Why is the eminent domain playing field tilted so heavily in favor of the government?
To understand the uphill battle faced by landowners when their property is taken for public use, we must understand the setting or environment in which condemnation occurs.
The Takings Clause of the Fifth Amendment to the United States Constitution states:
“[N]or shall private property be taken for public use without just compensation.”
While this clearly stated protection of one of our fundamental rights seems straightforward and easy, it is anything but simple. In this essay, the author relies on nearly 40 years of experience of passionately battling for just compensation on behalf of property owners, and looks at the environment in which the taking of private property for public use occurs.
It is a constant struggle to achieve anything approaching fairness for the property owner. This is because the condemning agency holds a number of advantages that tilt the field greatly in the agency’s favor and which can be very difficult to overcome. Let’s look at a few of the factors involved:
1. The Agency Holds Almost All the Power. The agency says it wants to acquire the property for public use:
- The owner cannot say “no, it is not for sale”.
- The owner cannot say “I’m busy right now, come back in a couple of months”.
- The owner does not have the right to say how much property they will part with,
- or which property,
- or the terms of a purchase agreement.
- in most cases the agency will be required to have an appraisal, but amazingly, many agencies will not allow the owner to have a copy or to even see a copy of the appraisal.
- The owner has no right to change the agency’s plans for the property or the timing of the project.
- In Nebraska and many other states, if the owner wants to seek legal counsel or value consultation, then the owner must pay for it.
- Larger agencies may employ in-house appraisers, who answer only to the agency and who are not required to follow the appraisal rules that all other appraisers are required to follow, rules that have the primary goal of reaching credible results.
The one right that is held by the owner to counter-balance these tremendous disadvantages is the right to be paid just compensation as determined by a fair and neutral Board of Appraisers or a jury of peers in what can become very expensive and time-consuming court proceedings. However, the owner must pay their own attorney and appraisal fees unless the condemnation is dismissed (very limited circumstances) or the owner is successful in increasing the final award above a certain threshold through a jury trial in District Court. All of this can be quite intimidating to the owner.
2. Refusal to Seriously Consider the Other Side’s Viewpoint. In many areas of litigation, attorneys and expert witnesses tend to consistently work on one side or the other. Many of the attorneys representing government agencies are full-time employees and attorneys who represent landowners tend to specialize in this area of law. The same tends to be true as well for real estate appraisers. People who work on one side of an issue for a long period of time tend to gravitate toward the idea that they are on the right side, which of course means that the other side must be wrong. Distrust on the other side soon follows. The practice of eminent domain law is no different. We are all prisoners of our own experiences, and we cannot help but see the world through the lens of experience.
3. Right-Mindedness: There are few government agents who would knowingly try to acquire private property far below its fair market value, just as there are few property owners who are out to get the money they can. If we would pause occasionally to consider the bigger picture of what we are doing and why we could avoid much of the mutual distrust and engage in more productive negotiations.
We who work with the ideal of “just compensation” are engaged in a noble cause which is at the root of our American concept of liberty. “Just Compensation” and “Fair Market Value” are not absolutes. They are based on opinions, and our job is to provide as much accurate information as possible to reach a fair result. It is a sacred honor and a privilege to be involved in administering one of our fundamental rights. It is also an ever-present responsibility, and we must step back occasionally and remind ourselves of this.
4. Open, Meaningful and Fair Negotiations. In Nebraska, the public agency must enter into god faith negotiations with the property owner prior to filing condemnation. However, this has become a little more than a requirement to be respectful. It requires very little good faith and virtually no actual negotiations. Why would any agency acting in good faith refuse to give a landowner a copy of their appraisal at the very first meeting? How can an agency that says “Trust me, I’m from the government” expect to be seen as trustworthy? How can a property owner be expected to accept the conclusions of an appraisal of their property that they have not been given an opportunity to review?” These types of negotiation techniques are the antithesis of fairness and good faith, regardless of the effort to sound respectful Further, in all likelihood they cost the public time and dollars in the long run.
5. The Tyranny of Fair Market Value. It has long been established that just compensation is measured by the loss of the fair market value of the property involved. However, there are many losses that are very real to the property owner but cannot be measured by the loss of the property’s fair market value. A prime example is the loss of income before, during and after a business moves to make way for a public project. In Nebraska and most other states, losses that are very real to the owner but which do not directly relate to the loss of fair market value of the real estate are generally not going to be compensated. Also, some losses that can be measured in terms of fair rental market value may not be compensable.
6. Legal Fictions Very real losses sometimes are determined to not be compensable under the legal fiction of being matters of good management, which in truth is just a way of saying that the public cannot afford to pay for everything. There are numerous such legal fictions in condemnation law, and this author has never faced one that favors the property owner. There is no way to manage your way around the loss of business during a move. There is no way to manage your way around the necessity of washing an entire inventory of automobiles on a sales lot almost every day due to overwhelming dust from road construction. There is no way to manage around having vehicular access to commercial property moved in a way that forces potential patrons to drive an extra five miles to get there.
In conclusion, if you are an owner facing a public acquisition of your property, don’t go it alone. You will not be able to level the playing field enough. Seek legal counsel from an attorney with substantial experience in this area of law. Until the Legislature or the courts choose to change the rules, knowledgeable legal counsel is your best option.