People who own real property generally get to control what they do with their property. They can rent it out to others or sell it for development. Occasionally, property owners may lose that control due to complications, such as foreclosure triggered by non-payment. In some cases, even those who have paid off their mortgages can sometimes lose control of the properties they own.
Eminent domain proceedings can force property owners to sell their holdings even if they might prefer to retain them indefinitely. Under eminent domain statutes, state agencies and companies completing projects for public benefit can compel the sale of real property. Those facing the forced sale of a residential property, commercial property or pieces of vacant land generally deserve compensation for the transaction.
Who determines the compensation provided for those selling their property in an eminent domain case or facing condemnation to force the sale of their property?
The condemning authority makes the initial offer
Typically, the government agency or business overseeing the project communicates with each potentially affected property owner to advise them of the project and the need to acquire their property. Generally speaking, eminent domain sales should lead to just compensation for the property owner.
The amount provided to them for the sale should be appropriate, given the fair market value of the property, adjusted for any environmental contamination and cleanup costs. In some cases, the party seeking the property may be unaware of features or improvements that may have impacted the fair market value of the property.
For example, significant internal renovations could lead to a residential property commanding a premium price on the market, while the offer may reflect the average recent sale price of nearby homes. In scenarios where the condemning authorities’ offer is unreasonably low given the condition of the property and market conditions, property owners may need to take legal action.
During real estate litigation related to eminent domain claims, attorneys representing property owners can demonstrate that the amount offered for the property is not fair and appropriate, given the condition of the property and the investments made by the current owner. In such circumstances, the courts may ultimately determine what value to assign to the property, possibly after evaluating reports from real estate professionals.
Understanding the state rules that apply during eminent domain proceedings can be critical for real estate owners who need to protect their investments. Property owners facing the challenges of condemnation need insight into how to assert themselves and may need strong legal support as they prepare to counter a low initial offer made by the party seeking to acquire their home or business, and that’s okay.