Run over by Rail Baltic: «I feel that the state is doing with it wants with my land»

Forest entrepreneur Margo Visnu's forest land was forcibly expropriated for the purpose of the Rail Baltic route corridor. Photo: Mihkel Maripuu

Long before the people of South Estonia became upset by the plan to expand the Nursipalu army training ground, the state has, apparently without much excitement, acquired plots of land lying on the Rail Baltic route which runs through Estonia. However, three individuals have so far resisted here as well and sued the expropriation of the land.

“The attitude is extremely state-centered and takes into account the owner's interests as narrowly as possible," complains the well-known barrister Aivar Pilv when characterizing the disputes over the expropriation of properties remaining on the railway route.

If one ask the Land Board for an assessment of the transfer of land remaining on the Rail Baltic route, it seems that things are going according to plan. “Within the scope of the current county plan, the state has acquired approximately 40 percent of the privately owned lands by the beginning of November this year. 17 percent in Harju County, 52 percent in Pärnu County and 58 percent in Rapla County,” said Maarja Virks, advisor of the Land Management Department of the Land Board.

The percentages are currently half-way, mainly because the negotiations for land acquisition can only be started when the solution for the railway project has been completed. This is the reason of the small percentage in Harju County. So far, mainly the land plots in the way of the fast-schedule sites have been acquired.

Commenting on the proportion of litigation, Virks noted that the state has acquired 318 privately owned immovable properties, of which only about one percent has ended in expropriation. “Three expropriation decisions have been disputed in the court: one concerned the expropriation of two adjacent forest properties in Rapla County, one dispute concerns the expropriation of a built-up immovable property and another non-built-up residential land in Rae municipality,” explained Virks. Such are the cold statistics and the cool official view of what is happening. But if you look at the disputed situations one by one, the situation becomes much more heated.

The battle at Rapla

Rapla-based forestry company AmEst Haldus is the owner of these two expropriated forest properties next to each other near Rapla. The company has been arguing with the state for years because it does not agree with the proposed transaction. AmEst Haldus board member Margo Visnu takes out documents, shows recordings from the real estate register and starts his story from back in 2017, when he was invited to a meeting in Rapla along with other owners of the land on the Rail Baltic route.

There he filled out a form stating that he preferred to exchange the land remaining on the route for an equivalent piece of land. “I am not against Rail Baltic. I understand that if the state wants to build a railway, let it build it. But since we are a forestry company, we wanted to exchange the land remaining on the route one for one for an equivalent piece of land," Visnu recalls.

In 2019, the Land Board notified Visnu of the procedure for acquiring real estate in the public interest and made an offer: a section of about a hectare will be taken from one of the properties belonging to AmEst Haldus, for which the state offers 3,634 euros and an additional 1,048 euros as a motivation fee. The state agreed to pay 2,730 euros (1,682 + 1,048) for 1.58 hectares taken from another property.

AmEst did not agree to the offer. “It would be very difficult to manage my entire forest plots – about 20 hectares in total – in the future if they are divided by the railway,” says Visnu, who at the time offered to give the entire property to the state. “Let this section of the railway pass through there, and RMK, for example, would manage the rest as it wants. Give me 20 hectares of land, where I can normally operate.”

Moreover, the Land Board evaluated the acquired plots unfairly low, totally ignoring the young forest growing on one of the properties. “I see the future here, but someone sees the bush,” says Visnu, as we move among the few trees on the property.

The Land Board did not agree with the claim that the value of the forest divided by the railway line will decrease. However, it did admit a mistake in the evaluation of the young forest and made a new offer to AmEst, which the company rejected. The reason was still the low price and unfair organization of land use management.

Visnu could compare the offer with a contract with the state-owned company Elering, which paid a several times higher price for a hectare under the power line running over his company's land; in addition, the owner retained the right to the timber remaining on the line and the possibility to continue using the land to a limited extent. Visnu wanted a similar offer now, but no such or any other agreement was reached.

Virks, advisor of the Land Management Department of the Land Board, explained that the owner was offered all legal alternatives, i.e. financial compensation and also replacement property. As no agreement was reached, the Land Board announced the expropriation of sections of land belonging to AmEst in the summer of 2020, paying 6,200 and 3,200 euros for the two sections, plus 134 euros for administrative costs.

According to Visnu, the Acquisition of Immovables in Public Interest Act (KAHOS) stipulated as almost the first thing that expropriation must be immediate and fair. He adds a little wearily that in case of expropriation, it will eventually go as the state wants. “I am talking about my life's work here. I have raised money to buy this property. I have drained it, I have planted trees... However, the state, not appreciating the prospects related to the land, offers me a price which in no way allows for purchasing an equivalent land plot. I feel that in this case the state does what it wants.”

Nothing helps but to go to court. The first instance proceedings lasted almost two years and Visnu did not get justice there. “The court said that we are malicious and do not want to agree to anything,” he states. In fact, the first instance court cast a shadow on the Land Board as well, questioning the correctness of the assessor's actions. Both parties have appealed the decision to the district court.

New or old home?

When asked why the other owners of the land plots remaining on the railway route have not protested, Visnu replied that he actually tried to gather a group of interested parties, but... "The general attitude is that who bothers to argue with the state. You can't win anyway."

At the beginning of September, landowner Toomas Tammsalu also started arguing with the state; he believes that the Land Board offered less money for his home in Rae municipality than it is worth. The court partially satisfied Tammsalu's complaint: now the Land Board must make a new assessment of the plot and pay compensation over 80,000 euros. The Land Board and the Ministry of Economy and Communications, which made the expropriation decision, were also ordered to pay thousands of euros in procedural costs.

"I have worked a lot with this house," Tammsalu told the court. “There is ground heating, floor heating. There are no old walls, electrical wires or pipes left. This is essentially a new house.”

However, the representative of the state had no words of praise in the courtroom: "The interior finishing was done six years ago; the outside of the house has not been renovated. The building has no forced ventilation, it is architecturally outdated. Aspects of interior planning are also outdated,” he claimed.

That Tammsalu’s land plot with the house and auxiliary buildings on the route of Rail Baltic will be expropriated, the Land Board informed him last summer. The Board invited an expert from Lahe Kinnisvara to evaluate his real estate, who estimated the total amount at 341,000 euros. In order not to waste time in court and to avoid disputes, the state offers landowners an additional 20 percent incentive fee in such cases.

Tammsalu found that the selected appraiser was not competent and the method was wrong: the state should also have included the cost of building the house in the compensation.

The Land Board ordered a new assessment from Lahe Kinnisvara, the errors were corrected and 30,000 euros were added to the value of Tammsalu’s properties. Even this did not satisfy the owner and the state made a decision to expropriate. Tammsalu went to court.

At the autumn hearing, the representative of the state emphasized that the average price of real estate in the same area is around 200,000 euros, indicating that the amount offered even exceeds expectations.

However, Tammsalu had also ordered the opinions of other experts, one of whom estimated the value of the property as high as 500,000 euros.

The cost figures of the experts ordered by the land owner seemed utopian to the Land Board: "There is a very old shed on the plot. According to one expert, it is worth 6,000 euros,” said the state's representative and added that a new shed could be found significantly cheaper by browsing online stores.

The state's complaint was simple: more than 400,000 euros had already been paid, and with a friendly agreement, Tammsalu would have benefited from that. “Instead of the price of the old building, he claimed the highest price, according to the most expensive construction budget. Even the money of the European Union is not endless," the state's lawyer commented on the owner's demands in court.

The same house was for rent on real estate portals some time ago. The owner of the property, Tammsalu, admitted that he wanted to sell the house, but could not: “I am like a hostage.”

He accused the state that the Land Board has inappropriately used its superior position: “You have never once asked me what my wishes are.” During 350 days, according to him, his claims were never accepted in the Land Board.

The court found that there were deficiencies in the construction budget and expert report used in the assessment, which were not identified or eliminated in the administrative procedure. In the court's opinion, the error could have been avoided if the state had considered the expert assessment commissioned by Tammsalu more thoroughly and tried to understand why the assessments of the state and the landowner were so different.

“Even though the economical use of public funds is an important public interest, the acquisition and expropriation of real estate must be based on the objective stated in the law to compensate the owner of the real estate for the damage," the court found, canceling the minister's directive on compensation. The court emphasized that it is up to the state to assess the correct value of the real estate to be transferred, and the judge will not do it for them. It is up to the Land Board to decide whether it will use the previous expert assessment as a basis or a new one, but a new assessment must be made for the property according to the court ruling.

Commenting on the decision, Virks from the Land Board said that there is no need to change the current assessment practice, because the court gave the right to the ministry and the Land Board in a fundamental matter: the owner of the property need not and should not receive compensation for the old house equal to the construction cost of a new house. At the same time, Virks admitted that KAHOS is a relatively new law and conducting evaluations within its framework is also new for evaluators. "That's why court decisions in KAHOS matters are helpful in developing practice," said Virks, according to whom the ministry is analyzing the decision and considering an appeal.

The lawyer loading his guns

The company Titan Engineering, which owned valuable real estate in Rae municipality, is also trying its luck in a court case with the state. Aivar Pilv, the barrister representing the company, said that the procedure has lasted more than two years and has only now reached the substantive discussion in the administrative court.

The Land Board informed Titan Engineering in July 2020 about the procedure for acquiring the real estate in public interest and submitted an offer in September of the same year. According to the owner, this did not correspond to the real value of the property because it did not take into account the potentially lost income from the right to build two residences. In November 2021, the ministry issued a directive for the expropriation of the real estate, which the owner appealed to the administrative court in December of the same year. However, the first court session was not scheduled until this autumn.

"Unfortunately, it must be noted that administrative court proceedings are the slowest type of proceedings, and the deadlines set for the actual review of the matter have been continuously extended over the years. Therefore, it takes unreasonably long time to reach legal clarity and an enforced court ruling in such disputes," said Pilv.

Finally, when asked how receptive or understanding the state, or the Land Board, has been in considering people's private and business interests, Pilv replied: "The attitude is extremely state-centered and considers the owner's interests as narrowly as possible."

According to the well-known barrister, in order to improve the situation, it would be reasonable to carry out a comprehensive analysis of the current practice of implementing the law, which would map out the problems. "On the basis of the latter, it would be reasonable to assess whether KAHOS needs additional and more precise regulation to ensure the comprehensive consideration of the rights of the real estate owner. Currently, it is clearly aimed at the protection of the state's or so-called public interests, that is, at the lowest possible level of the state's financial obligations," said Pilv.