Does Eminent Domain Require Compensation? Key Facts You Should Know

Does eminent domain require compensation? This is a critical question for property owners facing the possibility of government seizure of their land. Eminent domain is a powerful tool used by the government to take private property for public use, but it comes with complex legal implications. Understanding whether you are entitled to compensation, and how much, can help you navigate this challenging process. In this blog post, we’ll explore five lesser-known facts about eminent domain to help you better understand your rights and what to expect if you find yourself in this situation.

A Property’s Value Isn’t Restricted to Its Current Usage

Does eminent domain require compensation that reflects the full potential value of a property? Absolutely. When the government seeks to take your property, it is obligated to provide “just compensation,” which is typically defined as the amount that would make the property owner whole by indemnifying the owner for the loss resulting from the taking. This compensation is generally determined by the fair market value of the land, buildings, and other structures situated on the property.

Property owners are entitled to a valuation that considers the “highest and best use” of the property. This means that if a property has the potential to be used in a way that would increase its value, the government’s compensation offer must account for that potential. For instance, if a piece of vacant land is seized, its appraisal value must include its potential for commercial use, provided such use is physically possible and legally permissible.

For example:

A property improved with a modest single-family home on a large piece of land near a highway might have the highest and best use. That involves demolishing the home and constructing a more intense use, such as a hotel or apartment building. The highest and best use of a property reflects its most profitable use, and property seized by eminent domain must be valued according to its highest and best use to ensure the property owner is fully compensated.

Legal Fees can be Reimbursable or Contingent on Success

When faced with a condemnation lawsuit, it’s crucial to protect your rights, but the prospect of paying for an attorney can be daunting. Thankfully, there are a few practices in place to help alleviate these concerns:

• In some circumstances, the government may be obligated to pay for your legal fees.
• Many eminent domain attorneys offer contingent payment options.

Firstly, you can have peace of mind knowing that if your property is located in New Jersey and you succeed in preventing the government from taking your property, it will have to compensate you for your counsel fees. According to N.J.S.A. 20:3-26, if a court rules that the condemning agency cannot seize the property or has improperly used its eminent domain powers, the court will dismiss the case. The condemning agency will be responsible for paying the property owner’s legal fees and related expenses.

Subsequently, if you are unsuccessful in stopping the condemnation, your next step would most likely be to pursue an award of just compensation from the condemnor. Fortunately, many eminent domain attorneys structure their fees so that you only incur legal fees if they win you more than the government originally offered. This type of contingent fee structure generally ensures that you won’t be liable for counsel fees unless you succeed in obtaining more compensation than the government originally offers.

Understanding whether eminent domain requires compensation, especially in the context of legal fees, is essential. If you need an eminent domain lawyer, remember that these types of remedies and fee structures may be available to help mitigate costs. This means you can focus on ensuring you receive just compensation without the added worry of upfront legal expenses. If you’re concerned about eminent domain without compensation, consulting a knowledgeable attorney can provide you with the best strategy to protect your rights and potentially recover legal costs.

You May Be Entitled to Relocation Benefits

The United States Constitution and the New Jersey Constitution guarantee that landowners subjected to property seizures via eminent domain are entitled to just compensation. This compensation includes the value of the land, buildings, features, and even the property’s potential to be converted into something more valuable. However, many people do not realize that the government is also responsible for providing relocation costs and other benefits to the occupants of property seized by eminent domain. Whether they are owners, tenants, or other lawful occupants at the time of the taking.

Not only does the condemnor have to pay for the real estate itself, but they also must cover the costs associated with moving one’s home or business to a different location. Relocation laws vary from state to state, but they are generally designed to assist occupants of properties who are displaced due to a taking via eminent domain. Some basic information about relocation laws in New Jersey is available here.

In circumstances where relocation is complex or difficult, relocation negotiations can be crucial. If you own a business that uses complex equipment and machinery, it may be especially important to consider relocation costs. In fact, complex commercial relocations may result in relocation awards that are larger than the amount paid for the real estate. Regardless, whether the government is threatening to take your capital-intensive business or simply your family home, it is necessary to understand your right to relocation benefits and assistance.

Owners Need to be Properly Compensated for Partial Takings

Does eminent domain require compensation for partial takings? Yes, and it can often be more complicated than compensation for complete condemnations. In some instances, the government may not want to take an entire property but rather just a portion of it, known as a partial taking.

A common example of a partial taking would be a road widening, where the condemnor would take only the land needed to increase the size of the road. When a partial taking occurs, the government must not only provide just compensation for the land that was actually taken but also severance damages for any decrease in value to the remaining property. Determining these damages requires a thorough understanding of how the partial taking impacts the remaining property’s utility and value.

For example:

Imagine a situation where part of a retail store’s parking lot is taken to widen a road. While the owner would be entitled to the market value of the land area seized by eminent domain, it may be more important to consider how the taking would affect the remaining property. Having fewer parking spaces could materially impact the utility of the remaining property for retail purposes or restrict the kinds of vehicular traffic that could maneuver around the property, such as large trucks for deliveries. The owner would need to be compensated for that.

Proper compensation ensures that property owners are not left with diminished property value or usability. The taking of private property, even partially, must be approached with a comprehensive valuation to ensure fair compensation.

 Taking One Property Might Cause Damages to Another Property

Does eminent domain require compensation when one property is taken, but it causes damage to another property? Absolutely. Sometimes, partial takings can involve two completely separate parcels of land. In these cases, if it can be proven that the two parcels share a “unity of use,” the property owner can be entitled to severance damages for the piece of land that is not taken. “Unity of use” means that two pieces of property share a common purpose and depend upon each other to function.

For example:

If the owner of a retail store property owned or leased a parking lot across the street from the store. Even though the two pieces of land are physically separated, the property owner may be entitled to severance damages caused to the value of the parcel containing the store if eminent domain seizes the parking lot. If a unity of use exists between the store and the parking lot, severance damages may be awarded to the store parcel if the parking lot parcel is taken by eminent domain. In other words, if the parking lot is used to service patrons or employees of the store, severance damages may apply.

These types of issues need to be carefully evaluated to ensure that the owner receives just compensation. Consulting with an eminent domain attorney in NJ can help navigate these complex situations and ensure that property owners understand their rights and receive full compensation.

Conclusion

Understanding the complexities of eminent domain is essential for property owners. This blog has explored five critical aspects of eminent domain: the need for just compensation, the valuation based on the highest and best use, the potential for relocation benefits, the intricacies of partial takings, and the impact on adjacent properties. So, does eminent domain require compensation? Yes, and it extends beyond the surface value of the land to include various factors that ensure property owners are made whole.

Navigating the legal landscape of eminent domain can be challenging. If you find yourself facing a property seizure, it is crucial to understand your rights and ensure you receive fair compensation. Consulting with an experienced eminent domain attorney can provide the guidance and support you need to protect your interests.

Contact Us Today for a Consultation

If you have questions or need assistance with an eminent domain case, don’t hesitate to reach out. Our team at MROD Law specializes in ensuring property owners receive the compensation they deserve. Contact us today to schedule a consultation and learn more about how we can help you navigate this complex process.

The author acknowledges the assistance of John Oettinger, a summer intern at McKirdy & Riskin, in preparing this article.  Mr. Oettinger is a member of the Class of 2018 at the University of Michigan’s Ross School of Business.