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Eminent Domain

Eminent domain is the inherent power of a government entity to take privately owned property.  The doctrine especially pertains to land.  The property is usually converted to public use although recent case law allows for a government entity to take land to be developed by private corporations.  Regardless of the reason for the taking of privately owned property, the government entity must pay reasonable compensation.

The term is said to have originated from a 17th century legal scholar who believed that the state possessed the inherent ability to take or destroy property for the benefit of the citizens.  Often this power is used to construct schools, roads, electric utilities, and other services that benefit the general population.

There has been interesting litigation argued before the U.S. Supreme Court to extend the doctrine to condemnation of property for a private use if it benefits the governmental entity where the taking occurs.  However, the standard sort of case our firm sees is a taking by the Tennessee Department of Transportation for a roadway project, Consolidated Utility District’s condemnation for utility easements and/or the county or city otherwise condemning a piece of property for public use for a school, courthouse or some other public project.

The government entity begins the proceeding by filing a suit to condemn the property and take possession.  When this occurs there is a “tender” of what the city, county, or state believes the value of the property taken to have been at the time of the taking.  This is paid into court with the petition for condemnation.  They must serve the owner of the property with the petition and notify them of the tender. There is usually a very short period of time consisting of five days to object to condemnation.  Almost no one does because the power of eminent domain is vast and extremely difficult to overcome.  The issue then is almost always the amount of compensation rather than the legitimacy of the taking.

Where a five acre tract of land is taken the government entity may determine it to be worth $10,000.00 per acre.  Thus, they will tender $50,000.00 into the court.  If the property is later found to be worth $15,000.00 an acre then there would be an additional judgment awarded by a jury for the additional $25,000.00.  This shortfall also bears interest at a statutory rate of US Prime on the day of the taking + 2%.  This rate has historically been higher than what one may earn on CD’s so that interest is usually a substantial factor in determining the value of the case if it has gone on for any length of time.  The land owner has a right to wait until the project is completed to discover if there are any incidental damages to the property as a result of the project.

Incidental damages (sometimes called consequential damages) are where the property taken creates a detriment to the remaining land. This could be the result of water drainage changes, the project being built up substantially from the remaining ground level, odd shaped remaining pieces of land that can no longer be developed, or any number of other problems that can occur.  However, the government entity can also argue that the project has improved the remaining property to decrease damages.  Whether to wait for the project to be completed or move for trial before completion depends heavily upon the specific circumstances.

A partial taking may occur in an easement situation.  Does a utility easement completely destroy the use of the value of the property?  The best answer is, it depends.  It depends on the use of the property, location of the easement, the proximity to major landmarks as to what the property is being used for, the nature of easement, etc.  Each case must be looked at on a case by case basis.

The owner may testify and give an opinion as to the value of the land and any harm done to the land.  It is not necessary to have an expert witness.  In most cases the land owner does use an expert witness but does present some testimony about the value.  The decision to obtain an expert witness is usually driven by whether the government entity will have an expert witness and costs.  Most attorneys feel the need to present an expert at trial.  Under some particular circumstances if the opposing expert is weak and/or if the client is extremely persuasive and/or knowledgeable in the field of real estate sales, it may not be necessary to have an expert.

While it may be legal for the government to take private land, it does not always seem fair. Juries in the community are torn between their sense of justice and their desire to keep government projects cheap so that taxes stay low.  These are cases that need legal representation to present them to a jury so that the land owner can get a fair shake.