compensation for consequential losses

david hornby

When the valuer determines "special value to the owner" following the compulsory taking of real estate by a government authority, the following equation for the determination of compensation is appropriate:

SV = L + IA + S + C - B

Where:

SV = special value to the owner
L = land value
IA = injurious affection
S = severance damage
C = consequential losses
B = betterment.

For simple residential properties special value to the owner consists mainly of L + IA + S and consequential losses are only minor for example, legal fees, costs of reinstatement and stamp duty. However, if the property compulsorily acquired is a profitable business, consequential losses can be the major loss as it includes the loss if any, of goodwill.

See goodwill