When should experienced eminent-domain counsel become involved?
Counsel should be involved as soon as a project is identified, and preferably before the owner submits financial information, obtains an appraisal, alters development plans, grants access, or begins substantive negotiations. Early involvement is not merely defensive. It allows the legal, valuation, engineering, and business strategies to be developed before important facts or negotiating positions become fixed. It also protects communications and work product of the client and any relevant experts while the various positions are being examined.
What should a business do when it first learns that its property may be affected?
Early action can materially affect the outcome. Before negotiations begin, the business should identify the project's potential effects, preserve relevant valuation and operational evidence, review title and lease documents, evaluate planned improvements or transactions, and avoid statements or agreements that may limit future claims. Counsel can also assess whether the condemning authority has the legal authority to acquire the property and whether the proposed scope of the taking is justified, while helping safeguard legal analyses, strategies, and communications through applicable attorney-client privilege and work product protections.
Why can the government's appraisal substantially understate the economic impact of a taking?
Because the government is not likely to understand the nuanced usage of any particular parcel, its appraisal may focus principally on the land and improvements physically acquired. In a partial taking, however, the larger loss may arise from the project's effect on the remaining property, including impaired access, reduced utility, changed circulation, development constraints, loss of parking, or interference with the property's highest and best use. A sound valuation requires analysis of the property and the business consequences of the project as an integrated whole.
How are damages evaluated in a partial taking?
Compensation may include both the value of the property acquired and any compensable diminution in the value of the remaining property. The analysis ordinarily compares the value and utility of the entire property before the taking with the value and utility of what remains after the project is completed. Project plans, access controls, grading, drainage, construction limits, easements, and future development restrictions may all be important.
Can a business recover losses caused by disruption to its operations?
The answer depends heavily on the governing law and the evidence. Some jurisdictions permit recovery of qualifying business losses; others restrict or exclude them. Even when business losses are not independently recoverable, evidence concerning operations may help demonstrate the effect of the taking on the real estate, leasehold interest, access, or highest and best use. These claims require careful separation of compensable loss from ordinary inconvenience or speculative harm.
How can condemnation affect property that is being developed, acquired, financed, or sold?
A threatened taking can alter site plans, development density, access, entitlements, financing assumptions, contractual obligations, and transaction value. Purchase agreements, leases, loan documents, and development contracts should allocate responsibility for the claim, control of the litigation, settlement authority, and ownership of any award. Those provisions should be addressed before the condemnation proceeds become the subject of a dispute among stakeholders or applicable law limits the right of a stakeholder to receive compensation based on various status considerations.
Who is entitled to the condemnation award when property is leased or subject to a mortgage?
Owners, tenants, lenders, easement holders, and other parties may hold competing interests in the property or the award. Their rights depend on applicable law and the governing documents, including condemnation clauses in leases and loan agreements. Identifying those interests early is essential because the condemning authority's payment does not necessarily resolve how the proceeds should be allocated.
Should a property owner provide its own appraisal to the condemning authority?
Not automatically. An appraisal can be useful, but commissioning or disclosing one prematurely may anchor negotiations before the project's full effects are understood. The better course is usually to develop the legal, engineering, operational, and valuation theories together, then determine what information should be presented, when it should be presented, and for what strategic purpose. Some jurisdictions do not require the government to produce its appraisal.
What evidence should a business preserve?
Important evidence may include historical and current site plans, surveys, appraisals, financial records, traffic and customer data, development studies, tenant information, photographs, correspondence with governmental officials, and records of planned improvements or transactions.
Can the necessity or scope of a taking be challenged?
In appropriate circumstances, an owner may challenge the condemning authority's power, public purpose, compliance with statutory procedures, necessity, or attempt to acquire more property or broader rights than the project reasonably requires. These challenges are often governed by short deadlines and may need to be raised separately from the dispute regarding compensation.
What is inverse condemnation, and when does it become a commercial concern?
Inverse condemnation is a claim initiated by the property owner when governmental action has taken or damaged a protected property interest without using formal condemnation procedures or paying required compensation. Potential examples include recurring flooding, physical invasion, denial of access, or governmental restrictions that produce a legally cognizable taking. Not every loss in value or regulatory burden qualifies, so the precise governmental action and affected property right must be examined.
How long does a condemnation matter take, and can the business continue using the property?
Timing depends on the governing procedure, the nature of the project, and whether possession and compensation are determined in separate stages. In some proceedings, the condemning authority may obtain title or possession before final compensation is resolved. Businesses therefore need both a litigation strategy and an operational plan addressing construction, relocation, access, customer communications, and continuity.