If you receive a notice in the mail that your property is needed for a public project, here are some tips. Don’t let the appraiser cross your threshold on that first knock. Be polite, these are mostly regular folks with a difficult job to do, but make it clear the timing doesn’t work for you right now.
The Offer on the Table is Rarely the Right Number
Appraisers for the government are not actively working to screw you over, but they’re not trying to do you any favors either. They are employees of the agency, their job is to develop a number that the agency can defend in court. The number may be much lower than expected, but if it’s defensible, that’s good enough.
Everyone knows the measure is fair market value, but fair market value is only as accurate as the assumptions that go into it. There are dozens of reasonable ways to arrive at a number. One of the easiest and most common sticks is the concept of “highest and best use.”
If you own a piece of property that’s being used as a surface parking lot, but is zoned for a 50-story office building, the agency’s appraiser may not assume that potential use. An independent appraisal could show the value to be a million dollars higher. That’s a million dollars you can get in negotiations, but you can kiss it goodbye if you simply accept the government’s number.
Hire an Appraiser Who Knows This Specific Area of Law
General property appraisals and eminent domain appraisals aren’t the same. The context of eminent domain introduces considerations that basic appraisals don’t include, and severance damages are one of the biggest, especially for business owners.
If the government is only taking part of your land, the part that’s left may become less valuable to you. You may lose access. Maybe the corner of your frontage is taken for a new turning lane, putting your entrance immediately in a dangerous intersection. Maybe a part of your parking or main truck access is eliminated. And maybe your remaining land is a weird, unbuildable triangle that you’ll never find a use for. Severance damages compensate you for the loss, but only if someone asks for them.
The government’s appraiser has little incentive to ask. Your independent appraiser does. The history of eminent domain reflects a long tension between what the state needs and what individual owners are owed, and the legal protections built up over that history are there specifically because early processes left too much room for under compensation.
You Can Challenge the Right to Take, Not Just the Price
Most property owners simply assume it’s a given that the government can build whatever it wants wherever it wants, so long as it pays. But there are two different questions: whether they can take the land at all, and what they have to pay for it.
The legal standard for “public use” has been pushed a long, long way since we started thinking about railroads and highways, but it’s still not a complete free-for-all. The Kelo v. City of New London decision in 2005 permitted the condemnation of an entire working-class city neighborhood for use in an office park, ironically one that was never even built.
We might say political scrutiny of that decision was, in part, responsible for what became an unprecedented wave of eminent domain reform across the states, where more than 40 jurisdictions strengthened their laws or constitutions with more protection for owners post-Kelo (Institute for Justice). That response matters, it means that the rules nowadays can differ quite significantly depending on which jurisdiction you fall under, and that in some cases, a taking for such and so project could still be challenged as falling short of a legitimate public use.
Negotiate the Terms, Not Just the Money
Other than just getting a check, there are numerous non-monetary elements that can be negotiated in an eminent domain case. A few common ones are making the benefit of the taking work to your project, granting certain restrictions that you’d typically want, and addressing future liability.
The Timeline Works Both Ways
Agencies have real deadlines to meet, and a property owner who is in order, represented by counsel, and clearly ready to go to court is a more costly headache than one who cashes the first check. That doesn’t mean that delay is to your advantage, every day you keep the agency from taking your property is a day the agency will want to cite against your interests in court. It does mean that you come prepared, knowing the property’s true value, the rules for taking a property, the limits on what the government can do and what they can pay, and knowing what your alternatives are and what they will really cost.