04 Feb Governments Have Tremendous Power, but You Have Your Rights, Too
Eminent domain is an issue that most people think about only when it hits the headlines. Often used in what appears to be an arbitrary manner, it is not uncommon for property owners to think: Could I be next? And maybe they will. Highways, public facilities, utility rights-of-way-even shopping malls and casinos-have been promoted under the threat of eminent domain.
The “the big guys” often prevail. But not always. For example, nearly 20 years ago, current Republican presidential candidate Donald Trump ran into a determined lady named Vera Coking, whose old, three story building stood in the path of Trump’s expansion plans in Atlantic City, New Jersey. Trump allied with New Jersey’s Casino Reinvestment Development Authority officials to argue that his mega-project was better for the city than Vera’s modest building and therefore, the Authority’s eminent domain powers should be used to take Vera’s building.
Unfortunately for Mr. Trump, the New Jersey courts disagreed. Vera still has her building
To be sure, eminent domain powers are substantial and wide-ranging. However, you have rights, too.
One of the most crucial aspects in any eminent domain situation is getting a fair valuation of your property. The Constitution guarantees “just compensation,” but it is very easy for government and development professionals to play the system to produce a lower valuation and frustrate efforts for individuals seeking more equitable results.
Eminent Domain Law generally considers a concept called fair market value in determining just compensation. This is an important but somewhat loose concept that focuses on what a willing buyer and seller would be likely to agree on as a sale price if neither was under any special pressure. In other words, if there weren’t in fact a big project in the process gobbling up property, how would a buyer and seller come to a fair price?
That’s a big theoretical, and it is crucial to get professional help and advice from someone with experience in this complex area of the law.
For example, a property might be subject to future rezoning to a “higher use” that could make it much more valuable. It is a concept that mirrors real world negotiations – the purchase price for a piece of property may not necessarily be locked into its current use. Highest and best use is that use that will produce the highest value for a property, regardless of its actual current use. The reasonable probability of a zone change should always be considered in arriving at a fair market value. Consider the value of an acre of farm land, where only farming is allowed by law. If zoning laws could change in the future to permit office parks or shopping malls, that acre of land could suddenly be worth vastly more money. No doubt, why people with substantial knowledge in real estate always have an eye for farmland or Colorado ranches for sale!
Similarly, if the property is related to your business operation, that fact needs to be considered. Suppose you run a landmark local restaurant that has been steadily profitable for decades. How likely is it that a new location a few miles away will attract the same customer base? In such an instance, the grave negative affect of an eminent domain taking on your business goodwill should also be weighed.
The big takeaway is don’t just settle…Make sure you consider every angle and be sure to get knowledgeable help!
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