Because I'm an eminent domain attorney, I try to keep a close eye not only on the state of eminent domain law, but also eminent domain in the news. What I've seen, and this may be because only the suspect condemnation action make it into the news, is that generally everyone is against the eminent domain process. Citizens don't like it for obvious reasons, city and state governments don't necessarily like it because of the political implications, and everyone else is luke warm because of the surly reputation of condemnation.
I wanted to take this opportunity to point out that although this process is never easy on the landowner or the acquiring authority it is a necessary function of government and in fact may keep all of our lives running smoothly. Now, you probably think this is a crazy statement, but take a moment to think about this. Think about the roads you drive on, railroads that deliver goods, the buildings you do business in, the services you enjoy (heat in your home, electricity, running water, sewage, internet, phone, cable), the gasoline you use, and how you generally live your life. Without the power of eminent domain, little of this would be possible.
To lay all those utilities, build those roads, and erect those buildings (almost any government building, and as you have seen in the news, even some private ones) eminent domain was used. Without this power roads (and all other utilities) would have to go around single tracts of land or not be built at all. To get from one place to another or to get commodities from place to another would be impossible. Gridlock would ensue. Entire neighborhoods would be filled with empty run down houses that could not be cleaned up (I'm referring to blighted neighborhoods, which is an important aspect of condemnation, absent the economic stimulus side that makes people so angry).
So, although for each individual landowner it is a painful, sometime arduous process, eminent domain overall is necessary for the good of the overall public.
As I mentioned before, these feeling wouldn't affect me as an eminent domain attorney if I was representing a landowner in a condemnation case. I'd still do my best to get them what they deserve, to at least make them feel like they've been compensated for their loss. But the fact is, this is an important function of government. I'm just glad the founders of this country were smart enough to make sure people were paid for their loss (this is actually a primary reason the Revolutionary War ensued - people used to have their property taken and received nothing in exchange!).
Eminent Domain Attorney
Friday, May 30, 2008
Wednesday, May 21, 2008
Can Juries Adequately Evaluate Eminent Domain Cases?
Jury Trials. The symbol of the American justice system. Having twelve of your peers evaluate your case to render a fair and just verdict.
That is how juries are often described in America, at least in courtrooms in front of juries. Outside the courtroom, however, in law offices across the United States, juries are avoided like the plague. Why, you might ask? Don't juries hold this system together and generally do the best they can to be fair to everyone? Of course they do, but sometimes they just mess up. A perfect example is a jury trial I was at just last week.
The trial, as you might expect, surrounded an eminent domain taking. It was for a road improvement project (the road was being widened and flattened for safety) in which the nearest 25-30 feet of the landowner's property was being acquired in fee, with another 25-30 feet on top of that for a temporary easement (construction limits). Overall the taking amounted to 10 acres or so, of a 60 acre tract. With 50 acres left, it would seem that the landowner wouldn't be left so bad off.
But he had a house on the property, and it was right in the middle of the taking area. This means it had to go. As I've mentioned before, the formula for acquiring only part of a piece of land by eminent domain is to determine the value of the entire parcel before the acquisition, determine the value of the entire parcel remaining after the acquisition, subtract the first from the second, and you have your answer. With a house there before and gone after, the damages, as you can imagine, are going to be fairly substantial.
The main issue in this case, as you might imagine, was the value of the house. See, the house itself was right smack in the middle of being renovated. Sheetrock was missing, wires were exposed, the house was a mess (and therefore not very valuable in the eyes of the government agency). But the landowner was renovating the house himself, and had put much of his blood, sweat, and tears into it. Although it is not a compensible item, the jury heard about what the guy had done to his house - and he actually shed a tear on the stand!
As the case progressed, there were no big surprises. The landowner and his expert testified, and the government and their expert testified. I believe the landowners expert computed $220,000 in damages, and the government body's computed $80,000. At closing, the landowner's attorney did throw out a little fire and brimstone, making it clear that this taking was cutting them to the bone. But it wasn't anything out of the ordinary.
Then the jury is out. They deliberate for a bit and are ready to return their verdict. Here it comes... are you ready... $300,000!! Although in the grand scheme of things that's not a lot of money, consider that it is a full $80,000 over what the landowner's expert appraiser even testified to! The verdict was shocking to say the least.
When it was all over, we got a chance to talk to the jurors (if they want) and some did. What we found out was astonishing. They said they just disregarded all of the jury instructions because they weren't fair! So instead of using the formula they tried to determine what a brand new house would cost and gave him that!
This is why jury trials are scary, and why they may not be good for eminent domain cases. What the jury never heard was that relocation benefits, a completely different set of rules and regulations, takes care of re-establishing the landowner in a new home. Without that information the jury figured the landowner would be out on his own with nowhere to go. So they decided to fore go the rules and initiate their own justice.
And the crazy thing is that no one had any way of knowing they'd do this. And even worse, in the aftermath, as a (current) government attorney, it is going to be very hard in the future to try to get that information to the jury.
These cases are so complicated that even novice attorneys can screw up eminent domain cases (that is a story for a different day, but involves an appeal to the state Supreme Court and a new case filed in Federal Court, all to save an attorney who royally messed up).
Juries are the foundation of our Justice System, but sometimes they can do crazy things, both for and against landowners in eminent domain cases. Remember this when you take your case to a jury - you never know what might happen!
Eminent Domain Attorney
That is how juries are often described in America, at least in courtrooms in front of juries. Outside the courtroom, however, in law offices across the United States, juries are avoided like the plague. Why, you might ask? Don't juries hold this system together and generally do the best they can to be fair to everyone? Of course they do, but sometimes they just mess up. A perfect example is a jury trial I was at just last week.
The trial, as you might expect, surrounded an eminent domain taking. It was for a road improvement project (the road was being widened and flattened for safety) in which the nearest 25-30 feet of the landowner's property was being acquired in fee, with another 25-30 feet on top of that for a temporary easement (construction limits). Overall the taking amounted to 10 acres or so, of a 60 acre tract. With 50 acres left, it would seem that the landowner wouldn't be left so bad off.
But he had a house on the property, and it was right in the middle of the taking area. This means it had to go. As I've mentioned before, the formula for acquiring only part of a piece of land by eminent domain is to determine the value of the entire parcel before the acquisition, determine the value of the entire parcel remaining after the acquisition, subtract the first from the second, and you have your answer. With a house there before and gone after, the damages, as you can imagine, are going to be fairly substantial.
The main issue in this case, as you might imagine, was the value of the house. See, the house itself was right smack in the middle of being renovated. Sheetrock was missing, wires were exposed, the house was a mess (and therefore not very valuable in the eyes of the government agency). But the landowner was renovating the house himself, and had put much of his blood, sweat, and tears into it. Although it is not a compensible item, the jury heard about what the guy had done to his house - and he actually shed a tear on the stand!
As the case progressed, there were no big surprises. The landowner and his expert testified, and the government and their expert testified. I believe the landowners expert computed $220,000 in damages, and the government body's computed $80,000. At closing, the landowner's attorney did throw out a little fire and brimstone, making it clear that this taking was cutting them to the bone. But it wasn't anything out of the ordinary.
Then the jury is out. They deliberate for a bit and are ready to return their verdict. Here it comes... are you ready... $300,000!! Although in the grand scheme of things that's not a lot of money, consider that it is a full $80,000 over what the landowner's expert appraiser even testified to! The verdict was shocking to say the least.
When it was all over, we got a chance to talk to the jurors (if they want) and some did. What we found out was astonishing. They said they just disregarded all of the jury instructions because they weren't fair! So instead of using the formula they tried to determine what a brand new house would cost and gave him that!
This is why jury trials are scary, and why they may not be good for eminent domain cases. What the jury never heard was that relocation benefits, a completely different set of rules and regulations, takes care of re-establishing the landowner in a new home. Without that information the jury figured the landowner would be out on his own with nowhere to go. So they decided to fore go the rules and initiate their own justice.
And the crazy thing is that no one had any way of knowing they'd do this. And even worse, in the aftermath, as a (current) government attorney, it is going to be very hard in the future to try to get that information to the jury.
These cases are so complicated that even novice attorneys can screw up eminent domain cases (that is a story for a different day, but involves an appeal to the state Supreme Court and a new case filed in Federal Court, all to save an attorney who royally messed up).
Juries are the foundation of our Justice System, but sometimes they can do crazy things, both for and against landowners in eminent domain cases. Remember this when you take your case to a jury - you never know what might happen!
Eminent Domain Attorney
Friday, May 16, 2008
Eminent Domain for Private Use | A Jury Fights Back
Eminent Domain can be used for many things. Most of the time it is used for actual needs of the local, state, or federal government. Such public uses include sewers, government buildings (warehouses, maintenance buildings, courthouses, schools, etc.), roads, electric lines, gas lines, wildlife refuges. But the Supreme Court in a relatively recent court decision determined that public use included taking property for economic development purposes, which often means leasing acquired ground out to private developers who turn it into business parks, malls, speedways, water parks, and any other thing that will make money.
When that case was decided, many states immediately changed their laws to diminish the chances that private land would be taken for economic development purposes (this does not mean that "blighted" land cannot be taken by government entities - there is a time and place for razing old buildings). Some place still allow it, although they are feeling the consequences of trying to take property for what appears to the public to be a private use.
A perfect example of this is in Jacksonville Florida, where a man recently had eminent domain exercised against him so the local governing authority could turn the land over for private development. Tom Scholl bought some ocean front property several years ago for 8 million dollars to use for a coal and cargo business. Shortly after that, Jaxport decided they would condemn the ground to lease it to private developers. They offered Scholl his 8 million dollars and he declined.
Eminent domain proceedings ensued and a jury returned a verdict of 67 million dollars for just compensation to Mr. Scholl. As would be expected, Jaxport is outraged by this and has threatened to ask for a new trial.
What is the moral behind all of this? Don't try to take property via eminent domain for economic development. It is open season for the landowner's eminent domain attorney to point out again and again, especially in this case, that the current property owner wants to use the land for the exact purpose the city wants to use it for, only the city doesn't get the money when they don't own the property. It makes the city look like a bully, and it really fattens the wallet of the property owner.
Was the property worth 67 million? Probably not. But that is the chance you take as a governing body against a landowner with an experience eminent domain attorney. You take the chance of being burned.
Eminent Domain
When that case was decided, many states immediately changed their laws to diminish the chances that private land would be taken for economic development purposes (this does not mean that "blighted" land cannot be taken by government entities - there is a time and place for razing old buildings). Some place still allow it, although they are feeling the consequences of trying to take property for what appears to the public to be a private use.
A perfect example of this is in Jacksonville Florida, where a man recently had eminent domain exercised against him so the local governing authority could turn the land over for private development. Tom Scholl bought some ocean front property several years ago for 8 million dollars to use for a coal and cargo business. Shortly after that, Jaxport decided they would condemn the ground to lease it to private developers. They offered Scholl his 8 million dollars and he declined.
Eminent domain proceedings ensued and a jury returned a verdict of 67 million dollars for just compensation to Mr. Scholl. As would be expected, Jaxport is outraged by this and has threatened to ask for a new trial.
What is the moral behind all of this? Don't try to take property via eminent domain for economic development. It is open season for the landowner's eminent domain attorney to point out again and again, especially in this case, that the current property owner wants to use the land for the exact purpose the city wants to use it for, only the city doesn't get the money when they don't own the property. It makes the city look like a bully, and it really fattens the wallet of the property owner.
Was the property worth 67 million? Probably not. But that is the chance you take as a governing body against a landowner with an experience eminent domain attorney. You take the chance of being burned.
Eminent Domain
Sunday, May 11, 2008
Eminent Domain | Sales Comparison Approach
Eminent Domain - Sales Comparison Approach Most Common Method of Determining Fair Market Value
As I've mentioned before, there are three traditional methods of determining the fair market value of property in eminent domain: sales comparison approach; income approach; and the cost approach. Although in many situations all three valuation methods can provide some insight into the fair market value of the property, the sales comparison approach is universally recognized as the most accurate indicator of value (when sales in the market exist).
In addition to the sales comparison approach being the most accurate indicator of fair market value, it is also the easiest to gather information on and the easiest to gather significant information on. It provides concrete, tangible information and is based the least on the subjective determinations of the appraiser. But, it is also the easiest to manipulate if you are a good eminent domain lawyer.
Sales Comparison Approach Explained
The sales comparison approach is a very easy concept to grasp. Wherever your property is, there are bound to be other properties like it. Properties that have about the same lot size, about the same square footage, about the same number of bedrooms and bathrooms, about the same condition as your house, and about the same amenities. And chances are that some of the houses are being put into the real estate market and are being bought and sold for agreed to prices in arms-length transactions.
The theory behind the sales comparison approach is these arm-length transactions provide evidence of what the market will bear for that specific type of property. And it makes sense if you think about it. When a house is put up for sale, a homeowner traditionally sets the price at at least the amount they would sell the house for. What I mean is no one usually lists their house for less than an amount they would take if someone accepted their offer. On the other side, no buyer is going to make an offer on a property for more than they think the house is worth. It would be a waste of money.
Therefore, when the two parties come to an agreement on the price to buy and sell a house for, it can be assumed that the buyer is paying a price they believe the house if worth and the seller is accepting a price they think the house is worth. Or said another way, they have agreed on the fair market value of the price of the house.
Now, one sale may be enough to provide a basis for the fair market value of your eminent domain taking. But four sales provides a great basis. And ten assures you have the information necessary to make a complete determination of fair market value. More is better because there are going to be things about each of the comparable sales that are both alike and different from the eminent domain taking. The more sales you have, the more you can extrapolate the differences, focus on the similarities, and arrive at a true fair market value for the property.
How Can an Eminent Domain Lawyer Help Get you More Money?
What an eminent domain attorney has the ability to do is see the hidden potential in your property so that you are using the right comparables in your analysis. For example, let's say you are a farmer, and you own some ground that is near the city limits of a fairly large sized metropolitan area and the city is growing your way. Even though you as a farmer would never want to develop your ground commercially, there is probably an argument that your properties highest and best use is for commercial or residential development. This means that instead of looking for agricultural and rural residential comparable sales, you would want to look for commercial and residential development site sales - a huge increase in value. So long as the highest and best use is not speculative, conjectural, or remote, it is allowed to be argued for fair market value purposes in eminent domain proceedings.
What is your land is clearly residential or agricultural? How can an eminent domain attorney help you get the most money for the taking? The benefit of an eminent domain attorney in this case is they have the ability to spot the flaws in the comparables the other side is using to promote their theory of fair market value and locate those comparables that most accurately represent your property's value. This can result in a significantly higher amount of money at the eminent domain proceeding.
When going forward through this arduous journey that is the eminent domain process, remember that there are ways to increase your just compensation award. The best way to do this is to become familiar with the process and use all of the tools at your disposal. This means hiring an eminent domain attorney.
As I've mentioned before, there are three traditional methods of determining the fair market value of property in eminent domain: sales comparison approach; income approach; and the cost approach. Although in many situations all three valuation methods can provide some insight into the fair market value of the property, the sales comparison approach is universally recognized as the most accurate indicator of value (when sales in the market exist).
In addition to the sales comparison approach being the most accurate indicator of fair market value, it is also the easiest to gather information on and the easiest to gather significant information on. It provides concrete, tangible information and is based the least on the subjective determinations of the appraiser. But, it is also the easiest to manipulate if you are a good eminent domain lawyer.
Sales Comparison Approach Explained
The sales comparison approach is a very easy concept to grasp. Wherever your property is, there are bound to be other properties like it. Properties that have about the same lot size, about the same square footage, about the same number of bedrooms and bathrooms, about the same condition as your house, and about the same amenities. And chances are that some of the houses are being put into the real estate market and are being bought and sold for agreed to prices in arms-length transactions.
The theory behind the sales comparison approach is these arm-length transactions provide evidence of what the market will bear for that specific type of property. And it makes sense if you think about it. When a house is put up for sale, a homeowner traditionally sets the price at at least the amount they would sell the house for. What I mean is no one usually lists their house for less than an amount they would take if someone accepted their offer. On the other side, no buyer is going to make an offer on a property for more than they think the house is worth. It would be a waste of money.
Therefore, when the two parties come to an agreement on the price to buy and sell a house for, it can be assumed that the buyer is paying a price they believe the house if worth and the seller is accepting a price they think the house is worth. Or said another way, they have agreed on the fair market value of the price of the house.
Now, one sale may be enough to provide a basis for the fair market value of your eminent domain taking. But four sales provides a great basis. And ten assures you have the information necessary to make a complete determination of fair market value. More is better because there are going to be things about each of the comparable sales that are both alike and different from the eminent domain taking. The more sales you have, the more you can extrapolate the differences, focus on the similarities, and arrive at a true fair market value for the property.
How Can an Eminent Domain Lawyer Help Get you More Money?
What an eminent domain attorney has the ability to do is see the hidden potential in your property so that you are using the right comparables in your analysis. For example, let's say you are a farmer, and you own some ground that is near the city limits of a fairly large sized metropolitan area and the city is growing your way. Even though you as a farmer would never want to develop your ground commercially, there is probably an argument that your properties highest and best use is for commercial or residential development. This means that instead of looking for agricultural and rural residential comparable sales, you would want to look for commercial and residential development site sales - a huge increase in value. So long as the highest and best use is not speculative, conjectural, or remote, it is allowed to be argued for fair market value purposes in eminent domain proceedings.
What is your land is clearly residential or agricultural? How can an eminent domain attorney help you get the most money for the taking? The benefit of an eminent domain attorney in this case is they have the ability to spot the flaws in the comparables the other side is using to promote their theory of fair market value and locate those comparables that most accurately represent your property's value. This can result in a significantly higher amount of money at the eminent domain proceeding.
When going forward through this arduous journey that is the eminent domain process, remember that there are ways to increase your just compensation award. The best way to do this is to become familiar with the process and use all of the tools at your disposal. This means hiring an eminent domain attorney.
Friday, May 2, 2008
Eminent Domain | When does a Taking Occur?
When Does Interference with Property Constitute a Taking for Eminent Domain Purposes.
I got a question the other day from one of my clients regarding when a taking actually occurs. What has happened in this particular case is a highway project has been designed that requires more right of way than is currently owned by the state. Through the design process, the precise amount of right of way needed has been figured out and a map of the new right of way limits has been drafted and is available to the public. Several property owners have seen this and are now worried that: (1) their property values are going to be greatly diminished because there are plans to put a highway through their house; and (2) they will not be able to sell the house because no one want to buy a house that some day will have a highway run through it.
My clients came to me to find out at what point a taking has occurred and compensation must be paid to a landowner. They don't want to start a fight they will lose if they don't have to.
This question regarding taking property and when it actually occurs is a common one faced by both governing bodies and landowners. Often designs are put together when no money exists to carry the design to fruition. What happens then is landowners are unhappy because they can't sell their house and the government isn't happy because they have unhappy landowners and no money to make them happy. The short solution to this problem, and what I was forced to tell my client, is that the property owners lose this battle (unless a couple of specific things happen).
Diminution in Value is Generally Not a Taking under Eminent Domain Law
The general rule of law, at least in the state I am practicing in, is that planning and plotting alone does not constitute a taking for eminent domain purposes. Other eminent domain attorneys may take your case and argue as hard as they can otherwise, but generally they will lose if only planning or even plotting has occurred. This means that in my footprint example above, even though in reality the landowner most likely can not sell his property or must sell it at a much lower price than prior to the footprint identification, no taking for eminent domain purposes has taken place.
As a practicing eminent domain attorney, I can assure you that some diminution in value does occur in this instance, and the courts even recognize that. The courts also understand the gridlock that would ensue if every landowner effected by a public improvement project could receive compensation for the loss in value of their property. No state would be able to pay for that loss in value, and the infrastructure of the country would likely crumble.
Prohibition from Land Use Can Constitute a Taking under Eminent Domain Law.
Now, the situation changes though, if you want to do something to your property that is legal, but only because of the identified footprint you are prohibited from doing it. As an eminent domain attorney, I could see a great argument for a taking under that circumstance.
For example (and this factual situation is straight of a real case), if you, as a landowner, wanted to put a Blockbuster on your property, or plat it for a residential development, you first have to go through the planning process and have it approved by the City Commission. One of the things the city commission looks at is whether or not the proposed plat conforms to zoning regulations, and other things of that nature - these are legally permissible. If, however, the commission sees that your planned subdivision is directly in the footprint of right of way needed for something else and they only allow the plat if you agree not to build in the area needed by the city, a taking has occurred. What they have done is prevent you from using and enjoying your property to its highest potential.
The reason for success in the second scenario is obvious - in addition to the loss in value caused by the public improvement footprint, the governing body is actually preventing you from using your property in a way that would normally be permissible simply because they want to protect right of way for a future project.
As always, when faced with these issues, contact an experience eminent domain attorney.
If you have any questions or comments, please feel free to leave them below.
I got a question the other day from one of my clients regarding when a taking actually occurs. What has happened in this particular case is a highway project has been designed that requires more right of way than is currently owned by the state. Through the design process, the precise amount of right of way needed has been figured out and a map of the new right of way limits has been drafted and is available to the public. Several property owners have seen this and are now worried that: (1) their property values are going to be greatly diminished because there are plans to put a highway through their house; and (2) they will not be able to sell the house because no one want to buy a house that some day will have a highway run through it.
My clients came to me to find out at what point a taking has occurred and compensation must be paid to a landowner. They don't want to start a fight they will lose if they don't have to.
This question regarding taking property and when it actually occurs is a common one faced by both governing bodies and landowners. Often designs are put together when no money exists to carry the design to fruition. What happens then is landowners are unhappy because they can't sell their house and the government isn't happy because they have unhappy landowners and no money to make them happy. The short solution to this problem, and what I was forced to tell my client, is that the property owners lose this battle (unless a couple of specific things happen).
Diminution in Value is Generally Not a Taking under Eminent Domain Law
The general rule of law, at least in the state I am practicing in, is that planning and plotting alone does not constitute a taking for eminent domain purposes. Other eminent domain attorneys may take your case and argue as hard as they can otherwise, but generally they will lose if only planning or even plotting has occurred. This means that in my footprint example above, even though in reality the landowner most likely can not sell his property or must sell it at a much lower price than prior to the footprint identification, no taking for eminent domain purposes has taken place.
As a practicing eminent domain attorney, I can assure you that some diminution in value does occur in this instance, and the courts even recognize that. The courts also understand the gridlock that would ensue if every landowner effected by a public improvement project could receive compensation for the loss in value of their property. No state would be able to pay for that loss in value, and the infrastructure of the country would likely crumble.
Prohibition from Land Use Can Constitute a Taking under Eminent Domain Law.
Now, the situation changes though, if you want to do something to your property that is legal, but only because of the identified footprint you are prohibited from doing it. As an eminent domain attorney, I could see a great argument for a taking under that circumstance.
For example (and this factual situation is straight of a real case), if you, as a landowner, wanted to put a Blockbuster on your property, or plat it for a residential development, you first have to go through the planning process and have it approved by the City Commission. One of the things the city commission looks at is whether or not the proposed plat conforms to zoning regulations, and other things of that nature - these are legally permissible. If, however, the commission sees that your planned subdivision is directly in the footprint of right of way needed for something else and they only allow the plat if you agree not to build in the area needed by the city, a taking has occurred. What they have done is prevent you from using and enjoying your property to its highest potential.
The reason for success in the second scenario is obvious - in addition to the loss in value caused by the public improvement footprint, the governing body is actually preventing you from using your property in a way that would normally be permissible simply because they want to protect right of way for a future project.
As always, when faced with these issues, contact an experience eminent domain attorney.
If you have any questions or comments, please feel free to leave them below.
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