How the Government Takes Property
As cities and towns expand and undertake improvements to roadways, sewer and power lines, communications, and other systems, the government must often secure or acquire access to private land. Without the government's power to take property, the capability of public infrastructure would not be able to serve the needs of society.
The right of the government to obtain private land for public purposes is known as eminent domain. This right derives from federal and state constitutions and related property laws.
Eminent domain allows the government to take private land for public purposes only if the government provides fair compensation to the property owner. The process through which the government acquires private property for public benefit is known as condemnation.
Also known as "taking," an example of government taking could include the expansion of a roadway or a new light rail station. The government can take private land for public use, which could include a shopping center or a park.
How the Government Takes Private Property
When the government makes plans for the expansion and improvement of publicly maintained roads and utilities, it determines which private parcels could be affected. The government will then work with its own appraisers to determine the appropriate price for the necessary property interests.
When the government has established its estimation of the property value, it may offer the landowner a particular price for the property. If the property owner agrees, the government buys the land. If the property owner disputes the government's valuation and they cannot agree on a price, the matter may go to condemnation proceedings.
During condemnation proceedings, the property owner will get to offer their own valuation for the property. Typically, the property owner will work with an attorney and an appraiser. The attorney will protect the property owner's legal rights respecting the involved property, and the appraiser will work to establish the property's fair market value. The property owner may also oppose a forced sale by contesting the government's proposed use of the property.
As an alternative, the landowner may also claim that the extent of the property the government is attempting to condemn is too great and that its purposes can be fulfilled with less intrusion. Generally speaking, the government is only allowed to invade the property rights of individuals to the extent necessary to accomplish the intended public purpose.
Value of the Property
Most condemnation proceedings turn on the value of the property at issue. How much a piece of property (or an interest in property) is worth depends on many factors. For a piece of undeveloped land with a single owner and no exceptional or unusual features, establishing the property's value may be fairly straightforward. The zoning of the property and the value of surrounding tracts will provide useful guidance for the calculation. In urban settings, however, the property is likely to be developed.
The unique characteristics of a property often result in a different estimation of value between the property owner and the government. In addition to an appraiser and an attorney, each side may use additional experts, such as engineers and architects.
Factors that are considered in property valuation include:
- Property size
- Existing buildings and roads are on the property
- Current use
- Potential uses
- Other businesses or land uses that are adjacent or nearby
- Whether there are tenants or other leaseholders involved.
The property may represent the owner's livelihood so that to the owner it is worth everything they have invested in it, and all that can be derived from it. The state must pay relocation expenses, including equipment to the property owner.
To the government, the relevant value is the property's market value. The market value is based on what an interested buyer might pay to an interested seller. The valuation is also made as of a particular date. This is because property values can fluctuate over time. To arrive at one price, the determination is established as of one date.
The value determination is based on the amount of the acquisition. In some cases, the government may need to take all of the owner's property. In other cases, the government will only need a portion of the property or an easement. The value of these interests depends on the land involved, and on the effect the loss or intrusion of that land will have on the rest of the property.
When determining the value for a particular piece of property, appraisers and courts generally recognize three approaches:
- Market approach: The value for the subject property is based on recent sales of comparable, nearby properties. Based on these sales, the appraiser forms an opinion as to the price the property would bring on the open market. The market approach may be inappropriate if there have been no recent comparable sales in the area.
- Cost approach: Also called the depreciated replacement cost, this looks at how much it would cost to replace the land and existing structures, after factoring in depreciation.
- Income approach: This considers the investment value of the property. How much one would pay at the moment of valuation in light of the property's income potential?
Time of Property Valuation
Another point a property owner may contest is the time of valuation. This can happen when the government unreasonably delays its acquisition of the property. At the same time, the government actions may substantially diminish the subject property's value. For example, the government cannot buy up and condemn adjacent properties, destroy them or let them decay, and then lowball the remaining property owner once their own property value has fallen as a result.
The general rule is that the government does not have to compensate a property owner until it has taken his property or substantially impaired his ability to use it. The government may argue that it has not done so but the property owner can argue that the government's actions have made the property all but useless in the real estate market.
Condemnation proceedings derive from the simple principle that the government may secure private property to benefit the public. Yet, because of the many property uses and volatile real estate market, condemnation proceedings can be complex. The valuation figure that the government reaches may differ from the landowner's.
The eventual value may turn on the persuasiveness of the landowner's appraiser. The property owner's appraisal must also meet specific legal requirements. Fair value will be based on the extent of the property taken and an analysis of the many interests involved.
Is the Government Trying to Take Your Property? Get Legal Help.
For anyone attempting to prove a different value for the property, or limit the extent of a government's intrusion, the assistance of an experienced attorney can be a valuable asset. Contact a skilled eminent domain lawyer who can help you make informed and effective decisions based on the law.
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