LAND LAW

LAND LAW Compiled presentation Mekelle University 2016

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Understanding property What is property?Different people conceive property in different ways.Lay persons (non lawyers) understand it as a thing such as car, land, or money.Lawyers, however, understand it as an interest in the thing.It is not the house that matters, rather the legally recognized interest or right to own, possess, use, lease, sale etc of the thing. property law is about the legally recognized relationships we have with each other in respect of things.

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It is not, as many believe, a relationship between people and thingsEg. it governs the relationship between a lessee and a lessor; not between the land/house and the owner.Property in its noun form refers to the thing, object of property lawThe thing (object) may be corporeal (tangible) or incorporeal (intangible)Incorporeal properties are associated with intellectual properties, such as copyrightsProperty may also be divided as movable and immovable.According to art. 1130 of the Ethiopian civil code, land and building are deemed immovable

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Property as bundle of rightsModern property lawyers understand property as a bundle of rights like a bundle of sticksAll the sticks may be held by one person or different peopleSticks out of the bundle can be acquired in different ways and held for different periodsThe ownership of the land is not itself as one of the sticks; it must be considered as a vessel or container for the sticks for the bundle.The owners of the container (land) has the right to give out different sticks to different people.See art. 1204 of the civil code Ownership is the widest right that may be had on a corporeal thing.

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Rights in ownership of land According to Honore, in a mature legal system an owner would typically have the following rightsPossession (physical control) Use and enjoyment Right to manage the thing (manage the use of)The right to the income (fruit of a tree, offspring of an animal, rent of land, profit from investment on land)The right of transmissibility of the above rights (this is right one is provided to transfer rights not the land itself)The right to transfer the land itself (inherit, sale)The right to do away (destroy a house), but it is limited for public safety and health reasonsThe right to exclude others (ownership is a right claimed against the world, no one is allowed to interfere in ones ownership right)

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Ownership as complete bundleOwnership Bare ownership

UseLeaseInheritDonateSaleMortgageLeaseMortgageDonateSaleInheritUseSale

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Continued mortgage, donation, or another means of transfer. The complete bundle of rights includes the following: -the right to sale an interest -the right to lease an interest -the right to mortgage an interest -the right to give away an interest - the right to do none of the above things

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Real property, Real estate, Immovable*Property law, in systems derived from English common law, is divided into personal and real property. Real property concerns itself with rights in rem, or relating to land. Personal property concerns itself with rights in personam, or relating to chattels. In the Civil law system, there is a division between movable and immovable property. Movable property roughly corresponds to personal property, while immovable property corresponds to real estate or real property, and the associated rights and obligations thereon.

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*What terminology do we use in Ethiopia? How do you understand land? Read art. 1126 cum. 1130

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Types of land ownershipThere are four types of property regimes found around the world:Private ownershipCommunal ownershipState ownershipOpen access You must note that there is no complete consensus on what constitutes to each system(what property belongs to which regime) Eg. While in some countries forest and lakes belonged to the state, in others they may be held privately or communally 5/27/2016LAND LAW10

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Open access (ownerless property)There are some things in respect of which no one has property rights. each of us has a privilege to use such things , and the rest of the world has no right to limit usTo put it in terms of exclusion, none of us have the right to exclude others from such things, nor do we ourselves have the right not to be excluded from use. Every person has a free access to use or exploit such things.The assumption is that either they are not highly valued , or abundant not exhaustible (air and sunlight)More eg. Waking paths, parks, radio/TV wavesIs it possible for ETV to force us to subscribe? Or should it limit its services by putting codes etc? 5/27/2016LAND LAW11

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In Hunter v. Canary Wharf [1997] AC 655, is a case in which the House of Lords decided that terrestrial television signals come within this category. It was held that, although everyone has a privilege to receive them, no one has a right to do so. Consequently, residents in the Isle of Dogs were held not to be entitled to complain when Canary Wharf Ltd built Canary Wharf Tower which, because of its size and construction, interfered with their television reception by preventing television signals reaching buildings which fell within its electromagnetic shadow5/27/2016LAND LAW12

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Communal propertyThe defining characteristic of communal property is that every member of the community has the right not to be excluded from the resource.In a more closed community, access is allowed only to members (eg. Grazing pasture in a village)An individual who is a member of the community therefore has not only a privilege to use the thing, but also a right not to be excluded from it.The difference between open access and communal property is that in the first case a person may not claim a use as a matter of right, while he may do in the second case.The similarity is that in both cases no body can exclude the person from using the resource.

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Communal ownership of land refers to such property of land commonly owned by a community of a certain village or locality. Grazing land, fishery, forest, irrigation system Proc. 456/2005 defines it as "communal holding" means rural land which is given by the government to local residents for common grazing, forestry and other social services. Art. 2 (12)

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State propertyA property completely owned by the state and when the state is able to use by itself or allocate its use to others.Although it is individuals who may use the property, the state has the ultimate power of management.Land neither owned by private individuals nor by the community.In most countries, mountains, public highways, public halls, parks, trans-boundary rivers and forest lands, lakes, etc are owned and administered by the state. Article 2(13), of Proc. 456/2005 considers forestlands, wild life protected areas, state farms, mining lands, lakes, rivers and other rural lands, as state holding lands.

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Private ownershipOwnership right vested in the individual personProvides rights of use, exchange, abuse, and exclude others from using it. (use, rent/lease, mortgage, inherit, donate, sale, exchange)Widest right 1204(1) of Civil codeMany countries recognized it, and others prohibited it (former USSR), African countriesIn Ethiopia, land belongs to the state and the Ethiopian people. No private ownership of land. Read Art. 40(3) of FDRE constitution.As a segment of private ownership, joint ownership (such as condominium) and common ownership within a family can also be categorized here.

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ImportanceProperty is about access and control of material resource.Property is considered as one of the essential element in human life throughout history.In Greek a person who lost his land, he lost his citizenship The Romans considered property as some thing sacred and absoluteProtection of private property was of utmost importance to the people of England who penned the Magna Carta in 1215National Assembly of French Revolution the end in view of every political association is the preservation of the natural and inviolable rights of man. These rights are life, liberty, property, security and resistance to opposition5/27/2016LAND LAW17

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LockeJohn Locke in his Second Treatise of Civil Government declares the existence of private property before the creation of states and puts it as one inviolable right like life & liberty. (Life, liberty, and property)

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The Founding Fathers of the United States who drafted the Declaration of Independence and the Constitution also gave emphasizes to property.Property must be secured, or liberty cannot exist John Adams proclaimed in 1790, One great object of Government is personal protection and the security of Property. Alexander Hamilton

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Scores of constitutions around the world include it as one fundamental right.Art. 40 of the FDRE constitution as well guarantees the right to private property.

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Justification for propertyThere are different justifications for emergence of property rightsOne justification for the genesis or creation of property rights is an economic justification.Assume in the beginning (non propertied society) the resource was used by all. What will happen?Assume resource is always scarce, demand exceeds supply.Four consequences shall followPeople will compete for control and conflict will ensue Some resources will be over exploited and exhausted (fish, pasture)Premature exploitation of resources before their full potential eg. TimberResources which could be more valuable by applying more investment and skill will be under exploited Economists regard the institution of property as a means of solving these problems caused by scarcity of resources.5/27/2016LAND LAW21

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Most of the above problems are solved by privatizing land. The first one may be solved by any type of property system.Consider Hardins The Tragedy of Commons. His basic thesis is that resources that he refers to as commons will inevitably become exhausted once scarce, and that the only way of averting this tragedy is by making the resource the subject of private ownership or state ownership.He gives two examples, a pasture and pollution

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In a pasture open to all, He argues that each herdsman pasturing animals on the field has an incentive to increase the number of animals he puts on the pasture, because he will obtain 100 per cent of the benefit of each additional animal but will bear only a fraction of the cost of the negative effects of doing so.Since this is true for all herdsmen, he argues, the pasture will inevitably be overgrazed and then exhausted. His second example is pollution, and as he points out the problem is essentially the same as the pasture problem, even though in the case of pollution the problem is putting something (the pollutant) into the commons (i.e. the atmosphere, or a water supply) rather than taking something out.

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The solution for Hardin is privatizing.But the problem is why only privatizing? Other forms of property systems, eg. Communal or state property may also avert the problem.

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Aristotle says that individuals are likely to care more for what is their ownEconomic-Harold DemsetzAccording to Harold Demsetz, the primary function of property rights is that of guiding incentives to achieve a greater internalization of externalities.(If benefit exceeds cost of doing)Demsetz argues that, if land and resources are communally owned, i.e. each member having the unlimited right to appropriate for himself, then resources will be depleted too quickly. Each person who tries to maximize the value of his own right will be able to pass some of the costs on to others. In this situation, the richness of the land and resources will be depleted too quickly to maximize economic return.No one is incentivized to save/increase natural resourceUnless the benefits exceed the costs of his action by a huge amount, he is unlikely to find conservation personally advantageous.

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Private ownership of land can prevent too quick depletion according to Demsetzs argument:He argues that private ownership of land and resources facilitates a more rational use of land and resources, specifically by preventing a too rapid depletion, and that private ownership reduces the costs of internalizing externalities.

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Theories of Property Rights and Justifications for and Against Private Ownership of Property

Occupation Theory

Labour TheoryA favorite of the Americans, advocated by John LockeLocke argued that an original is one who mixes his/her labor with a thing and by commingling that labor with the thing, establishes ownership of it.God gave the earth and the beasts and fruits thereon to the common use of all man kind. But as no one enjoys either the soil or that which it produces unless he be owner, individuals must be allowed the use, to the exclusion of all others.5/27/2016LAND LAW28

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How?Everyone has an exclusive right over his own person. The labour of his body and the work of his hands therefore are likewise his property.

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LabourIf one mixes his labor to the common property, private property can be created.Hence, if one gathers fruits from a tree, kills a deer in the jungle, or catches a fish from the riverIf one digs and treats the ground and fences and grows things, the ground becomes his.Labour creates value

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DilemmasIt seems that the material produced far exceeds the remuneration of such labour.This line of thinking makes Marx to make the laborers finally the owners of the means of production (land) If labour were the only legitimate source of property, it would follow that a society, in which so many labourers live in poverty and so many idlers in opulence, is contrary to all right and a violation of the true foundation of property.If labour is the source of property, why should the Institutes and the Code civil have said nothing of it? It seems to be against institutional arrangements of modern world5/27/2016LAND LAW31

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It is difficult to assert the existence of ownership in labour without defining it firstIts scope is undefined. Robert Nozick, once said if I mix a can of tomato in to a sea, does it mean I own the sea?

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Social ContractThis theory says property right is the result of social consent (agreement)Through social contract individuals pass over their absolute right to the state.The right of property, and, generally speaking, every right must spring from public authority. Bossuet As men have renounced their natural independence to live under political laws, they have also renounced the natural community of goods to live under civil laws. . Montesquieu Property is founded in the physical power manifested in seizing the object of property /occupation/. In order, however, to convert the fact of physical power into a right, the sanction of the state is necessary. Pufendorf 5/27/2016LAND LAW33

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Social contractBentham says Property and Law are born together, and die together. Before laws were made there was no property; take away the laws, and property ceases.The state determines and defines the scope of ownership and it also provides protection

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Utilitarianism Under the traditional utilitarian theory, property exists to maximize the overall happiness or utility of all citizens. Accordingly, property rights exist because they provide greater happiness to the majority of the societyThis is the dominant theory underlying American property law. but still suffers a lot of criticismA utilitarian concerned about maximizing happiness to the general public cares little about the distribution of wealth.Utilitarianism doesnt care about the sufferings of the minority and thereby leaves out justice and equity in property distribution. 5/27/2016LAND LAW35

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Anti private property theoriesMarx took this theory to its final conclusion.Marx is not the only one to have warned of problems in private property rightsHenry Gorge, Plato, Pierre-Joseph Proudhon, Jean Jacques Rousseau, and many early Christian philosophers also cautioned of property.

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Proudhon has claimed that private property is tantamount to theft, because the acquisition of property in modern capitalist societies increasingly confers power and authority. Private property, it has been argued, inevitably creates a growing inequality of wealth which is morally unjustifiable and leads to social instability. Private property, it also has been urged, undermines good moral character. Recent scholars have argued that what some see as the advantages of private property can be disadvantages to others.

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Marx and Engels denounced private property of capitalism as it destroys social equality. Their manefeto declares the theory of the communist may be summed up in a single sentence: abolition of private property.From each according to his ability, to each according to his need.5/27/2016LAND LAW38

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Aristotle in ancient days showed the failure of such theory. Those who do more and get less recompenses will be bound raise complaints against those who get a large recompenses and do little work.Lack of great in efficiency, motivation and corruption were the characteristics of the communist world that denies Pvt ownership.5/27/2016LAND LAW39

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The Arc foe of MarxPROPERTY RIGHTS: The right to life is the source of all rightsand the right to property is their only implementation. Without property rights, no other rights are possible. Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. The man who produces while others dispose of his product is a slave.Ayn Rand, The Virtue of Selfishness5/27/2016LAND LAW40

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The Scope of the object of Right to Land Cujus est solum, ejus est usque ad coelumHe who is proprietor of land is proprietor also of every thing on it. All buildings, all natural fruits, and everything above as well as below the surface, belong to the owner of the land. This Latin maxim was also reaffirmed by the English judge Lord Coke when he said cujus est solum ejus est usque ad coelum ad inferno, the owner of the surface of the real estate has property rights in the air above the surface and in soil below.

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Landincludes not only the ground, or soil, but everything that is attached to the earth (trees and herbage, or houses and other buildings.) It includes not only the surface of the earth but every thing under it and over it. Thus in legal theory, the surface of the earth is just a part of an inverted pyramid having its tip, at the center of the earth, extending outward through the surface at the boundary lines of the tract, and continuing on upward to the heavens.5/27/2016LAND LAW42

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In EthiopiaIn Ethiopia, the extent of ownership of land is regulated by the civil code.Read articles 1207-1211

Assignment one explain the scope of land rights according to the civil code of Ethiopia and the FDRE constitution?

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Special Features of Land Land is neither produced; nor is it reproducibleLand is permanent and recyclable Land supply is fixed Land is immobile in space Land price serves as a guide and determines the character of capital

Chapter Two History of Tenure System in EthiopiaTenure refers to the land ownership and holding system.Three broad areas:Pre 1974Post 1974Present system5/27/2016LAND LAW45

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Land Rights in EthiopiaProperty rights are the social institutions that define or delimit the range of privileges granted to individuals to specific assets, such as parcels of land or water. (Gary D. Libecap 1989, p.1)LandProperty RightsUseInheritanceMortgageSaleLeaseDonate

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From land tenure perspective we witnessed three types of systemsImperial Era (Pre 1974 era)The Derg era (1975-1991)Current system

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Pre 1975 tenure system- NorthStarting from time immemorial land was controlled by the king.All lands annexed as a result of expansion of territories went to the kingLand collected in this way had been distributed to individuals, church and partly held by the state itself. Concerning the classification of the nature of the tenure systems there are two schools of thoughts.

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Classification of tenuresRist vs. Gultprivate (rist), church (gult), governmentRist right confers use right over the land.Rist holders had all rights except sale.Original Rist right may be created as a result of imperial grant or clearance of forest by the original father.It is inheritable to children irrespective of sex or birth order.

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GultGult right is not as such use right.Gult right (like fief right) provides rights of administration, adjudication, and tribute collection over rist holders who settled on the landThis right is acquired by the nobility/aristocracy through imperial grant. Some how it was like public office and needed appointment.Since it was temporary right (may also be life time for some), it was neither inheritable nor alienable.Acc. To Hoben, a single estate of gult land, comprising perhaps one or two square miles, often included within its boundaries strip-fields, held as rist by scores (50-150) of farmers.

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Gult Right(3-4 sq.miles)RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRISt

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Inheritance and rist H&W

H&W

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Rights and Obligations of rist owners and gult holdersRist Holder Peasants Land tax- tribute(1/3) and tithe (1/10) of total produceIn the old days peasants were also required to provide manual service to the nobility and the church (grinding, fencing, farming, collecting firewood) which claimed 1/3rd of peasants timeConcerning decision of production the peasant had full right.His right was relatively secured with little interference either from the immediate gult holder or even the emperor.

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Gult holderThe Gult holder after being granted the office he acted as chief tax collector, judge, and administrator.For his service he shall: retain part of the tax for himself. uses the court fees and fines he collected in his capacity as a judge. own land as rist to be cultivated by the peasants

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From anonymous writer (1910)The gult-holder, assisted by the local official, fixes the proportion of the state due which each parish must pay; he also acts as a court of appeal in civil and criminal matters from judgments of the local official; he is responsible for peace and order in his gult and is, of course, the military chief of the district. In return for this he (a) has his land cultivated free of charge by the ristenyatat (rist holders); (b) receives all of the fines which he may impose in his judicial capacity; keeps a part, generally one-tenth, of the tribute collected by him; and (c) receives certain presents, example a sheep from each parish at Easter.

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Second classificationprivate, church, and governmentLand acquired by King (Common to State ownership)

Private rist landChurch LandGovernment landHeirs

Land to be distributed among the clergy (samon land)Land distributed in lieu of salary and pensions (maderia and ginde bel)

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Southern EthiopiaEmperor Menelik II annexed the southern part of Ethiopia (1875-1889)Previously all land was held customarily as commonThen most of the land was confiscated by emperors forces and distributed to soldiers, church, local gentries, and to imperial familiesLocal people were left landless Land became private

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Southern.This condition of landlessness of the southern people continued until the mid 1960s.Local people were given the name gabbar (paradoxically means tax payer) and served northern land owners.After second world war government continued to transfer land to investors, northern settlers, patriots of war .Among 4 million ha (after 1940s) few thousands reached to the gabbars (Bahru Zewde)When most land owners sold their land, the gabbars (tenants) remained jobless.The office of Gult was weakened because of establishments of modern courts, tax collection systems, civil and military bureaucracy.

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Additional land taxes however exacerbated burdens of peasantsResistance to land reform from northern peasants, MP, government officialsGovernment couldnt make meaningful land reform and finally it became a reason for its downfall (under the slogan Land to the Tiller.

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Derg Era- Rural LandAfter the demise of the imperial power, a military junta (a.k.a. Derg) came to power.The Derg immediately passed two land related proclamations which fundamentally changed the age old tenure systemProclamation 31 of 1975 nationalized all rural land and transferred it to state ownershipLand was redistributed in the country and landless tenants got their own land. No compensation for land confiscation It gave only use right.It specifically prohibited sale, donation, mortgage, lease/rent or inheritance of land (except inheritance to minor children and widow) (see art.5)

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Effects of land reformThe Derg had enjoyed popular support from the peasantry of the south.On the other hand northern peasants (rist owners) and big land owners from across the country opposed the lawBecause 1, it reduces the previous holdings; 2. restricts the land rights as mentioned aboveStudent led opposition movements instantly wage war over the Derg.Generally speaking, the land distribution was successful at that time but later erroneous policies prevented the peasant from enjoying it. (villagization, resettlement, grain requisition) The Land to the Tiller question that brought the Derg to power was paradoxically sabotaged by the Derg itself. The government ended up as owner rather than the peasant. Finally peasant supported armed resistance brought down the Derg from power in 1991.

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Additional contentsCompare art. 3(1) of proc 31/1975All rural land shall be the collective property of the Ethiopian people With the PDRE constitution art. 13

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The Ministry of Land Reform and Administration, of Haile Selassie, proposed for all individually owned lands above 20 hectares to be distributed.The Derg used this notion and limited the maximum limit to 10 hectares (art. 4(3)It gives only use right and the right to inherit to spouse, minor children or those attaining majorityNo sale, exchange, succession (by will), mortgage, lease and so on.

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Tenants were given right to hold the land they tilled until land distribution to be carried outLarge scale agri. Was distributed, or held by cooperatives or run by the statePeasant association with the sole objective of land distribution (art.10) were established in an area that covers 800 hectares5/27/2016LAND LAW64

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Derg--Urban LandThe Derg also enacted in the same year Proclamation 47/1975, which nationalized all urban land and extra rentable housesAll urban land was transferred to state ownership (art. 3.1) and homeless people were allocated with 500 m2 land to build one (art.5)No compensation was paid for the loss of land (art. 3.3)All extra urban houses (houses other than dwelling houses) were also nationalized (see art 11 cum. 13)Urban land was not subject to sale, mortgage, donation, inheritance, and lease (art. 4.1)Government became sole owner of land and collector of rent (see detail under art. 20)The effect was that shortage of housing in major cities (private construction of houses for rental purposes was shrunken)

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No compensation was paid for nationalized land.The proc allows for payment of compensation for loss of houses (art.18)_ yet no evidence for payment of compensationHowever, government had been paying 250 birr for those land lords who had no other income other than the rent they used to collect (21.2)

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The Current systemAfter assuming power, in 1991, the current government passed a constitution in 1995.The much anticipated constitution once again maintained state ownership of land in Ethiopia.The right to ownership of rural and urban land, as well as of all natural resources, is exclusively vested in the State and in the peoples of Ethiopia. Land is a common property of the Nations, Nationalities and Peoples of Ethiopia and shall not be subject to sale or to other means of exchange. [Art. 40 (3)]The justification for state ownership of land in Ethiopia is based on two grounds: social equity and tenure security.

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To ensure equity the constitution guarantees every person who wishes to engage in agriculture to get plot of land free of charge. Peasants have been given more liberated rights of use, lease/rent, donation, and inheritance of land. Government restricts the sole power of selling land and mortgage. In this way, gov. argues, tenure security will be guaranteed (by prohibiting sale)- the fear is that farmers may sell land during periods of hardship.

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Proclamation 456/2005In order to implement this constitutional right different land related legislations have been enacted by the Federal and Regional governments.Rural Land Administration and Use proclamation 456/2005Urban Lands Lease holding proclamation 272/2002 (replaced with proc. 721/2011) Expropriation Proclamation 455/2005, Reg. 135/2007Regional Rural land Use and Administration proclamations (legislations enacted based on the Federal Rural land and expropriation proclamations)Regional urban land leasehold proclamation (based on the Federal leasehold and expropriation proclamations)

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Rural landProclamation 456/2005 provides a holding right to rural farmers.Holding right is a life time right that includes rights of use, lease (rent), donation and inheritance.Every able body (18 years) has the right to get rural land/pasture free of charge from government (art. 5.1) or from family (5.2)Rural land may also be given to urban investors. This lease right may be mortgaged.

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Nature of land rightThe right given is known as holding right.Acc. To art.2.4, holding right includes rights of use, lease, bequeath to family members and other lawful heirs, and to own the fruit (produce) thereof. Is this right ownership? Possession? Usufruct? Holding right is transferable except sale (art.8). What about exchange? Holding right has no time limit (art. 7.1) Holding right is guaranteed (from eviction and distribution) and certified (art.6)No distribution without consent (art.9.3)Loss of holding right (by expropriation) is compensable (art.7.2 of 456/2005 cum art. 8 of proc.455/2005)

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Transferability: lease and rent Rural land holding may be transferred to others by way of rent (farmer-farmer), lease (farmer-investor), donate, or inheritSuch provision is included in regional rural land lawsFarmers are able to lease or rent land from their holding size sufficient for the intended development in a manner that shall not displace them, for a period of time to be determined by rural land administration laws of regions (art.8.1)Two restrictions: all the holding may not be rent out; and transfer for definite period.The proc uses the word lease only5/27/2016LAND LAW72

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leaseWhat kind of land is that mentioned under art. 8.4, land to be mortgaged? Could it be land rented from farmers?In any case, leased land may be given as a security to loan (mortgage) Regional governments have different lease, rental period and amount to be rent/lease out

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Donation and inheritanceThe proc generally allows transfer of land rights to family members through inheritance or donation(5.2 cum 2.4).Bequeath (donation or inheritance) is possible to family member or other legal heir.Who is a family member? Why is it different from the RFC?The details are different in regional rural land laws.The restriction is that the beneficiaries must engage in agriculture and live in the area. (art. 2.5, 5.2 and regional laws) 5/27/2016LAND LAW74

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Highlights of restriction on rights

Lease/rent (limited by time and size by regional rural land lawsRenting not more than 50% of land sizeRenting for not more than 5, 10 etc yearsTo get farm land one:Must be above 18 years (there are exceptions)Must be a permanent resident (acc. To regional laws)Must have intention to engage in the agricultural profession Inheritance and donation to people outside family is restrictedInheritance to children who are engaged in non-farming activities is prohibited

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Rural Land rights in comparison in EthiopiaTxnFederal456/2005Tigray136/2006Amhara133/2006Oromia130/2007SNNPRS110/2007BG85/2010RentFarmer farmerAmount not specified50% of land 3 yrs traditio20 yrs modernNon specificamount25 years (18 proc)50%3 years tradition15 modern50%5 yrs fmr-fm10, 25 yrs farm-investo50% of holding2 yrs traditiona10 yrs modernLeaseGov-invstrAmount not specified50 yrs for Agri investment25 years (Art.12.5 regulation) No mentionNo mention40 years subject to renewal every 5yrMortgage lease right AllowedAllowed (16)Allowed (19)Allowed (15.15)AllowedAllowedDonationFamily member-To any farmer-(art.17)To family membersTo family membersTo any person (art 18)InheritanceFamily membersChildrenParentsDependants(With no land)To any farmer by willMinor childrenChildren no landChildren landParents To family members (includes dependants)To family membersTo any farmer by willMinor childrenChildren no landChildren landParents

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Two arguments (pro and against state ownership land)The argument forwarded by the ruling party for the continuation of land as public/state property rests solely on the issue of security. In particular, it has been said that private ownership of rural land would lead to massive eviction or migration of the farming population, as poor farmers are forced to sell their plots to unscrupulous urban speculators, particularly during periods of hardship. Some studies conducted by the Ethiopian Economic Association (EEA) and by the World Bank contradict this hypothesisDuring hard ship peasants prefer to rent instead of selling it5/27/2016LAND LAW77

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Critics of the land policy Critics of the land policy generally said that the land policy:promotes insecurity of tenure because it allows, among other things, periodic redistribution; is inefficient because it constrains land transactions and has inhibited the emergence of a dynamic land market, promotes fragmentation of land and growing pressure on land resources because it discourages rural people from leaving their farms for other employment opportunities; gives the state immense power over the farming population because land is state property.

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A separate observationsThe fear of both the government and the critics are somehow unwarranted.There has not been hard evidence which support government claim of peasants land sale during periods of hardship. On the other hand there is neither hard evidence that shows state ownership of land causes tenure insecurity or less productivityRecent studies show rather farmers feel secure on their holding irrespective of the fact that they are not the owners.The Current land registration and certification process also adds their confidence.Privatization before finalization of land registration may create a chaos and widespread and conflict.

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.Federal Democratic Republic of Ethiopia Land PolicyConstitution - Article 40 The right to ownership of rural and urban land, as well as of all natural resources, is exclusively vested in the State and in the peoples of Ethiopia. Land is a common property of the Nations, Nationalities and Peoples of Ethiopia and shall not be subject to sale or to other means of exchange

(4)Ethiopian peasants have right to obtain land without payment and the protection against eviction from their possession. The implementation of this provision shall be specified by law.

(5) Ethiopian pastoralists have the right to free land for grazing and cultivation as well as the right not to be displaced from their own lands. The implementation of this provision shall be specified by law.

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Federal Democratic Republic of Ethiopia Land PolicyConstitution - Article 40 Protection against eviction is provided in Federal Proclamation No. 455/2005. The problem is valuation & compensation practice.

No private ownership of land in Ethiopia is not a new phenomenonLand was communally owned in the northern part of the country rist tenure. No one could sell or transfer rist (communal) land(Tigray, Northern Wello, Begemider, Gojam & N. Shoa)And the rest of the country until the 1890s

Policy Issue land policy has become an inflexible policy instrument;One has to amend the constitution if one wants to change the policy very difficult if not impossible

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A nutshell of land rights in 3 periodsPeriodLand useN/SUseLeaseDonateInheritMortgageSaleEquity Imperial EraRuralNor??XSouXUrbanXDerg EraRuralXXX ()XXUrbanXXX ()XXCurrentSystemRuralXXUrban(?)XX()- No inheritance except to children and widow/er(?)- mortgage only lease right

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Chapter Three LEASEHOLD

Definition lease /lis/ noun; a written contract for letting or renting of a building, a piece of land or a piece of equipment for a period of time on payment of a fee.Verb; to let or rent offices, land or machinery for a period.Lease under the FDRE lease proclamation 721/2011 has been defined as a system of land tenure by which the right of use of urban land is acquired under a contract of a definite period"

Leasehold is one form of urban land tenure. In many countries it operates perfectly side by side with private ownership/freehold of land tenure. Many Western and African cities controlled city lands and transfer it to users through lease agreement. This creates among others sustainable income to the cities. In Ethiopia, lease holds as a mode of land holding was introduced in 1993. The law was changed twice since then.

4.3 4.3 Urban Land Lease 4.3.1 Scope Today, in Ethiopia, lease is the cardinal and exclusive land-holding system to transfer urban land to users in accordance with the master plans of each urban area. Hence, unlike the housing sector, urban land is governed by a special legislation, namely, Urban Lands Lease Holding Proclamation No. 721/2011. The scope of application of the law is to all urban centers with in Ethiopia with regard to urban land (Art. 3). And yet the civil code may be applied on matters which are not covered by the proclamation and as long as it is consistent with the proclamation.

Background, Justifications and Objectives Proc. 721/2011 Ten years after the adoption of Proclamation 272/2002, the Ethiopian government was reconsidering the revision and change of the lease proclamation on account of reasons. Accordingly, the FDRE parliament adopted a new lease proclamation in October 2011. The proclamation was one of the most contentious legislations ever proclaimed as it sparked intense public debates following its adoption, and public officials were forced to give explanations almost every day for more than three months without interruption.

The reasons offered by government officials for the revision of the existing lease proclamations are in effect reflected in what was later enshrined under Article 4 of the proclamation as Fundamental Principles of Lease: 4.1 The right to use of urban land by lease shall be permitted in order to realize the common interest and development of the people.4.2 The offer of lease tender and land delivery system shall adhere to the principles of transparency and accountability and thereby preventing corrupt practices and abuses to ensure impartiality in the process. 4.3 Tender shall reflect the prevailing transaction value of land. 4.4 The urban land delivery system shall give priority to the interests of the public and urban centers to ensure rapid urban development and equitable benefits of citizens and thereby ensure the sustainability of the country's development.

Advantages of LeaseholdRetain the publics share of land value increments for infrastructure investments.Facilitate urban development or redevelopmentManage urban growthReserve land for public purposes, such as government building and green areasStabilize land and housing prices and provide affordable housing to the populationProvide a transitional mechanism for raising public funds when an effective system of property taxation is not in placeFacilitate investment in property by foreign entities when a countrys constitution prohibits ownership of land by foreignersSpeed up transfer of property from public ownership to private usesEncourage investment

Lease periods Article 18 of Proclamation 721/2011 provides the following with regard to lease period. 18. Period of Lease 1/ The period of urban land lease shall vary depending on the level of urban development and sector of development activity or the type of service and shall have the ceiling of: a) in any urban center: (1) 99 years for residential housing, science and technology, research and study, government offices, charitable organizations, and religious institutions; (2) 15 years for urban agriculture; (3) as per agreement entered with the government for diplomatic missions and international organizations; b) in Addis Ababa: (1) 90 years for education, health, culture and sports; (2) 70 years for industry; (3) 60 years for commerce; (4) 60 years for others;

c) in other urban centers: (1) 99 years for education, health, culture and sports; (2) 80 years for industry; (3) 70 years for commerce; (4) 70 years for others.

2/ Notwithstanding the provisions of sub-article (1) of this Article: a) a lease period may be extended for period of time of not more than half of the specified ceiling for a development activity or service requiring an extended period of lease on account of its unique nature; b) a ceiling of five years of lease period shall be applicable to short-term economic and social activities intended to be carried out on urban lands not designated for immediate development use. Such lease period may be renewed for the same period of time where it is necessary.

Modalities of Land Acquisition1- Tender Previously there were five modalities of urban land acquisition: auction, negotiation, assignment, award, and lot. Now, however, since most of the modalities are categorized as bad practices that opened the door for corruption, the government argued, the law recognizes only tender (auction) and allotment (land lease transfer without auction) as the two basic means of lease transfer from government to citizens. Art7.22- AllotmentRefer to Art 2 (10) and Art 12 of proc.721/2011whether or not the beneficiaries under this list are required to pay lease bench mark price is not known.

Transfer of Lease Right1- Freedom to transferLike any other property right, lease right is also freely transferable. The new lease proclamation declares: a lessee may transfer his leasehold right or use it as collateral or capital contribution to the extent of the lease amount already paid (Art. 24.1). The phrase to the extent of lease amount already paid refers to the collateral and capital contribution, and partly, the sale of uncompleted constructions. Caution is necessary, though, in understanding its implication.In the previous Proclamation No. 272/2002, there was no limit or restriction to such right. Lessees who had been transferring either the lease right (bare land) or lease right with construction (complete or incomplete) on it were getting the full profit of the transfer without any restriction. Lots of urban speculators were said to be benefiting by capturing the full enhanced land value over the years, and even abused it and became rent collectors.

2- Barring repeated transferFirst, the proclamation prevents people who repeatedly transfer leasehold right, without completion of construction, in anticipation of speculative market benefit, from participation in a future bid (Art. 24.7).The proclamation does not tell as to how many times people are supposed to transfer unfinished property before they get banned. The FDRE Model Lease Regulation (Art. 43.1) however, provide a clue in this regard. According to the Regulations if the person transfers unfinished properties three times within three years, he may be barred from any future bidding in lease for two years.

3- Supervision of saleSecond, as per Article 24 (2) of the proclamation, If a lessee, with the exception of inheritance, wishes to transfer his leasehold right prior to commencement or half-completion of construction, he shall be required to follow transparent procedures of sale to be supervised by the appropriate body. Note that this requirement is not necessary for the sale and transfer of fully completed properties. The implication of this provision is understood only after reading the next sub article of this provision. The sub-article points out that since the seller of the lease will not be entitled to the full profit of unfinished construction, it is necessary to involve a government agent to assess the value of construction and current lease price.

5- Transfer of unfinished propertyThird, transferring only leasehold right (bare land) or leasehold right with only half-completed construction gives no benefit at all to sellers. Previously, completed or not, lease holders used to reap the full benefit of enhanced land value during transfer of the lease right. Now, however, as a strategy to encourage completion of construction, to avoid rent seeking activities, and to rather capture the benefit by the state the sale and transfer of half completed properties is not attractive. Half completed construction is defined under the proclamation (Art. 2.16)

What will happen if a lessee wants to transfer half completed construction or bare land? The first requirement, as we already saw above is to invite a municipal agent to oversee the sale process. According to the law, a lessee who wishes to transfer his leasehold rights before commencement of construction or half-completed constructions will get first, the effected lease payment including interest thereon, calculated at bank deposit rate; second, the value of the already executed construction; and third, 5% of the transfer lease value (Art. 24.3). This 5% relates to the difference between the lease purchase price paid and the sales price; in effect, it must be referred to the gain or profit made by the transfer.

So far as the first two conditions are concerned, there is no problem in understanding the amount of lease price paid (plus the bank based interest rate), and the amount of money expended for the construction made. The difficulty lies in understanding the third point: how do we determine the transfer lease value? Are the lessee and the new beneficiary (e.g. buyer) supposed to deal in the open? What is the role of the municipality agent at this point? Details, similar in content, are provided in the Model Lease Regulation.The model Regulation provides details as described below. As a matter of principle, it is the government, through the supervisor mentioned above, that can decide the amount of transfer value.The lease transfer value shall be the average value of the current/market tender value of the locality and the lease value by which transfer was made to the current lessee. The government supervisor will take the average price of current lease price of the area and the actual lease price for which the lessee got the land. In the absence of an offer by the buyer, this average value will be the binding transfer value.

On the other hand, if the construction is completed or becomes more than half, then there is no limitation as to the value of the sale price. Hence, the whole purpose behind limiting the right to the transfer of half-completed properties seems to encourage owners to complete construction and thereby solve the housing shortage.will this stop the connivance that might be made between buyers and sellers?

Assignment Assumption 1.Ms. A has bid 200 m2 of land from the city municipality for 4000 birr per square meter (total 800,000 birr). Out of it, assume that she has made a 10% advance payment of 80,000 birr as lease price. Lets further assume that she constructed a foundation at a cost of 40,000 birr. Her total cost at this point amounts to 120,000 birr. For some reason, now however, she wants to sell the property after one year. The bank interest is 5%Assumption 2.The current lease value of land in similar location is 5000 birr per square meter and that gives a total value of 1,000,000 birr.Now calculate how much the buyer will pay in total and how much would go to whom.

Individual Assignment Based on proclamation 721/2011 write your analysis of: Formation and Termination of Lease ContractMortgage of leasehold rightAlso explain the limitation of a lessee Fate of expiry

Mortgage of leasehold rightthe right to mortgage is limited to the extent of lease amount already paid(Art. 24.1). Under Article 24(4), the proclamation further introduces, as a fourth strategy.Lease right may be mortgaged to the extent of lease payment already made (that includes down payment and yearly installments.) If the lease right is without any construction on it, the mortgage value will be equal to lease payment already made, minus 7% penalty and unpaid yearly installments.

Assignment assume the lessee has got the land for a total of birr 1.2 million. He made a down payment of 10% (120,000 birr) and continued to pay for the next three years, an annual lease rent of 40,000 (total of 120,000) birr. So far the total lease price paid is birr 240,000. Suppose also that there is no construction activity made on the land. If he wants to mortgage the lease right, how much can he get?

CHAPTER SIX

REAL PROPERTY TRANSACTIONS

Sale/PurchaseLand is a common property of the nation nationalities and peoples of Ethiopia and hence not subject to sale, exchange.[By virtue of the constitution]But buildings or improvements holders make on the land can be personal property and it can be subject to sell or other means of exchange.

Obligations and Rights of Seller1-Obligation to Transfer unassailable Rights over the ImmovableArt. 2281 of the Civil Code states, "a seller shall take necessary steps to transfer unassailable right over the thing.The seller is assumed to be selling his whole interest in the thing he is required to convey that estate free of encumbrances. But this is true in the absence of any stipulation to the contrary.

2-Obligation to Furnish Necessary Documents ownership right of an immovable property is proved by a certificate of ownership. It is to this effect that title deeds are issued by the administrative authorities to show that a given immovable belongs to a certain person. And the buyer would not have entered into a contract of sale had he known that the seller had no title deed. Because how can the buyer be sure, or at least presume that the seller is the owner? If title deeds are very important for claiming ownership in transfer of ownership cases, they should be delivered to the buyer as they are necessary documents. So when article 2879 says necessary documents title deeds are surely amongst them.

The other important document to be delivered to the buyer is an authenticated contract of sale. As it is stated under article 1723 of the civil code, contract of sale of an immovable property shall be in writing and registered with a court or notary.The other necessary documents which are required to be delivered to the buyer are certificates as to the payment of tax, clearance certificates from Construction and Business Bank, usually known as Mortgage Bank, etc.

3-Obligation to deliverUnder Ethiopian law, we have an authenticated contract of sale of immovab1es. And the sel1er by delivering the authenticated contract of sale and his title deed to the buyer effects his obligation of delivery of the immovable in the transfer of ownership of the immovable.

4-Right to Take the Payment of Price5-Right to Retain Necessary DocumentsSo when it comes to immovable properties, we can extend the application of Article 2278(2) of the civil code to retain necessary documents and can say the seller can retain the documents if he is not paid the price until the payment is effected. The ownership right will not be transferred to the buyer unless and until the necessary documents are delivered to him.

Obligations and Rights of the Buyer1- Obligation as to the Payment of Purchase Money 2- Obligation to Take Delivery of the Thing and Documents3- Obligation to Have the Instruments and Title Registered In the Relevant Office4- Right to have the Issuance of New Title Deed 5- Right to Retention of the Payment of Purchase MoneyArticles from 2875-2895 of the Civil Code

Promise of Sale and PreemptionPromise of sale and preemption are considered as restrictions to the owners right to sale an immovable.Read Articles 1410-1425 of the civil code!pre-emption: the right of first refusal to purchase something before it is sold to someone else

Other Modes of Transfer1- Land InheritanceInheritance is the passage of title and ownership of property from the one who dies to people whom the law designates because of blood or marriage relation as the deceased heir by operation of the law or by will of the deceased.The farmers though they do not have ownership right over their holding, have the right to transfer their holding right through inheritance. Who is a heir eligible to inherit the land use right of the deceased farmer? The heir as stated by the new federal rural land use and administration law are both family members which are defined as "any person who permanently living with the holder of land use right sharing the livelihood of the later" and lawful heir.

2-DonationDonation is regulated under Tilte XV, Chapter Three of the Civil Code as well as the rural land laws.The person who wants to donate may make either an intervivos or mortis cause donation to the donee (Art. 1205).

3 Barter/ExchangeRefer Article 2408 and 2409people can exchange things including immovables and the provisions of the Civil Code relating to the general contract of sale are also relevant to regulate exchange of things.

4 Court Orderit is also possible to have transferred real property through court judgment. The Civil Procedure Code in part provides:Art. 402. The Decree for Immovable Property Where a decree is for the delivery of any immovable property, possession thereof shall be delivered to the decree-holder, or to such person as he may appoint to receive delivery on his behalf, and, if necessary, by removing any person bound by the decree who refuses to vacate the property

5Prescription/Adverse PossessionThis method of having a right on an immovable is determined by possession of a property for a fixed period of time. The Civil Code provides:Art. 1168. - Principle.(1) The possessor who has paid for fifteen consecutive years the taxes relating to the ownership of an immovable shall become the owner of such immovable Provided that no land which is jointly owned by members of one family in accordance with custom may he acquired by usucaption and any member of such family may at any time claim such land.(2) Nothing in this Article shall affect the provisions of Title VI, Chapter 2, of this Code (Art. l140-l150).

Transfer of Leasehold Rights in Urban AreasLeasehold right is freely transferable in the current proclamation as well.But to discourage rent seeking activities (seeking benefit without adding value) the proclamation puts three strategies:One, speculators who participate repeatedly in unfinished land sale shall be denied such right (23.7)People who wish to sell their lease right (bare land) or half completed construction will get no benefit (paid lease price + construction cost + 5% of profit gained from sale)

. . . Assume X holds 200m2 land, leased for 3500 birr, and expend 40, 000 birr for foundation. He paid 70,000 birr initial lease price. Now he transferred it to Z for 4000 birr per m2)He shall get 118,500 (70,000+3500+40,000+5000). Profit is 8,500.While the gov.t collects 95,000 birr out of the profit (100,000)What about if the construction is completed?

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Half completed= foundation + columns + top beam 5/27/2016LAND LAW120

Foundation70,00040,000

3,500

5,0001,000,000

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But how do we stop people from conniving?Even though it is possible, speculators will shift from selling unfinished properties to finished onesIs preventing people from trading constitutional?Is Rent seeking by itself a crime?

Municipality is collecting undeserved income, and it is unfair to the leaseholder.Art. 2(11) lease benchmark price means the threshold price determined by taking into account the cost of infrastructural development, demolition cost as well as compensation to be paid to displaced persons in case of built up areas, and other relevant factors;

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lease benchmark price= Compensation for land + demolition cost+ infrastructure (water..) the maximum in Addis Ababa is 600 The ideas is that government calculates the cost of developing land to be leased out.This amount covers government costs So by transferring land based on auction government collects its costs as well as big profit;Eg. In Addis Ababa the maximum lease bench mark is 600. But the land may be sold 60,000 by auction. Only few organs will get land based on the basic lease bench mark. So the idea is by transferring land through lease contract government will collect large profitWhy again share with the lessee?5/27/2016LAND LAW123

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Mortgage MV-mortgage value CC- Cost of constructionTLV-total lease value TLP-total lease paidSv- sale value Mortgage Ration 1:1, 1:2The third strategy is limiting the mortgage value of the land only to the amount of lease price paid. 5/27/2016LAND LAW124TLV= 500,000TLP= 50,000MV= CC+TLP

CC=400,000TLP=50,000MV=450,000SV=4,000,000EXV= 900,000TMV= 900,000

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CHAPTER SEVEN

DISPUTE RESOLUTION MECHANISMS ON REAL PROPERTIES

Regarding the institutional structure for land dispute settlement, previously rural land disputes were under the jurisdiction of the Kebele Social Courts in many of the regional states. However, Social Courts were later found to be unable to handle rural land dispute cases for several reasons, corruption and incompetence being the main causes.Thus, in a majority of the regions, rural land disputes are currently under the jurisdiction of local elders or land committees constituted at kebele level to decide on land disputes, while the parties to the dispute are entitled to appeal to woreda courts if dissatisfied with the decision of local arbitrators. The following table summarizes the land dispute resolution mechanism at federal and state levels as found in the land administration and use laws.

Federal 2005 Amhara 2006 Oromia 2007Southern 2003Tigray 2007Land dispute resolution Mutual agreements and local elders can be used to resolve land related conflicts. The detail of the formal institutions is not provided in the proclamation. Land disputes can be resolved by (a) local elders, (b) then appeal to the ordinary woreda court, and (c) then appeal to the high court. (d) then appeal to the region's supreme court Land related disputes will be seen Land disputes can be resolved by (a) Negotiated settlement of the parties (mutual agreements) (b) local elders can be used to resolve land related conflicts (c) kebele land administration and use committee, Land related disputes will be seen Land disputes can be resolved by (a) Negotiated settlement of the parties (mutual agreements) (b) local elders can be used to resolve land related conflicts (c) kebele land administration and use committee, (d) then can appeal to the woreda court, and (e) has the right to apply to the Zonal high court. (f) then has the right to appeal to supreme court. Land disputes can be resolved by (a) Negotiated settlement of the parties (mutual agreements) (b) local elders can be used to resolve land related conflicts (c) kebele land administration and use committee, (d) then can appeal to the woreda court, and

The major causes of land disputes in the country include: lack of records or documentation and evidence to make proper decisions on claims for landholding rights, fabricated landholding certificates or different certificates given to two holders for the same plot, problems related to inheritance and donation of landholdings, dissolution of marriage and partitioning of land held jointly, problems in application of restrictions on land use rights that lead to loss of the use rights, rights of minors to exercise their land rights through guardians, inappropriate interpretation and/or application of the Civil Code and regional land laws, lack of fairness and reasonability in the decisions given by local land administration organs and regional courts, land redistribution, illegal sale of land under the pretext of rental land arrangements, etc

Urban Land Dispute Resolution Mechanism As a matter of principle, urban and rural administrations are required to establish an administrative grievance hearing organ to hear complaints related to landholdings. In urban centers it is formally known as Municipal Court. If such organs are not established, complaints related to landholding shall be submitted to regular courts having jurisdiction. In Ethiopia, such courts are not established in almost all of the major towns except in Addis Ababa.

CHAPTER EIGHT

LAND USE RESTRICTIONS

Land Use Restrictions As private ownership is not an absolute one the use right of a certain immovable property may be limited because of health, public security, good neighborhood, town planning, etc. in most cases, the limitation is imposed on the use and enjoyment right while in case of expropriation it takes away the whole property.

Restrictions Nuisance lawNuisance is an activity that arises from unreasonable, unwarranted or unlawful use by a person of his on property. It is mostly related with the abuse of right of an immovable.Art. 1225. - Abuse of ownership. - 1. Principle(1) The owner shall not cause nuisance or damage to his neighbor.(2) He shall not cause smoke, soot, unpleasant smells, noise or vibrations in excess of good neighbourly behaviour.(3) Regard shall be had to local custom, the position of the lands and the nature thereof.

Planning law change the use of building requires a permit. Basically change can be divided in to three categories: construction of new building, work on existing building, and demolition of the building. This means use of land and building becomes under extensive official control.At Federal level a proclamation that provides for urban plans has been adopted under Proc. No. 574/2008 which governs the above kind of regulations.

Environmental concerns Other legislation which relate to environment ( proc. No. 300/2002), provides different restriction on property owners concerning management and release of dangerous and hazardous activities that may damage the environment.

Expropriationimportant elements in any expropriation process and practice are:Expropriation is a taking of private real propertyIt is an inherent right of the stateIt is done against the consent of the owner/possessorFair compensation must be paidThe taking must be made for public interest/use

Land Rights: Constitution Art. 40 Proclamations 456/2005, 455/2005, 721/2004, Reg. 135/2007BaseArticle 40 (8) of FDRE Constitution: Without prejudice to the right to private property, the government may expropriate private property for public purposes subject to payment in advance of compensation commensurate to the value of the property.

It is the right of the nation or state, or of those to whom the power has been lawfully delegated, to take private property with out the owners consent

JUSTIFICATION FOR EXPROPRIATIONDue to their monopolistic position, landowners would be able to block development The need to ensure the efficiency of land acquisition. The need of much land for developmental works (expansion of cities and other infrastructures) and the need to make urban areas to fit with the master plan. (Ethiopian

Expropriation

Master plan

NatureExpropriation is an inherent power of the state to take private individuals land.There are two limitations however. Public purpose Just compensation

Public purposeBroad view Public purpose means . anything which tends to enlarge the resources, increase the industrial energies, and promote the productive power of any considerable number of the inhabitants of a section of the state (or which leads to the growth of towns and the creation of new resources for the employment of capital and labor), manifestly contributes to the general welfare and the prosperity of the whole community constitutes a public purpose.

Narrower view public purpose is actual use or right to use of the condemned property by the public. (The indirect contribution the prosperity of the entire community resulting from activities from which only some individuals would profit was not sufficiently to justify the exercise of eminent domain. It is necessary that the public possess a right to use the facility or service for which the property was desired).

Federal law defines it as: the use of land defined as such by the decision of the appropriate body in conformity with urban structure plan or development plan in order to ensure the interest of the people to acquire direct or indirect benefits from the use of the land and to consolidate sustainable socio-economic development. (Art. 3(2) of Proc. 455/2005)

Valuation and CompensationCompensation is defined as full indemnity or remuneration for the loss or damage sustained by the owner of the property taken or injured for the public use.

Valuation... Compensation is one limitation on the governments power of expropriation. The compensation requirement under the law demands that the expropriator reimburses the expropriated for the property interest taken and place the latter in as good a pecuniary position as if the property had not been taken.

Amount Amount must be fair, commensurate, just The Ethiopian constitution provides for the payment of commensurate amount of compensation. This signifies that compensation must be equal to the loss sustained. In modern laws this equality can be attained by applying market value.

To reach or attain market value valuators use three different valuation methods: comparable sales approach Income capitalization approach Replacement cost approach in many countries the first two are the most employed approaches. The third one is an exception which is applied for special and peculiar kind of properties.

VALUATION IN Ethiopia The value of real estate property rights is the function of the propertys physical, location, and legal characteristics (Ling and Archer 2005 Mandate In Ethiopia, there is neither an independent and developed valuation system, nor available professionals in the field. Rather the mandate is given to sets of committees and some times to civil engineers.

Major compensable interests 1.Building Cost replacement + replacement land + 1 years rent It considers the value in terms of current labour and materials required in assembling a similar asset of comparable utility. Problems observed Cost of labor and building material is not updated A person may not get a land comparable in size and location. Location is not given value (city administration gets un proportional profit damages to property/business caused as a result of another project are not compensable.

Simple calculation Mr. X lives in the center of the city He holds 300 m2 plot of land He operates small business from his house Government expropriates the land Mr. X is provided with 150m2 of bare land on the escarpment of the city where no infrastructure and utility services is provided Ground lease value for such land is about 200-300 birr /m2 Compensated with 100, 000 birr to replace his home The Municipality sales the bare land in the center for (300 X 2000 birr)= 600,000 birr Municipality makes a profit of about 450,000. Multiply this by 10 or 20 houses in the same neighborhood.

Displacement Compensation Farmers who lost their land permanently may be compensated through monetary compensation or land to land compensation. Full monetary compensation (ten times the average annual income he secured during the past 5 years) -why ten years? - why 5 years back?

-Assume a farmer produces 50 quintal wheat per year -sales price per Q is 500 Birr and his total income is 25000 -Bank Interest rate 5% Following are two types of calculations

Compensation= Annual Income X 100 Interest rate Compensation= 25000 X 100 = 500,000 Birr 5 On the other hand applying the current calculation system it gives us: Average Annual Income X 10 25000X10 =250,000 Birr

Displacing farmers from the outskirt of towns Replacement cost Plot of land on the same site 10 years compensation in reality municipalities are reluctant to pay plot of land given only if there was a building

ServitudeServitude is defined as a charge encumbering a land (servient tenement) for the benefit of another land (the dominant tenement.) And the type of obligation or encumbrance made on the burdened land, that is the servient land is the obligation to submit to the commission of some acts by the owner of the dominant tenement or to refrain from exercising some rights inherent in ownership. Read article 1359 of the civil code. This means the servient land is burdened with some obligation for the purpose of the advantage of the dominant tenement.

Means of creation and types of servitudesServitude can emanate from contract, will, the law or custom.Article 1362 Creation of Servitude1. Contract or willArticle 1366Article 1371 Right of way and rural servitudeArt.1220 pipesArt.1221. Right of way-principleArt.1246. Duties of Land owners below Art.1247 DrainageArt.1249. Taking of Water. 1. Right of owner

Termination of Servitude The following are grounds that lead into or bring about the extinction of servitudes:Maturity of the time fixed for servitudes in the contract or will;Destruction of either of the tenements or both of them;Prescription; Division of the dominant or servient tenement(partially);Struck off from the registers of immovalbes;Redeeming servitude;Merger of the ownership of the two tenements, etc

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