News & Events

What To Do when Faced with Eminent Domain

by | Mar 21, 2016 | Industry News, Real Estate & Land Use, Silver, Mark S

by Mark Silver

Faced With Eminent Domain

Q: I have received notification that my property is to be taken for public use; what do I do and what are my rights?

A: The answers vary depending on the type of property to be taken (residential; commercial; industrial; development; agricultural, etc.); the entity seeking to acquire the property and the expressed purpose; whether the taking is partial or total; whether there are structures or site improvements contained within the area of taking; if a business is involved whether the taking will interfere with its continued use and operation, and other factors specific to the property involved and the taking plans.

Both the United States Constitution (Amendment V) and the Pennsylvania Constitution (art.1, Sec. 10) provide: “…nor shall private property be taken…or applied…for public use, without just compensation…”. It is the quest for just compensation that requires assistance of experienced counsel early in the proceedings to seek to address issues that arise from the acquisition of part or all of the subject property that may include in addition to just compensation for the actual area of acquisition the recovery of specific statutory benefits for which the condemnee may be eligible.

The earlier the condemnee makes contact with counsel, the better. First, it must be determined that the taking is legal, and not subject to objections. Then the property must be inspected to determine existing conditions; plan revisions considered; a real estate appraiser and engineer, if necessary, employed…all to review current conditions and the relevant taking plans, to determine the impact of the taking, and if not total, the effect the taking will have on the remaining property (severance damage). Factors such as relevant zoning; availability of public/private utilities; access; topography; visibility, and the like are critical to the full understanding of the property, its current and potential highest and best uses, and how it may be impacted by the taking.

The Condemnee is to be paid “just compensation”, defined in the Pennsylvania Eminent Domain Code to: “…consist of the difference between the fair market value of the condemnee’s entire property interest immediately before the condemnation and as unaffected by the condemnation and the fair market value of the property interest remaining immediately after the condemnation and as affected by the condemnation”. Although the words that comprise the definition of “just compensation” in the Pennsylvania Eminent Domain Code seem straightforward, the experience and insight of counsel, the appraiser, and when necessary an engineer, can serve to identify and quantify elements of damage not initially appreciated, but compensable in accordance with applicable law.

Counsel can also serve to identify claims in addition to “just compensation” for which the condemnee may be eligible that may include interest; limited reimbursement of professional fees; moving and related expenses; business reestablishment expenses; replacement search costs; rent loss; and others where the facts and governing law so provide. In certain residential taking scenarios, the condemnee may be entitled to a replacement housing supplement; increased mortgage interest differential payment; and payments for title search, transfer tax, and other closing costs, in addition to moving expenses.

Pennsylvania law does not currently provide compensation or reimbursement for business loss or loss of business profits. Business Dislocation Damages; however, may be payable in certain circumstances (for example: where the taking is total and a business not part of a chain of three or more similar establishments is taken along with the real property), are limited to a maximum of $60,000, and are dependent on tax returns.

It is noteworthy to mention that the process of obtaining full and comprehensive just compensation for any taking, whether total or partial; residential, commercial, or otherwise; is time consuming and can include many legal, engineering, and appraisal issues not immediately obvious or known to professionals who do not have experience in this type of work.

Should you wish to discuss issues of importance to you that are involved in a taking of your property, I would be more than pleased to review them with you.

Mark S. Silver