Law n.º 14.620/2023, published on July 14, promoted changes in Decree-Law n.º 3.365/1941, which regulates expropriation for public utility in Brazil.

One of the changes is the requirement for legislative authorization, in article 2, paragraph 2, for the expropriation both of assets owned by the States, Municipalities and the Federal District by the Federal government, and for the assets of the Municipalities by the State. Previously, the requirement was only for the expropriation of the Municipalities’ assets by the States. However, legislative authorization may be waived when the expropriation is conducted by an agreement between the federative entities.

The Law also amended article 3, allowing expropriation by means of authorization by law or contract, by concessionaires, permit holders, authorization holders and tenants, as well as by those contracted by the public authorities for the execution of works and engineering services under the contracting regime for global price, engineering contracting and integrated contracting.

Regarding the latter, the bidding notice must contain information on who is responsible for each phase of the project, the estimated budget and the distribution of risk between the parties, including the variation in costs of expropriation under the estimated budget.

The sole paragraph of article 4 determines that, in expropriations for urbanization plans, urban renewal, subdivision or reparcelling of the land provided for in the Municipality Urbanization Master Plan (Plano Diretor), the bidding notice may stipulate that the revenue from the resale or use of real estate integrates an associated project at the expense and risk of the contracted party, guaranteed to the public authority responsible for contracting, at least, reimbursement of costs with indemnities under its responsibility.

The said law included in article 4-A that, in expropriations of properties characterized as Informal Urban Centers (Núcleos Urbanos Informais), occupied by low-income population, the expropriator must promote compensatory measures to the expropriated, such as relocation of families, compensation for improvements or financial compensation for reallocation. Here, the registration of occupants is required. The occupant of the area that presents a condition of vulnerability, to be defined by the expropriator, may be matched to the low-income population.

Article 5, paragraph 6, provides that whenever there is proven unfeasibility or the objective loss of public interest in maintaining the destination of the property indicated in the expropriation decree, the expropriator must adopt one of the following measures, in order: (i) allocate the area for another public purpose; or (ii) sell the asset to the interested party, ensuring the preemptive right to the expropriated person.

Another amendment was in relation to article 7, which provides that with the declaration of public utility, administrative authorities are authorized to enter expropriated areas, for inspections, and may resort to the assistance of police forces. In the event of damages due to excess or abuse of power, compensation for damages and competent criminal action is applicable.

Finally, art. 15-A went on to provide that, in the case of prior imposition in possession, in expropriation due to necessity or public utility or social interest, in the event of a discrepancy between the price offered in court and the value of the property established in the judgment, compensatory interest of up to 6% may be levied per year on the calculated difference, counted from the date of taking possession, compound interest is prohibited.

The Public, Regulatory and Infrastructure Legal team is available for any queries you may have.

By André Martins.