Expropriating a declared nuisance property

It is what happens after the public-nuisance declaration: the municipality’s acquisition of the property, by purchase or by eminent domain, and its later transfer to whoever is willing to rehabilitate, reconstruct, restore or demolish it or build anew. The Code governs two distinct procedures — the Article 4.012 one, funded by an applicant-acquirer, and the summary one in Article 4.012-A, run at the municipality’s own account — and closes with a clawback action if the acquirer does not do the work within a year.

The Article 4.012 route applies to properties on the Inventory of Properties Declared a Public Nuisance, and is opened by any person willing to acquire them for rehabilitation, reconstruction, restoration, demolition or new building. The summary route in Article 4.012-A is used by the municipality where it wishes to expropriate that way. For the later sale of built properties that can be rehabilitated as residences, the municipality must consider as first option, where interested citizens exist, people whose chance of acquiring property is limited in the traditional market; and the article itself says the summary mechanism shall not be used to benefit third-party acquirers, including those recognised as real-estate investors.

• That the property be on the Inventory of Properties Declared a Public Nuisance (Articles 4.011 and 4.012).Verified against the official source
• That the applicant-acquirer notify the municipality of the intent to acquire the property (Article 4.012(a)).Verified against the official source
• Supplying the municipality a sum equal to the appraisal report’s value plus ten per cent (10%) of that value for the procedure’s costs and fees, before signing the expropriation contract (Article 4.012(b) and (c)).Verified against the official source
• Covering any additional sum the Court of First Instance requires as just compensation, and supplying the difference if what was handed over falls short (Article 4.012(b) and (d)).Verified against the official source
• On the summary route, answering the complaint within twenty (20) days of service, or thirty (30) if served by publication; the term is unextendable (Article 4.012-A(b)).Verified against the official source
• Claiming the just compensation within three (3) years of the court setting it in judgment; after that term the action is time-barred (Article 4.012-A(g)).Verified against the official source
• Carrying out the rehabilitation, reconstruction, restoration or demolition within the year counted from the transfer of title, or the municipality may exercise the retracto convencional (Article 4.014).Verified against the official source

• The municipality’s appraisal report, which sets the sum the applicant-acquirer must front (Article 4.012(b) and (c)).
• The contract with the municipality for the expropriation of the nuisance, setting out the commitment to acquire the property (Article 4.012(b)).
• The municipality’s certification that the property is registered neither at the Registro de la Propiedad nor at CRIM and that no possessor or interested person can be identified, where “persona desconocida” is sued (Article 4.012-A(a)).
• The municipal ordinance, approved by the Municipal Legislature and signed by the mayor, setting the requirements and rules for transferring or selling these properties (Article 4.012-A).

1. 1

   Step 1: Whoever wants the property funds the case up front

   It is the most surprising part of Article 4.012, so it goes first. The applicant-acquirer shall supply the municipality a sum of money equal to the value set in the appraisal report, plus a sum equal to ten per cent of the appraised value for the procedure’s costs and fees, including title study, reimbursement to the municipality of the appraisal cost, service of process, notarial expenses and title recording at the Registro de la Propiedad. And that comes before signing the expropriation contract with the municipality. Subsection (c) repeats it for the moment before the case starts, and adds that any expense above that amount will be billed to them.

2. 2

   Step 2: And they keep answering if the court asks for more

   The same Article 4.012 chains several responsibilities. The applicant-acquirer is obliged to cover any additional sum the Court of First Instance requires as just compensation; if what was handed over does not cover the fair value, interest, costs and fees, it is their responsibility to supply the difference, and the municipality will not transfer title until they settle what they owe, being empowered to pursue collection and attach their assets. And if they withdraw once the case is filed, or if their lack of cooperation or funding forces the municipality to withdraw or the court to dismiss, they answer for just compensation, interest, costs, penalties, sanctions, litigation expenses and attorney’s fees. Unused sums are returned to them when the proceedings end.

3. 3

   Step 3: One year for the case, then the transfer

   Article 4.012(f) says the expropriation complaint shall be filed by the municipality under Rule 58 of the 2009 Rules of Civil Procedure, and sets a limit: the case, from the answer to the complaint or the entry of default where it is not answered in time, to resolution on the merits, may not exceed one year. Subsection (g) closes it: after judgment is entered, the municipality shall transfer title to the applicant-acquirer.

4. 4

   Step 4: The summary route and its short deadlines

   Article 4.012-A, added by Act 114-2024, establishes a summary procedure for when the municipality wishes to expropriate that way. The deadlines are these: once served, defendants have twenty days to answer and set out their defences, and thirty if served by publication; the term is unextendable and, absent an answer, the court enters default and issues judgment within five days. If they appear and answer, the court sets trial, to be held not less than fifteen and not more than thirty days after the answer, and issues judgment within five days. The term to appeal to the Court of Appeals is fifteen days.

5. 5

   Step 5: The municipality consigns nothing until someone appears

   Article 4.012-A(f) says the municipality is not obliged to consign any money for the expropriation when filing the complaint, per Article 2.018 of the Code, and that the duty begins the moment the defendants appear in court through the responsive pleadings in their answer. And it specifies what may be deducted from that compensation: only the property-tax debt and the amount owed for fines and for the cleaning and maintenance costs the municipality incurred, under Article 4.010.

6. 6

   Step 6: Three years to claim the compensation

   Article 4.012-A(g) sets a deadline that runs against whoever the money belongs to: once the court issues a judgment setting just compensation, anyone entitled to it shall have three years to claim it, and after that term the action to claim the amount determined by the court is time-barred.

7. 7

   Step 7: First option to buy is not for investors

   Article 4.012-A devotes a whole paragraph to who buys afterwards. The municipality, by ordinance approved by the Municipal Legislature and signed by the mayor, may adopt the requirements and rules for transferring or selling properties acquired by purchase or through the summary procedure, where they are built properties that can be rehabilitated as residences. And it says the municipality must consider as first option, where interested citizens exist, people whose chance of acquiring a property is limited in the traditional market. It adds the prohibition: the summary mechanism shall not be used to benefit third-party acquirers, including those recognised as real-estate investors; and it defines a third-party acquirer as someone who does not hold the legitimate right of ownership, as an heir or registered owner would.

8. 8

   Step 8: A year, plus six months, to raise the money

   The same paragraph opens an exception with its own calendar. During the first year after the municipality declared the property a public nuisance, per the ordinance adopted under that article, people whose chances of acquiring a property are limited in the traditional market are not treated as third-party acquirers. To that end the interested citizen is granted one year to secure funds, aid or any available method to meet the just compensation and the costs associated with the process, and a further six months may be granted. Once the whole term passes without the purchase closing, the municipality may sell to third-party acquirers, including real-estate investors. And where one year has passed since the declaration and inventory listing with nobody showing interest, the municipality may dispose of the property under that article.

9. 9

   Step 9: What can go to court, and what cannot

   Article 4.013 is short and marks the forum: the municipality’s actions under this Chapter, except the expropriation action which is governed by Rule 58 of the Rules of Civil Procedure, are reviewable by the Court of First Instance. That is: the declaration, the orders and the fines are reviewed that way; the expropriation runs on its own procedural track.

10. 10

    Step 10: If you buy and do not do the work, it can be taken back

    Article 4.014 closes the chapter with the sanction that gives everything before it meaning: where the acquirer, during the year counted from the transfer of title, has not carried out the rehabilitation, reconstruction, restoration or demolition of the acquired property, the municipality may exercise the action of retracto convencional, in accordance with the Civil Code of Puerto Rico. We did not read the Civil Code, so we do not publish how that action is exercised.

Before the municipality where the property is located: it is the municipality the applicant-acquirer notifies of the intent to acquire, with whom they sign the expropriation contract, and to whom they hand the funds. The expropriation complaint is filed by the municipality at the Court of First Instance under Rule 58 of the 2009 Rules of Civil Procedure, and that same court reviews the chapter’s other actions under Article 4.013. The rules for the later transfer or sale are set by each municipality by ordinance approved by its Municipal Legislature and signed by the mayor.

• Believing the municipality funds the expropriation on the Article 4.012 route: the money is fronted by the applicant-acquirer.
• Budgeting only the appraisal: ten per cent must be added for costs and fees.
• Thinking that ten per cent is the ceiling: any additional expense is billed, and whatever the court sets must be covered.
• Withdrawing after the complaint is filed: you answer for just compensation, interest, costs, penalties, sanctions and attorney’s fees.
• Counting on extensions to answer on the summary route: the twenty-day term, or thirty by publication, is unextendable.
• Assuming the municipality consigns on filing: on the summary route the duty starts when the defendants appear.
• Letting the expropriation money go: there are three years to claim the just compensation set in judgment.
• Believing an investor may use the summary route: the article forbids using it to benefit third-party acquirers.
• Not using the year — plus six months — the Act reserves for those whose chance of acquiring in the traditional market is limited.
• Buying and leaving the property as it was: if within a year it is not rehabilitated, reconstructed, restored or demolished, retracto convencional applies.
• Taking the expropriation to administrative review: Article 4.013 excludes it and leaves it under Rule 58.

These are the government pages this guide is based on.

• Municipios de Puerto Rico

  Municipios

  bvirtualogp.pr.gov