RIGHT TO COMPENSATION FOR CONSTRUCTIONS, IMPROVEMENTS, OR EXPANSIONS ON REAL ESTATE IN BOLIVIA

RIGHT TO COMPENSATION FOR IMPROVEMENTS

A possessor may demand compensation for necessary and useful improvements present at the time the property is returned. The compensation amount depends on whether the possessor acted in good or bad faith.

COMPENSATION FOR GOOD FAITH POSSESSORS

If the possessor genuinely believed they had a legal right to the property, they may be compensated to the extent that the improvements increased the property’s value.

Example: If you inherited a property and, trusting the validity of the will, carried out renovations and expansions—but later it’s discovered there was an error in the succession and a third party claims ownership—you may demand compensation for the value added by your improvements.

COMPENSATION FOR BAD FAITH POSSESSORS

If the possessor knew they had no legal right to the property, the compensation is limited. They may only claim the lesser of the following:

• The cost of the improvements made.
• The increase in the property’s value due to the improvements.

Example: If you occupied land illegally and built a storage facility, you can only recover the lesser amount between what it cost to build and the increase in property value.

COMPENSATION FOR LUXURY OR RECREATIONAL IMPROVEMENTS

Luxury or recreational improvements are generally non-compensable. However, the possessor may remove them if doing so causes no damage to the original property.

Example: If you installed a swimming pool on someone else’s land, the owner is not required to compensate you, but you may remove it if feasible without harming the property.

EXPANSIONS AND COMPENSATION

Expansions are subject to the same rules as improvements. If they are useful or necessary, they may be compensated based on the possessor’s good or bad faith.

PROPERTY RETENTION UNTIL COMPENSATION IS PAID

A good faith possessor has the legal right to retain possession of the property until they are reimbursed for corresponding compensation and essential expenses incurred. This includes not only useful and necessary improvements, but also other essential costs that contributed to the maintenance and preservation of the property.

In cases where the rightful owner cannot make immediate payment, the good faith possessor may request guarantees or reasonable terms for reimbursement.

Example: If someone acquires a lot based on a seemingly valid contract and builds a home with all required permits, but it is later discovered that the contract was invalid, the possessor may demand payment for the improvements before returning the property to the rightful owner.