgment setting the price is not late as long as an appeal is pending. And on 21 December 2017 it refused the right to require purchase for a building taken out of a ZAC (zone d’aménagement concerté, a public development zone) by a simple council resolution. For the valuer, three rules of method and procedure.
The facts
In the first case, a property company owning plots in a deferred development zone gives notice of intention to sell, mentioning an agency fee; the local public land agency, holding the delegated pre-emption right, pre-empts and, absent agreement, applies to the expropriation judge. The Pau court of appeal, on 12 May 2016, sets the value from the average of three sales of 2010, 2012 and 2013, holding that the prices in the deeds are “exclusive of allowances for easements, notably planning ones”, that “the price received by the seller is a net price” and that there is no need to distinguish zone UAd from zone UAg, the difference in building height being “necessarily taken into account when setting the sale price of the land”. It refers the agency to another court on its request not to pay the estate agent’s fee, the agent having allegedly done no real work.
In the second, an inter-municipal body pre-empts a flat; the expropriation judge sets the price by judgment of 17 June 2014; the body appeals, withdraws from the pre-emption on 7 April 2015, then discontinues. The Paris court of appeal, on 28 January 2016, orders it to pay the sellers 7 500 € in damages: the withdrawal, made more than two months after the judgment, was late.
In the third, a municipality creates a ZAC in 2009 and delimits its perimeter in the local plan in February 2013. On 23 April 2013 a company owning a building within the zone gives the municipality formal notice to buy its property, exercising its right to require purchase. The municipality does not answer within the one-year period but, by resolution of 14 November 2013, amends the perimeter of the ZAC to exclude the building. The company applies to the expropriation judge for transfer of ownership and setting of the price. The Versailles court of appeal, on 13 September 2016, rejects the claim.
The decision
First ruling (Cass. 3e civ., 14 December 2017, no. 16-20.150, reported): on the fee, “the expropriation judge, who has jurisdiction to determine, according to the indications in the parties’ undertaking and in the notice of intention to sell, whether the body exercising its pre-emption right is bound, as substituted for the buyer, to bear the estate agent’s fee, does not have jurisdiction to reduce or remove that fee on account of faults the agent may have committed in performing its assignment”. On the price, under article L. 213-4 of the Planning Code and article L. 322-4 of the Expropriation Code, quashed: the court of appeal ruled “on reasons unfit to justify how the comparables retained, which concerned plots in zone UAg, were suitable comparison elements for valuing the expropriated plots, located in zone UAd, subject to more restrictive planning rules, and without examining, as it was asked to, whether a discount should be applied on account of the occupation of the premises”.
Second ruling (Cass. 3e civ., 29 June 2017, no. 16-14.622, reported): under article L. 213-7 of the Planning Code, the award of damages was quashed, “whereas on the date the inter-municipal body withdrew from the pre-emption, the appeal proceedings were still pending, so that the judgment had not become final”.
Third ruling (Cass. 3e civ., 21 December 2017, no. 16-26.564, reported): the municipality having amended the ZAC perimeter and published that decision before the judgment, and having “rightly held that, no more than its creation, the amendment of the ZAC did not require a prior amendment of the local plan”, the court of appeal “rightly deduced that the company’s claim to require purchase of its building had to be rejected”. Dismissed.
What this changes for valuation
Comparables must share the same planning rules. The price of land depends on what can be built on it. Two neighbouring zones of the same plan, with different permitted heights, do not yield interchangeable references, and it is not enough to say that the market already priced the difference into the deeds. A valuer assessing a pre-empted property therefore picks comparables in the same zone, with the same height, footprint and use rules, or, if they must go outside the zone, explains and quantifies the correction applied, for instance through the permitted floor area. The glossary entry comparable describes what a reference must be, and the article on comparables from public databases recalls how they are produced.
Occupation is quantified when raised. An occupied property is not worth a vacant one, and a judge asked for a discount for occupation must answer. The report therefore addresses the point: nature of the occupier’s title, rent and remaining term, cost and time to obtain vacant possession, and applies the resulting décote pour occupation, or explains why it is nil. The article on the price set according to the condition of the property at judgment shows another component of the property’s condition the expropriation judge must take into account.
The agency fee follows the notice of intention to sell. The pre-empting body steps into the buyer’s shoes; if the preliminary contract and the notice show that the fee is payable by the buyer, it owes it, and the expropriation judge may say so. But that specialised judge can neither reduce nor cancel it on the ground that the agent did poor work: that question belongs to the contract judge, between the parties to that contract. The valuer therefore reproduces in the report the items of the notice, price, fee, who bears it, and values the property excluding the fee, keeping that item apart. The guide Public bodies and pre-emption: setting a defensible price describes that reading from the public body’s side.
Withdrawal remains possible until the price is final. The holder of the pre-emption right may withdraw within two months of the final decision setting the price; while an appeal is pending, the judgment is not final, and the withdrawal is not late. For the seller, this means the price appraisal does not guarantee the sale: the public body may still pull out if the price set does not suit it, and the property returns to the market. The valuer recalls this in the conclusions, and the seller bears it in mind before committing elsewhere.
The right to require purchase ends when the property leaves the perimeter. The owner of property within a ZAC may give the public body formal notice to buy it; but if the body amends the zone’s perimeter and excludes the property, by a published resolution, without having to amend the local plan, the claim falls away. A valuer instructed on such a claim therefore checks the state of the perimeter at the valuation date, and the article on surrendered land resold as building land shows what happens when the surrender did take place. On the reference date in a ZAC, the article on the reference date in a ZAC and under the pre-emption right completes the picture.
What the valuer takes from it
- Comparables for a pre-empted property must share the same zoning and planning rules, or be corrected with an explained adjustment.
- The discount for occupation of the premises is examined and quantified as soon as it is claimed.
- The expropriation judge says whether the pre-empting body owes the agency fee according to the notice of intention to sell, but can neither reduce nor cancel it.
- Withdrawal from pre-emption is not late as long as the judgment setting the price is not final; the price appraisal does not guarantee the sale.
- Property excluded from a ZAC perimeter by a published resolution can no longer be surrendered to the public body.
Further reading
The Compulsory purchase and pre-emption page describes the assignment, its timescale and its fee. The guide Public bodies and pre-emption: setting a defensible price and the glossary entries droit de préemption, juge de l’expropriation, comparable and décote pour occupation complement this article. On the same theme: Pre-emption price in France: valued as it stands at judgment and Compulsory purchase: comparables from public databases are enough. The decisions are available on Légifrance: no. 16-20.150, no. 16-14.622 and no. 16-26.564.
What next
A pre-empted property whose price is argued before the expropriation judge, with comparables from another zone, an occupier or an agency fee?
I establish the price of the pre-empted property from comparable sales in the same zone and under the same planning rules, quantify the discount for occupation and set out the items of the notice of intention to sell, for the seller, the public body or the judge.
Free quote, by email or by phone. No commitment before the quote is accepted. Fees are never linked to the value of the property (Charte de l’expertise, Title I, §2.1).
