Eminent domain is the power of federal, state and local government, and certain private entities, to take private property for public use following the payment of just compensation. The California Supreme Court has described the power of eminent domain as "an inherent attribute of sovereignty." And although there are safeguards for property owners and limitations on the power, in most cases, if your property is needed for a public project, the government can take it as long as it pays you just compensation. The following is a brief summary of some things you should know, and some things you can do, before the government decides to take your property, that could help you influence the scope of the taking, and perhaps even prevent it, and to maximize the compensation you will receive.
Things You Should Know
- What types of property are most vulnerable to eminent domain? Almost any property can be taken for such public projects as parks, schools, flood control channels, courthouses, bicycle paths and the like. Certain types of property, however, may be more at risk because of their proximity or usefulness for large scale infrastructure projects that tend to impact a large number of parcels in the path of the development. These projects include construction of new, and expansion of existing highways, major thoroughfares and light rail lines; erection of high-voltage power line towers, or installation of interstate pipelines across wide swaths of rural land; expansion of city limits and related infrastructure over former agricultural or ranch land in growing exurbs; airports; and, in limited circumstances, public projects placed in blighted areas.
- Who has the power of eminent domain? States, counties, cities, transportation authorities, railroads, electric utilities; gas companies, water and sanitation districts, irrigation districts, school districts, housing authorities, certain non-profit hospitals, cemetery authorities, and various other entities authorized by statute.
- How does the process work? There are many phases to a condemnation action. These include, among others:
- First Contact: This is often a letter from the condemning agency indicating its interest in acquiring your property and inviting you to accompany an appraiser on a site visit to value your property. It is often a good idea to accept the invitation, or have your lawyer do it, to help the appraiser better understand the unique attributes and value of your property.
- Pre-Condemnation Testing: Public entities are authorized to conducts tests or studies on your property to determine its suitability for the project. Often, this involves identifying any environmental contamination. This can, in turn, affect the value of your property even though you may have no obligation to clean up the contamination. Your lawyer may be able to successfully challenge this authority or minimize the impact to you or your property.
- Offer of Just Compensation: You will receive a written offer to acquire your property, along with an appraisal or a summary statement of the valuation. The offer cannot be lower than the amount of the appraisal in most cases and is based on an opinion of the fair market value of your property. Public entities often include documents necessary to complete the transaction. Typically, the amount offered is less than you may think the property is worth. Moreover, you may want to challenge the public entity's right to take your property or request changes to the design of the project to minimize impacts on you. Accordingly, accepting the offer at this point is often unadvisable.
- Resolution of Necessity: Adoption of a Resolution of Necessity conclusively establishes the public use and necessity of the project, and the necessity of your property for the project. The public entity will give you notice of its intent to do so and you will have just 15 days to respond and request a hearing to object to the taking. Failure to object at this point waives your right to challenge these aspects of the government's right-to-take later. If you have any objection to the taking (other than the value), you should not ignore this notice. Your lawyer can help you determine if you have a valid basis for objection.
- Lawsuit Filed: If you and the public entity do not reach agreement, it will file a condemnation lawsuit against you and any other party that may have an interest in the property. As with any complaint, you will need to file an answer or other appropriate response within 30 days. There are many objections to the right to take and other grounds for affirmative defenses. These must be asserted in your response or will likely be waived.
- Pre-Judgment Possession: If the public entity has the right to take your property, and deposits the amount of compensation it contends is due, it can ask the court to grant prejudgment possession of your property. In effect, this allows the public entity to take your property before the right-to-take challenges and valuation issues are fully litigated. Your lawyer can help you oppose this effort. If the government is successful and if your property is occupied, you will have at least 120 days from the filing of the motion for possession to vacate the property. In many cases, the government will allow even more time to soften the hardship on the property owner.
- Final Offers and Demands: Shortly before trial, the parties are required to make final offers and demands for just compensation. This is designed to promote settlement and often serves as a kind of gut-check for the parties.
- Trial: There are essentially two issues in every condemnation action: the right to take your property, and the just compensation to be paid to you. The former is a question for the judge to answer, the latter is determined by a jury. The value of your property is, in most cases, based on the opinion testimony of expert witnesses. It may include damages to the remainder of your property caused by the taking, loss of business goodwill, and the value of any fixtures and equipment. You may be able to recover some or all of your attorney's fees and expert witness costs if the government's offer is deemed to be unreasonable, and your demand is deemed to be reasonable in light of the final judgment amount and the evidence presented at trial.
Things You Should Do
- Call a Lawyer: We recommend contacting a lawyer as soon as you get notice that the government is interested in acquiring your property. In most cases, the public entity will have been planning the project for many months or years and its lawyers will be well prepared to defend the project. Getting your lawyer up to speed at the earliest time helps level that playing field. You'll also want to make sure you don't inadvertently waive your ability to challenge the government's right to take. Your lawyer can help you understand the process and devise a strategy for opposing the right to take and maximizing the amount of compensation owed to you. Often, doing the former, even if unsuccessful in the end, has significant impact on the success of the latter. Likewise, your lawyer can help you weigh the advantages of fighting versus the stress and cost of doing so. Early involvement of counsel will likely save you money later.
Things To Discuss With Your Lawyer
- Right to Take: Is the proposed taking acceptable to you? Could it be modified to reduce the impact on your property or your business? Is the property already being put to some kind of public use? What is the impact of the taking and the project on your business or living situation? How important is it to you to prevent the taking? All of these issues will help your lawyer devise a strategy for you and determine if you are likely to be successful in challenging the right to take.
- Valuation Issues: Any recent valuation work done on the property. Discussions you've had with the condemning agency regarding the scope of the project, valuation, the attributes of your property or anything else. Any recent listings of your property for sale, or offers to buy it, whether accepted or rejected. Your title interest and any known encumbrances on your title. Any leases or other contractual obligations affecting the property. Information about soil subsidence or damage from natural disasters or fire. Known environmental condition of the property. Any physical damages to your property caused by the project or pre-condemnation testing. The likely impact on your business and its ability to relocate successfully. All of these things can impact compensation. You should also give your lawyer copies of all documents you've received from the public entity.
- Limit Your Contact with the Public Entity: Under the category "anything you say can and will be used against you in a court of law," if at all possible, it is often advisable to limit your contact with the public entity to what is necessary to move the process forward and help you. Statements you may make about the condition of the property or its suitability for development, or things you may have heard from potential buyers can all have an impact later on the compensation you receive.
- Get as Much Information as You Can About the Project: Knowing as much about the project as possible is important to help you determine the impact on your property and business and will help set the stage for possible challenges to the right to take and for maximizing your compensation. Most public entities will be forthcoming with information and a formal Public Records Act request can obtain information if you hit a roadblock. Your lawyer can help you obtain this information.
- Start Thinking About Contingency Plans: Again, successful challenges to a public entity's right to take are not the norm and the likelihood of the government abandoning its project is typically very small. It makes sense to begin thinking about life after the taking of your property. Where and how will your business relocate? What impact will it have on revenues and expenses? If the property is your home, where could you find a desirable new home. If the taking is only a portion of your property, what impact will that have on the rest of it or your ability to carry on your business? Could the project actually benefit you or your business? How quickly could you relocate if required by an order for prejudgment possession?
- Get a Preliminary Assessment of the Value of Your Property: In the early stages, it rarely makes sense to get a full-blown appraisal. You are entitled to up to $5,000 to obtain your own appraisal but typically an appraisal isn't warranted until at least after you receive an offer from the public entity and often not until the litigation is well underway. However, local brokers and realtors are sometimes willing to share with you some basic valuation information for comparable properties in the area and may even give you an informal assessment of the value of your property. Additional information may also be available on line. Keep in mind, however, that any written information you receive from anyone other than your lawyer could be discoverable by the public entity during litigation and may be used to undermine your appraiser's opinion of value. For now, it's enough to get an informal verbal assessment that could help you weigh how reasonable the condemning agency's eventual formal offer is. A good condemnation attorney should have a good sense of the various issues to help you preliminarily assess the value of your property.
Condemnation can be a complex, frightening and impactful process for many people. Understanding the process ahead of time helps mitigate these concerns. There are many ways in which a good condemnation attorney can help you both challenge the government's right to take your property (or at least reduce the impact on your property or business) and to maximize the amount of compensation to which you are entitled.