Eminent Domain | Two Types of Taking | Just Compensation

Eminent Domain Law - Two Types of Takings Just Compensation

There are two basic types of takings in the Washington eminent domain law. The first is referred to as a total take. As it sounds, this situation occurs when an entire parcel or tract of land is acquired for a project. The second type of taking is a partial take, and as it sounds, refers to the acquisition of only a partial portion of a tract or parcel. Although it may seem like a small distinction, when analyzing the value of property it becomes very important as valuation of the different property types is done in very different ways.

Condemnation Just Compensation Valuation of total take

The analysis for valuing a total take is straightforward. Using one of three appraisal methods (comparable sales, replacement cost, or income), or a combination thereof, one just determines the actual current fair market value of the property and that is the amount of just compensation owed to the landowner. No further analysis is necessary.

This should make perfect sense from both the landowner's and government agency's point of view. To determine just compensation for an entire tract of land, intuitively the analysis would be to find out what the property as a whole is worth. Whether or not the number arrived at in the analysis is correct is another story, but the theory behind it is sound.

Washington State Just Compensation Valuation of Partial Take

As easy as total takings analysis can be, partial takings can be difficult. Just taking a quick glance at the situation it may seem that the best way to find out what the fair market value of a partial taking is to determine what that size of property is worth and pay for it. Although this seems correct, in practice it just doesn't work out. Using an example of a partial taking for a highway project will demonstrate the error in that determination.

Let's assume there is a highway project in the works that requires 8 acres off a 60 acre parcel in rural Kansas. Using the above proposed methodology, the appraiser would use the sales comparison approach and look for properties in the area recently sold that were between 6 and 10 acres to gauge the fair market value of similar sized tracts. In doing so, the appraiser would probably determine most of the tracts were being sold as rural-residential properties. Let's say that number was $5,000 and acre.

Under the above proposed theory, the analysis would be complete. The 8 acres would be worth $40,000, and that would be it. However, what if I told you that the 8 acres being taken was cutting right through the 60 acres, leaving 10 acres on one side and 42 acres on another, and that the 10 acres would be useless because there would be no way to get to it once the road is built? Under the above theory, there is no way to compensate for that, unless you want to argue that the 10 acres is a take under inverse condemnation principles and therefore just compensation is due. Well, what if it wasn't useless but the owner would have to drive 5 miles around the road to get to it? Then there would be no argument for inverse condemnation, and he would be stuck.

Another problem that might happen is what if 1 acre is being taken off of 60 and 60 acre parcels are going for $1,000/acre and 1 acre parcels are going for $20,000/acre. Does it seem fair to pay the owner of land that is really worth $1,000/acre $20,000/acre just because a small sliver is required? No should be your answer.

To counter these problems, and a couple of others, a theory of just compensation was derived which examines the full value of the property before the taking, and then the full value of the property remaining after the taking, and taking the difference in those two to arrive at a just compensation amount. Under that analysis, a true measure of just compensation is reached, and any damages that might be associated with the taking are accounted for.

Next time - comparable the comparison sales approach is explained.

Washington State Eminent Domain Landowner Consultation

Eminent Domain | Condemnation Law | Overview

Eminent Domain and Condemnation - An Overview

Eminent domain, also known as condemnation law, is the power of the state to take your property for government purposes or public use. This power is derived from the 5th and 14th amendments to the United States Constitution. The 5th amendment provides, in part, "Nor shall private property be taken for public use, without just compensation." The 14th amendment, also referred to as the enabling clause, provides that each of the constitutional amendments shall apply to the states.

A review of the 5th amendment finds there are two requirements for a proper taking. First, private property can only be taken for a public use. In the past, this has come to be defined very broadly by the Supreme Court (remember the national news story about the Kelo's and their home being taken for a commercial development? That was an eminent domain case), resulting in state legislatures specifically defining what a proper public use is. The second requirement calls for just compensation. This has been decided to mean, in relative terms, the fair market value of the property. Said another way, what a willing buyer would pay and a willing seller would accept, in an open and competitive market, without undue compulsion.

Property Appraisal

Typically, though, the eminent domain process doesn't begin with a petition being filed at your local state or federal courthouse. The process actually begins much earlier than that. It all really starts when a governmental agency or economic development group decides to locate a project in a certain area with a certain real property "footprint." At that time it is determined which properties are affected and who the owners of those properties are. Usually this is done through a title search, conducted by the agency itself or a title company.

Once the title search is complete, appraisals are completed on all the properties to determine their fair market value. Believe it or not, most Washington eminent domain authorities are not out to lowball landowners. They want to make sure fair market value is paid, not a penny more, not a penny less. The reality of this, though, is that often property owners are faced with fair market value determinations that are far below their expectations. Sometimes their expectations are well grounded, sometimes they are not.

The Offer

Once the appraisal process is complete, people called acquisition agents are sent out into the field to make contact with landowners and present them with offers for their property. This, as you can expect, is usually a very sensitive matter, and usually it is handled delicately. People are rarely excited to hear that their property is being acquired, and it takes a special type of person to do this job.

After the offer has been presented, the landowner is given a certain amount of time to evaluate the offer of just compensation. At that time they have three choices: they can accept the offer; they can reject the offer; or they can negotiate with the acquiring body to receive more compensation (my recommendation). In the state of Washington, each landowner gets $750 to have someone evaluate the offer of just compensation (and as a landowner you really should take advantage of this).

As you can expect, no one really knows a property better than its owner. Because of that, often appraisers will miss some aspect of the property that makes it more valuable, or fails to account for an element that will have to be moved on account of the project (in rural areas this is often a well or septic tank, in urban areas this could be a satellite dish). This negotiation process will be discussed in more detail in the future, but it is important to have someone that is experienced with eminent domain and is familiar with the appraisal process. It can mean the difference in thousands of dollars of just compensation.

Eminent Domain

Assuming no agreement can be reached, eminent domain is the last result. Condemnation proceedings themselves are very informal matters. A judge will appoint a specific number of appraisers (in my Kansas it's three) whose sole job is to determine the fair market value of the property (if you think the government is taking your property without having a government purpose, there is another route to take, discussed later). At the hearing both sides are allowed to present their theory and evidence relating to fair market value (although the rules of evidence don't apply here). At the close of the presentations, the appraisers have a chance to look at the property (a "viewing"). Once that is complete, the appraisers will have about two weeks to issue their opinion as to value.

Eminent Domain Jury Trial

If either party is unsatisfied with the appraiser's award, they can appeal the decision to District Court (in Kansas). At this time the case becomes like any other civil action (in state court). Discovery occurs, each side selects an expert, and a jury trial is held. At the trial, though, the only issue the jury is deciding is what the property owner should be paid for the property that is being acquired. The parties are not free to challenge the validity of the taking itself.

Once the evidence is heard, the jury returns a verdict of just compensation. Unless there was a legal or factual issue that should not have been heard or was decided incorrectly, this is the final stop for determining just compensation. At that time the eminent domain or condemnation process is over and the state must pay into the Court the amount of the award.

Although this seems very straightforward and easy, like any legal topic there are all sorts of nuances and exceptions in play that can result for big returns for landowners if they are aware of them and bring them up. As I said before, most government agencies are not in this to save money. They want to pay just compensation (these people will, after all, be voting in the next election), but no more than required. In the coming posts, I'll describe some of the situations I've run into and try to provide some guidance on how to deal with it.

Welcome to Eminent Domain | Condemnation | Property Law | Relocation Assistance

Welcome to my site. If you have found yourself here you are probably either acquiring someone else's land via condemnation or eminent domain or having your property acquired (and possible being moved out of your house). If you are in the latter boat, you are probably very unfamiliar with condemnation law and probably have heard only bad things. Hopefully this site will ease some of those fears, or at least answer your questions.