April 18, 2017

Leftover Land ― When the Government Takes Part of Your Property, What Happens to the Rest?

So many questions arise when a landowner finds out that a government entity intends to condemn his or her property. When? Why? How will I get compensated? What can I do to protect my rights? There are even more uncertainties when the condemnation involves a partial taking of a larger piece of property. Landowners are often concerned about how the taking, as well the government’s underlying project, will affect their remaining property. The issues are different depending on the use of the land. The impacts to a piece of investment property, for example, may be very different from the problems created for an existing business. Although this complicated subject could fill volumes, the following overview can help landowners get acquainted with the basic principles of compensation for partial takings.

Partial Takings

Courts have recognized that when a government entity condemns a portion of a larger piece of property, payment for the land actually taken may not adequately compensate the landowner for his or her loss. A landowner may be entitled to additional compensation for impacts to his or her remaining property, depending on the answers to two questions:

  1. Was the part taken sufficiently connected with your remaining property so that the two portions are considered one “Larger Parcel”?
    If the government has taken a strip of frontage from a single lot, the remaining portion of the lot will satisfy this test and, as the landowner, you’ll be entitled to compensation for certain impacts to the remaining property. If, however, the government has taken land you own across the street from your operating business, this is a more difficult question. In this example, to figure out whether you’re entitled to compensation for a loss in value to the business property, it is important to consider three factors (often called the “three unities”). The factors involved in determining whether two pieces of property are part of the same Larger Parcel are (1) whether they’re physically touching (often referred to as “contiguity”); (2) whether they’re owned by the same person or entity; and (3) most importantly, whether they’re used together. There is some flexibility in the first two factors if one piece of land is very important to the use of the other. For property that is part of the same Larger Parcel as the piece taken by the government, there may be compensation for a loss in value caused by the taking. Depending on your jurisdiction, this may be referred to as a Larger Parcel, Parent Tract, or Economic Unit. Regardless of the terminology or jurisdiction, it will be important to talk to an attorney with experience in eminent domain so they can help you evaluate what your remaining property may be and in turn, you can determine what damages you may end up suffering.

  2. Does the law in your state allow compensation for the types of harm suffered by your remaining property?
    If the part taken and the remaining property are considered one Larger Parcel, the second issue is whether the courts or the legislature in your state have decided that landowners should receive compensation for the specific types of harm suffered by your remaining property. Landowners in condemnation cases don’t receive direct compensation for damages in the same way an injured person does in a tort case, but landowners may receive compensation for impacts causing a loss in value to their remaining property. There’s a great deal of variation in the types of losses that are compensable in different states. However, even if a landowner is not entitled to monetary compensation for a particular project impact, experienced eminent domain counsel can sometimes negotiate a better situation. If you engage counsel early enough in the process, there’s even the potential to work with the government and obtain small but important changes to the project so that it impacts your property less. Whether the opportunity is for potential compensation or a change in the project, it’s important to consider whether the taking will cause any of the following impacts to your remaining property:
    • Bifurcation (a taking that splits your property in half)
    • Causing the property to be in violation of zoning or land use ordinances
    • Changing what the property can be used for (e.g., retail to industrial)
    • Impacts to internal maneuverability
    • Impacts to loading docks and pick-up facilities
    • Impacts to landscaping and setbacks
    • Interference with business operations during project construction
    • Loss of access
    • Loss of parking or drive-aisles
    • Loss of signage or visibility
    • Small strips or remnants of land that can no longer be used

Partial takings are complex and challenging for everyone involved, including landowners, tenants, developers and appraisers. It’s crucial to take your time and think through all the ways in which a taking may affect your remaining property, because there’s only one chance at compensation. Experienced eminent domain counsel can also help assess these impacts and navigate the condemnation process to obtain your best possible outcome. So as soon as you find out that your property may be impacted by a public project, you should reach out to counsel to assess your options.

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