Eminent Domain Compensation: How Much Is Your Property Worth?

How Property Owners Can Maximize Their Recovery

When the government exercises its power of eminent domain – the right to take private property for public use – it must pay the property owner just compensation. But what does that really mean in North Carolina, and how can you ensure you are getting what you deserve?

What Does “Property” Include?

It is more than just the land you own. Under North Carolina law, “property” includes:

• Fixtures;
• Vested rights (i.e., permits, zoning/use approvals, etc.);
• Leases;
• Rights-of-way and easements;
• Water and air rights;
• Access rights, and more

Basically, if it affects your ability to use and enjoy your land or the value of your property, it matters.

You are Entitled to Full Compensation

You have the right to “just compensation,” which means the fair market value of your property before the government’s project ever affected it. This value is the price a willing buyer would pay a willing seller in an open market, with both parties having reasonable knowledge of the property’s condition and potential. You are entitled to the value of the property for its highest and best use, which means the use that would produce the most value. In situations where only part of your property is taken, you are also entitled to damages to the remainder, i.e., any decrease in the value of the remainder caused by the project. For example, if the taking reduces access or visibility, negatively impacts parking, drive aisles, traffic flow, or the marketability and usability of the property remaining after the taking, you are entitled to payment for such loss in value.

Limits on What Can Be Taken

Importantly, a condemning authority cannot take private property for any use or without justification.  Condemnors can take property only for a public use. Even then, condemnor can take only as much property as it needs to achieve its public use, but no more.

How Do Courts Determine Value?

North Carolina courts rely on several key principles:

• Fair Market Value Before the Taking:  The property is valued in its condition as it existed immediately before the condemnation, and, to the extent public knowledge of the project increased or decreased the value of the property before the taking, the property must be valued without that increase or decrease.
• Highest and Best Use: Even if your property is not currently being used for its most valuable purpose, you may consider its potential for the more valuable use when determining the value of the property.  You may also consider things like the probability of rezoning. For example:
  • Land being used for farming may be more valuable if sold for residential development;
  • Land currently zoned as agricultural may likely be rezoned and used for residential development or commercial use; or
  • Land zoned for single family residential development may be likely to be rezoned for high density residential or commercial use.
• Damages: In cases where the government takes only a portion of the property, the owner is entitled to damages.  These damages are the depreciation in the value of the property remaining after the taking.  Damages can occur from a loss of parking, reduction in access, loss of buildable area, and many other issues.  Oftentimes, the condemnor’s appraisal omits certain elements of damage.  Seemingly benign takings, such as easements, can have a severe impact on the use and value of property.  It is important to read the language of every taking, including easements.  The government often takes broad rights in its easements.  Depending on the rights taken and the location of the easements, these takings often have just as much impact as if the government had taken ownership of the area covered by the easement.  As lost profits are not reimbursable in North Carolina, it is critical for business owners to receive every damage that is recoverable under the law.

This is why it is crucial not to accept the government’s analysis or first offer without reviewing it closely.

There are three ways in which property is typically valued in condemnation cases: (1) Sales Approach, (2) Income Approach, and (3) Cost Approach.  The relevant approach is determined based on the facts of each individual case.

You Can—and Should—Challenge Low Offers

The condemning agency does not have the final word.  The constitutional right to just compensation ensures your right to:

• Negotiate;
• Present your own appraisal or other valuation evidence; and
• Go to court to have a jury decide the compensation you are owed.

Moreover, if only part of your property is being taken, you are entitled to be paid for both the property taken and the reduction in value of the property remaining after the taking.

Tips to Maximize Your Recovery

1. Hire an Experienced Eminent Domain Attorney The condemning authority has legal experts on its side; you should too. A skilled attorney can challenge lowball offers and bring in the right experts to support your claim.
2. Get a Qualified Appraisal Do not rely solely on the government’s valuation. Independent appraisals can uncover overlooked value, especially if your property has development potential or unique features.  It can also uncover elements of damage omitted in the government’s appraisal.
3. Document Everything Keep records of how the taking affects your property—photos, business losses, access changes, impacts to parking, construction vehicles on your property, noise impacts, etc. Even if an item is not independently recoverable, such as business losses, it may be relevant and helpful in the valuation of the property.  It may also support claims for damages to the value of your property after the taking.
4. Challenge the Taking If Necessary If the government’s purpose is not clearly for public use or the taking is excessive, you may be able to contest the taking itself.  The government can take property only for a legitimate public use, and, even then, it can take only as much property as it needs for its public use or project.
5. Understand Your Rights You have the right to a jury trial on the issue of just compensation. Do not settle without fully understanding your rights.

You deserve full, fair compensation – not just for the land taken, but for the loss in the value of any property with which you are left after the taking.  Small takings can have a huge impact.  Do not be deceived by the size of the taking or the analysis and appraisal that the government may provide you in its attempt to get your property.  You do not have to navigate this alone. With the right guidance, you can protect your investment and your future.