Compulsory Purchase, Compensation and Public Sector Valuation
This domain tests the statutory basis for taking land, the heads of compensation and the correct valuation approach.
Statutory basis
Under the Land Use Act 1978 the Governor may revoke a right of occupancy for overriding public interest under section 28, on notice. Section 29 provides compensation. In practice compensation is assessed for unexhausted improvements (buildings, works, crops), disturbance and resettlement costs; the statutory scheme famously gives little or nothing for the bare value of land, a recurring policy criticism. Federal acquisitions rely on the Act plus project-specific enabling laws.
Heads of claim
Replacement cost of improvements less depreciation for age, wear and obsolescence; crops at prescribed rates; disturbance (removal, transport, temporary accommodation, loss of business); severance and injurious affection where part only is taken; betterment set off where applicable. The valuation date is the date of revocation, and the report must identify the interest held.
Worked example
Two hectares are revoked, containing a 400 m2 bungalow and crops. Replacement cost N40m; depreciation 20% gives N32m. Crops N1.5m. Disturbance at 10% of the building value gives N3.2m. Total compensation N36.7m. The land itself is not valued at open-market freehold because no freehold exists; explain this in the report rather than importing a comparison approach.
Traps
Valuing a fee simple that no longer exists; compensating items the claimant does not own; ignoring depreciation or obsolescence; omitting disturbance and severance; failing to state the valuation date and the statutory power relied on.