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See some of Saul Fenchel's eminent domain articles covering various subjects in Eminent Domain Condemnation.

What about mortgages and liens on my property?

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Virtually every mortgage will provide that the mortgagee (i.e., the bank or lending institution) is entitled to the entire condemnation award to be applied against the mortgage. However, in partial takings (i.e., where the government takes less than the whole property), the mortgagee will occasionally waive this right and agree to let this award pass through to the owner, or it may agree to allocate the award with certain conditions. Of course, even where the mortgagee takes the entire award, it reduces the mortgage balance so the fee owner realizes a benefit.

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