Property Rights and Expropriation in Peru
Property Rights in Peru
Concept of Property
Article 923 of the Civil Code defines property as the legal power to possess and claim a good. This power should be exercised in harmony with social well-being and within legal limits. Property is a right, allowing individuals to own assets (e.g., a home). This right includes the power to use, dispose of, and recover the property through legal means like possessory defenses (Civil Code, Section 920).
While Article 2, paragraph 16 of the Constitution grants individuals the right to property and inheritance, this right is not absolute. It must be exercised within the boundaries of the law, as stated in Article 70 of the Constitution. The State guarantees the inviolability of property rights only when exercised in harmony with the common good.
Expropriation and Compensation
According to Article 70 of the Constitution, no one can be deprived of their property except for reasons of Homeland Security, declared as a public necessity, and upon payment of just compensation. This compensation must be paid in cash and reflect the full value of the property, including any associated prejudice. The judicial branch can be approached to challenge the State’s valuation of the property during expropriation proceedings.
Article 71 of the 1993 Constitution allows property owners to dispute the valuation through a judicial process. The compensation should encompass the property’s value and cover any resulting damages. In expropriation cases, the State must pay the full, judicially determined value of the property.
Property and Economic Resources
Private property constitutes a significant portion of Peru’s economic resources. However, much of this property cannot be utilized in the legal market due to the lack of registered titles, which confer exchange value.
Given Peru’s widespread poverty, existing legal procedures hinder many people from fully benefiting from economic policies like currency stabilization and privatization. The lack of effective legal processes for property registration has led to informal settlements and challenges to the legal security of those who have managed to register their property.