Lawyers
Under Section 197 of the Planning and Construction Law, a claim for diminution in value may be made
A property owner may claim compensation for the decrease in value of their property caused by the approval of a building plan by the local Planning and Construction Committee under Section 197 of the Planning and Construction Law. Nevertheless, the section limits compensation claims to specific assets, and the Supreme Court’s ruling that addressed this important issue even limited damages to the value of the asset that will be included in the compensation calculation. In light of the complexity of such a compensation claim, we encourage you to contact us if you have been approved for a plan that will damage your assets.
By Igal Mor, Adv. & Notary
Accuracy in Legal Advice. Excellence in legal support.
Law of Planning and Construction
As specified in Section 197 of the Planning and Construction Law, new developments and construction damage the value of real estate assets on a regular basis. As a result, the section tries to provide a solution for the owners of these properties and determines the following eligibility conditions for compensation:
The local committee may compensate whoever, on the day the plan began, owned or had a right to the real estate located within the scope of the plan or bordering it to the extent that it was damaged by the plan, other than through expropriation.
Thus, the law allows the owner of real estate to receive compensation for the decrease in value of the property he owns because of the approval of a construction plan for land located in the neighborhood or on the property’s territory. As long as the planning and building committee approved a plan that may adversely affect the value of nearby properties, the property owner may claim compensation from the local planning and construction committee following the approval of the plan, for example, when a highway is constructed, a multi-story building is constructed, or a central shopping mall is established.
Although, attention should be paid to the provisions of the law that limit the right to claim to the owners of land in the area of the plan or adjacent land. Consequently, even if a noisy highway, for example, is built near the property without irrigation between the property and the road, the land owner will not be able to claim compensation for the decrease in value. Furthermore, the law limits the possibility of a lawsuit to situations in which construction plans have been approved without expropriation.
Moreover, section 200 of the law lists cases in which compensation is not required by the local planning and construction committee if the damage to the plaintiff’s property does not exceed a “reasonable scope”. Consequently, in order to strike a balance between the loss of value caused to the plaintiff’s property and the need to develop and build the urban space. However, the court held that the starting point should be that damage caused to the value of the property qualifies for compensation, while the denial of compensation via Article 200 is an exception.
Section 200 of the Planning and Construction Law states:
200. Land will not be considered damaged if it has been damaged by one of the provisions listed below, provided that the damage does not exceed what is reasonable in the circumstances and compensation to the victim would not be fair:
A change in the area of zones and the conditions of land use in those zones;
(2) determining the spacing between and around the buildings;
(3) Limiting the number of buildings within a given area;
(4) Regulating the location, size, and height of buildings; and planning the shape or exterior of buildings.
(5) Preventing or prohibiting construction, permanently or temporarily, on a site where the construction of buildings might result in a flood hazard, landslide, health hazard or danger to lives, or excessive expenditures of public funds for roads, culverts, water or other public services;
(6) Prohibiting the use of land or restricting its use other than by prohibiting construction, if the use may result in danger to health, risk to life, or other serious environmental damages;
(7) restricting the manner in which the buildings may be used;
(8) Establishing a line parallel to the road beyond which no building will stand out;
(9) The obligation to provide a place for vehicles to be loaded, unloaded, and filled with fuel, adjacent to a building intended for business, craft, or industry, so as not to obstruct traffic on a road;
(10) The obligation to install a parking area, a shelter or a shelter from an air attack in a building intended for business, crafts or industry, for residence, lodging or public use, or adjacent to the building;
(11 ) Provisions of the plan that are subject to section 81.
The Litigation.
The purpose of the claim is to restore the value of the property to its previous condition prior to the approval of the plan. As a result, compensation will be determined solely based on the expected damage caused by the plan. Damage is manifested in the fact that the plan affects the plaintiff’s property, thereby directly limiting the ability to use it, for example, by limiting future construction on the property by changing its designation from residential to agricultural. There are, however, indirect damages which can be compensable, such as reducing the exposure of the property to direct sunlight, causing insignificant noise, or even causing damage to the landscape.
It is important to note that the ruling clarifies that not all damages as perceived by the plaintiff will be considered damages as perceived by the law:Specifically, section 197 refers to damage to real estate, not to personal injury. Therefore, the damage is examined according to an objective test of damage to the real estate, and not according to a subjective test of damage to the owner.The Local Committee for Planning and Construction of Jerusalem vs. Bareli.
Consequently, a decrease in value will have to be determined objectively by a real estate appraiser, so certain damages may not be compensable. Damage estimates through an appraiser will be based on the appraiser’s assessment of the property’s value before and after the plan is approved.
Lastly, it is important to emphasize that the court will not be satisfied with the appraiser’s valuations alone, but must provide evidence that shows a causal link between the approval of the construction plan by the local committee and the decrease in value. Thus, even if the property value decreases after the approval of the construction plan, the owner of the property will not be entitled to compensation if such a relationship could not be proven in court.
Support From a Lawyer is Essential
As previously stated, it can be difficult to obtain compensation for a decrease in value. In some cases, compensation is not available at all. Additionally, this is a procedure that may be dragged to court and last for a prolonged period of time, aside from the strict threshold requirements regarding a limited window of time for filing the claim and the identity of the claimant and the property that establishes a right of claim. Despite all of this, there may still be damages that were recognized by an appraiser and accepted in court, but which were determined to be damages within a reasonable scope and would not enable the local committee to award compensation to the property owner.
