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Tenants Rights & Eminent Domain

Posted on December 15 2014 by Gabriela Ocampo

Eminent domain, also called condemnation, gives government agencies the power to take private property if they can meet two requirements: 1.) the property has to be used for the public good, and 2.) the owner has to be fairly compensated. In California, most government agencies can exercise the power of condemnation - over 380 municipalities have redevelopment agencies that use their right to eminent domain.

But what are your rights if you aren't the owner of the subject property, but are a tenant on the property? Do you have to be fairly compensated as well?

The short answer is "yes" but it's dependent on the situational circumstances.

If your lease is in effect at the time that the property is condemned to eminent domain, and the lease doesn't contain a "condemnation clause," then you are likely entitled to compensation. Varying situations dictate varying entitlements, such as:

Compensation for possessory rights.

If you are renting the property, and the taking by the government will interfere with your enjoyment of your possessory rights, you can receive compensation for your future right to possess that equals the current fair market value.

Compensation for fair market value, even beyond your current rent.

More so, if the property rent that you've established with the owner is below market value, as the tenant you could be entitled to a large portion of "fair market" value paid to the owner for the property. You could also be entitled to a bonus value defined as the difference between the total agreed rent for the remaining lease term and the total fair market rent for the same period.

Compensation for relocation costs.

You may possibly have a right to compensation for your costs to move from the property and reestablish in a new location.

Compensation for lost business goodwill.

As a tenant operating a business on the property at the time it is condemned, you have the right to compensation for "lost business goodwill."

Right to challenge.

Eminent domain cases have been challenged, and some successfully stopped, but as a tenant the ability to challenge a case isn't always clear. If you think you have a compelling argument, consulting with experts on eminent domain can help you determine if your argument is valid.

Right to negotiate.

If you are subject to losing your home or place of business to a condemnation, even as a tenant you may be able to negotiate with the government entity for compensation. A challenge can be made to the government's initial compensation offer - you have the right to seek higher compensation based on your particular interest in the property.

Even if your lease does contain a "condemnation clause" there are situations where you are still entitled to some compensation. At Century Law Group, we help property and business owners negotiate with government agencies in condemnation cases where you might be taken advantage of or displaced. In the small community of expert eminent domain lawyers, we are one of the only teams who ONLY represent the displaced property and/or business owners in eminent domain situations. We want to get the maximum compensation possible for our clients.