Glossary Of Helpful Terms
- Condemnation Clause
- Date Of Valuation
- Default Judgment
- Fair Market Value
- Just Compensation
- Loss Of Goodwill
- Public Use
- Resolution Of Necessity
Once a complaint has been filed, you must file an answer to the complaint. This answer will accept or deny each of the allegations alleged in the complaint. It should also contain a statement of the nature and extent of the interest you claim in the property as well as claims of loss of goodwill and precondemnation damages if applicable.
Elimination of blighted areas has long been held to be a valid public use. Blight has been found to include unsafe buildings, dilapidation, faulty utilities, subdivided lots of irregular shape and inadequate sized lots for development.
The complaint is the first pleading filed with the court in a condemnation action. The complaint will state the government agency as the plaintiff in the action. Yourself, as well as other parties with an interest in the property are typically listed as the defendants in the action. The complaint will state the property being condemned and a statement of the government’s right to take the property, among other allegations.
A condemnation clause is a clause in a lease between the landlord and tenant stating that if the property is condemned the tenant will not receive a portion of the compensation.
Date Of Valuation
The date of valuation is the date the complaint is filed if the case is brought to trial within one year. If the case is brought to trial after one year, the date of valuation will become the date trial begins.
If an answer is not filed within 30 days after the complaint has been served, the government can obtain a default judgment against you. This default judgment precludes you from making a finding of additional compensation owed to you. Typically, the government will seek a default judgment amount based off its appraisal report, which can be substantially lower than the amount found through settlement or trial.
Discovery is a pretrial phase of litigation. During discovery, both sides seek information from each other in an attempt to build and prove their case. In eminent domain actions, discovery typically includes both sides having the property appraised. Other discovery requests can include requests for documents and interviewing interested parties, known as taking depositions.
Fair Market Value
The fair market value of property is the highest price estimated that the property would bring if exposed for sale for a reasonable period of time. The highest price is determined by the “highest and best use” of the property. Real estate appraisers for both parties will each make a determination of the fair market value for the property at the date of valuation. Both appraisals will be presented to a jury to determine the final amount paid.
Appraisal amounts can differ drastically, which can lead to a big difference in the final amount paid. Century Law Group, LLP works with experienced, knowledgeable appraisers who will be able to give a fair appraisal of your property.
Improvements, which the property owner is entitled to compensation for, is defined as “any machinery or equipment installed for use on property taken by eminent domain” which cannot be removed from the property without substantial economic loss or damage to the property. These improvements are oftentimes referred to as “fixtures and equipment.”
If both sides do not reach a settlement agreement, the eminent domain action will be tried before a jury. At the conclusion of the trial, the jury will deliberate to come up with a value of the property based off evidence provided by both parties. The value the jury finds is called the judgment and is the final dollar amount the government is ordered to pay the property owner.
The Fifth Amendment of the United States Constitution and Article I Section 19 of the California Constitution both provide that the government must pay “just compensation” in order to take private property. Generally, “just compensation” is sought for the value of the real property being taken, improvements to the property, such as fixtures and equipment, and business goodwill. Just compensation for these items is generally the “fair market value” of the item as of a particular date.
Loss Of Goodwill
If a business is on property which is condemned, whether it owns the property or leases, the business owner is entitled to compensation for loss of business goodwill as a result of moving business locations. The owner must show that a loss is caused by the property being condemned and that the loss cannot be reasonably prevented by relocating. Typically, a goodwill expert will evaluate the loss of goodwill caused by the condemnation. See CCP §1263.510(b) below for a definition of goodwill.
Originally, public use was construed to mean land to be used by the public. This would often include uses such as public roads and highways, schools, libraries, and police stations. Elimination of “blighted” areas has also been a common public use. As of 2005, the United States Supreme Court has held that eminent domain can be used to take private property in order to give it to another private party. This controversial economic redevelopment theory is that new owners will put the land to more lucrative uses, thereby increasing tax revenues which would benefit the public.
Resolution Of Necessity
A Resolution of Necessity must be adopted by the government agency before the agency can commence an eminent domain proceeding in court. This formal decision states that the agency has concluded that the following conditions have been met: (i) the project is necessary and in the public’s interest, (ii) the project provides for the greatest public good and least private injury, (iii) the property is necessary for the project, and (iv) an offer has been made to the owner of the property. These findings are typically conclusive except for where gross abuse of discretion, bribery or fraud can be found.