Are you unsure what ‘just terms’ means if the government is taking your property?

Simply put, it means you should be paid fairly for everything the compulsory acquisition costs you, not just for the land. The Constitution calls this the acquisition of property on just terms. Here’s what that includes and how to check if your offer is fair.

Key takeaways

• The Constitution's promise applies to the Commonwealth, not the states.
• If a state or council is acquiring your land, your state's Act sets your rights.
• Compensation has separate parts, and each part can add to your total.
• A good offer shows how each part was worked out.

Where 'just terms' comes from

Section 51(xxxi) of the Constitution allows the Commonwealth to acquire property, but only on ‘just terms’. This means the federal government cannot take your property and pay any amount it chooses.

This promise only applies to the Commonwealth, not the states. In most cases, a state agency or council takes land for things like roads, rail lines, or schools, so your rights depend on your state’s law.

What you can actually claim

The Constitution does not set a specific amount for ‘just’. Instead, the law lists what you can claim. The Commonwealth’s Lands Acquisition Act 1989 is a good example, and the Department of Finance explains the types of compensation the Act covers to meet just terms. This applies whether the Commonwealth buys your land by agreement or takes it compulsorily.

The main parts are:

• Market value: the price a buyer and seller, neither under pressure, would agree on
• Special value: extra financial benefits that come from owning that particular land
• Severance: the drop in value of your remaining land when only part is taken
• Disturbance: losses and costs the acquisition directly causes you
• Solatium: a lump sum where the land includes your home
• Professional costs: reasonable legal and valuation fees

For example, if a road widening project takes a strip from the front of your property and blocks your driveway, you would be paid for the strip itself (market value), for any loss in value to the rest of your land (severance), and for extra costs caused by the project (disturbance).

This is why you should look closely at any single figure in an offer letter. Market value is just the beginning, and fair compensation can include much more than what your property would sell for.

Getting the right advice on your compensation

When you receive an offer, ask for a written breakdown and check for three things:

• A market value figure backed by a proper valuation
• An allowance for severance, if only part of your land is being taken
• Your disturbance and professional costs

If the offer doesn’t explain how they calculated your compensation, ask for a breakdown. A specialist compulsory acquisition lawyer and an independent valuer can review the offer, assess your entitlements and identify anything that may have been overlooked.

In many cases, the acquiring authority may cover reasonable legal and valuation costs, depending on the applicable legislation and circumstances. It’s worth checking what costs you can recover before ruling out specialist advice.