Indemnity for Depreciation of the Surplus: Even for Building Land, the Court of Cassation Restores the Law

Imagine: you are the owner in Capbreton of a large plot with an ocean view. The local authority decides to expropriate a small part to widen a road. You receive compensation for the part taken, but the rest of your land – the 'surplus' – becomes devalued: harder to access, less area, obstructed view. You claim additional compensation for this 'depreciation of the surplus'. But the expropriating authority argues that your land is building land, and that case law excludes this indemnity for building land. What can you do?

This question, crucial for hundreds of owners in the Landes or elsewhere, was settled by the Court of Cassation in a judgment of 4 April 2019 (No. 18-10.989). The High Court set aside the decision of a court of appeal which refused the indemnity for depreciation of the surplus solely on the ground that the plots were classified as building land. In short, the mere fact that land is building land is not enough to automatically exclude the right to an indemnity for the loss in value suffered by the non-expropriated part.

This judgment is a breath of fresh air for the owners concerned. It reminds that the right to full compensation for damage must prevail, regardless of the planning classification of the property. Analysis of this decision which could change the game in your next negotiations with the expropriating authority.

The facts: a story that happens every day

Mr E... was the owner in Capbreton of several plots of land, classified as building land by the local plan. The local authority initiated an expropriation procedure to carry out a public development project, taking only part of his land. The expropriated owner accepted the main compensation for the expropriated portion, but claimed additional compensation for the depreciation of the surplus (the loss in value suffered by the remaining part).

The expropriation judge granted this indemnity, finding that the surplus was indeed depreciated. But the local authority appealed. The court of appeal then set aside this decision, based on a simple reason: the remaining plots being building land, they could not suffer depreciation because their market value remained high. According to the appeal judges, the indemnity for depreciation of the surplus was reserved for non-building land (agricultural, natural).

Mr E... appealed to the Court of Cassation. He contested this automatic exclusion. The Court of Cassation agreed with him: it set aside the appeal decision and referred the case to another court, for it to re-examine the actual loss suffered, without limiting itself to the classification of building land.

The reasoning of the court — analysed

The Court of Cassation relies on the principle of full compensation for damage, derived from Article 1240 of the Civil Code (formerly 1382), which provides that 'any act of man which causes damage to another obliges the person by whose fault it occurred to repair it'. In expropriation matters, this principle translates into the obligation to compensate fully for the direct, material and certain loss caused by the expropriation.

The question was: can the indemnity for depreciation of the surplus (provided for in Article L. 13-13 of the Expropriation Code, now L. 322-2) be refused solely on the ground that the remaining land is building land? The court of appeal had said yes, based on a market study showing that building plots sold well. But the Court of Cassation reminds that the indemnity is due 'regardless of the nature of the expropriated property', i.e., regardless of its planning classification. In other words, even building land can suffer depreciation: for example, loss of area, more difficult access, degraded view, etc.

In this case, the court of appeal had excluded the right to compensation solely because of the classification as building land, without actually investigating whether the surplus had suffered a loss in value. In doing so, it violated the principle of full compensation. The Court of Cassation censures this overly mechanical approach. It requires the trial judge to examine, on a case-by-case basis, the existence of actual loss, regardless of the building nature of the property.

This reasoning is part of a protective trend for property owners' rights. The High Court reminds that expropriation is an interference with the right to property (Article 17 of the Declaration of the Rights of Man), which must be strictly regulated and fairly compensated.

What this changes for you — concretely

Landowners: if you are partially expropriated, you can now claim an indemnity for depreciation of the surplus, even if your land is building land. However, you will need to prove the actual loss (for example, through an expert valuation). Concrete example: in Mimizan, an owner of a 2,000 m² building plot sees 500 m² expropriated for a beach access road. The surplus of 1,500 m² loses exploitable area and attractiveness. He can claim additional compensation, calculated on the difference in value before/after.

Property developers: if you hold land banks, know that partial expropriation can give rise to this indemnity. Factor this risk into your negotiations with local authorities.

Tenants: indirectly concerned, as a higher indemnity for the owner may delay or increase the cost of the expropriation project. But you have no direct right to this indemnity.

Co-owners: if the co-ownership is partially expropriated (for example, for a road widening), the management company can act on behalf of all. The indemnity for depreciation of the surplus is then distributed among co-owners in proportion to their shares.

If you are in this situation, you should: 1) have the value of the surplus before and after expropriation assessed by an expert (surveyor, notary); 2) expressly claim the indemnity within the procedure (before the expropriation judge); 3) contest any decision that would automatically exclude it. The time limits are those of the expropriation procedure (often 1 to 2 years). The amounts vary: 10 to 30% of the value of the surplus depending on the depreciation.

What few people know: the indemnity for depreciation of the surplus may also include loss of enjoyment during the works. Do not hesitate to claim it.

Four tips to avoid this type of dispute

• Have a land valuation done before expropriation: as soon as the project is notified, instruct an expert to assess the real value of your property and anticipate any loss in value. This will allow you to negotiate a fair indemnity from the outset.
• Do not neglect the surplus: many owners focus on the main compensation and forget the surplus. Yet this is often where a significant part of the compensation lies. Be vigilant.
• Keep all planning documents: the classification as building land is not an obstacle, but you must be able to demonstrate the depreciation. Gather photos, plans, and any evidence showing the change in the environment.
• Consult a specialised lawyer from the start: a lawyer familiar with expropriation law will help you build a strong case and negotiate with the local authority. A procedural error can be costly.

Further reading: related case law and developments

This judgment is part of a protective line. Already, the Court of Cassation had ruled (Civ. 3e, 12 October 2017, No. 16-21.583) that the indemnity for depreciation of the surplus was not limited to non-building land. But some courts of appeal continued to apply the old restrictive case law. The 2019 judgment is therefore a firm reminder.

However, it must be qualified: the indemnity is not automatic. The owner must prove a certain and direct loss. For example, if the surplus remains building land and its value has not decreased (same area, same access), no indemnity will be due. Courts are increasingly demanding in terms of proof.

For the future, we can expect an increase in claims for indemnity for depreciation of the surplus, including for building land. Local authorities will therefore have to factor this cost into their expropriation budgets. In practice, this could make development projects more expensive, but also encourage better amicable negotiation.

Checklist before acting

• ✅ Have I received a notification of partial expropriation?
• ✅ Have I had the value of the surplus before and after assessed? (Use an expert)
• ✅ Have I claimed the indemnity for depreciation of the surplus in my submissions?
• ✅ Have I kept all documents (PLU, photos, certificates) proving the loss in value?
• ✅ Have I consulted a specialised lawyer?

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