Eminent Domain appraisals are a specialized discipline within the appraisal industry and are normally associated with condemnation actions involving a government agency. Eminent Domain is defined in the, “Principals of Right of Way published by the International Right of Way Association, 1999 ed.,” as follows:
“The right or power of public and semipublic agencies, to take private property for public purposes without the owner’s consent on payment of just compensation.” And Condemnation is further defined as:
“(1) The process by which property is acquired for public purposes through legal proceedings under the power of eminent domain; (2) the act of a federal, state, county, or city government or district or public utility corporation vested with the right of eminent domain to take private property for public use when a public necessity exists; (3) upon payment of just compensation, the act of a sovereign in substituting itself in the place of the owner and taking all or part of the rights of the owner.”
An appraisal of real property for a condemnation action is utilized in the process of determining just compensation for the taking of personal rights associated with the property being affected. Just compensation is founded within the very basis of our country itself within the Constitution of the United States. In brevity the Fifth Amendment contains the words, “…..nor shall any person…. be deprived of….property, without due process of law; nor shall private property be taken for public use, without just compensation.” The Fourteenth Amendment dictates that this principal shall be applicable in the individual states and most state constitutions guarantee the same.
The “Principals of Right of Way published by the International Right of Way Association 1999 ed.,” defines Just Compensation as follows:
“The payment required by law for the loss sustained by the owner as a result of taking or damaging of private property for public purposes.”
The idea behind just compensation is to put the private property owner in as good a position as he/she was prior to a taking for public purposes. In other words the private property owner should not be in better or worse condition than before the action occurred. The whole concept of just compensation is to make the affected party whole again. Generally this is held to be the market value of the property and/or rights taken as a result of the condemnation action.
Several approaches to the just compensation are available depending on the geographic location of the action and what agencies are involved.
“The Dictionary of Real Estate Appraisal” published by the Appraisal Institute defines the Before and After Rule as follows:
“A procedure in which just compensation is measured as the difference between the value of the entire property before the taking and the value of the remainder after the taking.”
And the State Rule is defined as:
“The process of determining just compensation by estimating the value of the portion to be acquired as part of the whole property plus the net severance damages.”
Dependant upon the jurisdiction in which the action occurs will be the mandate for which rule will have to be adhered to during the appraisal process.
Eminent Domain or Condemnation appraisals can be very complex by their very nature which complexity is compounded since many will require court litigation. Not only will the appraiser have to assess the impacts of the actual take itself but will also have to consider severance damages that result from the action. It is not unusual to experience a change in highest and best use, access or circuitous issues, increased noise, marketability issues, etc.
Our firm has provided services ranging from the preliminary consultation services required of proposed projects for feasibility purposes to full blown appraisals as needed in court litigated situations. We have provided these services to both private party individuals as well as for public agencies including state transportation and utility companies. If the need ever arises in this type of situation consider our firm as your valuation specialist. We have at least one principal of the firm who is Right of Way – Appraisal Certified by the International Right of Way Association that has the educational background and experience necessary to complete these types of assignments competently.