Eminent Domain FAQ

View Eminent Domain/Condemnation FAQ
Eminent Domain FAQs about Eminent Domain Condemnation Law.

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When a condemnation occurs after closing on a contract or lease, the buyer or lessee may seek to rescind the sale or lease based on fraud because the seller concealed that fact that all or part of the property was to be condemned; or, alternatively, the buyer may seek damages for the alleged concealment. However, as a general rule, in the absence of a specific and contractual provision governing the situation, there is no basis to rescind the sale or lease or obtain damages; even if the seller or lessor was supposedly personally aware of the pending taking.

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It is a general (although not absolute) rule in eminent domain valuation that the valuation date – i.e., the date on which the property is valued – is the date on which the condemnor formally acquired the property. This is often called the “vesting date”.

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Every property owner, whether they are owner of land or buildings, or have any type of interest in property, such as an owner, tenant/lessee, business operator, is affected by government regulations. Government programs and the related planning can have an adverse effect.

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A) The Valuation Standard

When property is taken under the power of eminent domain, the property owner is entitled to “just compensation” at its “highest and best use”. This is the fair market value of the acquired property taking into account all its reasonable development potential irrespective of whether the property is being used for that purpose.

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The standard clause or clauses in every mortgage provide that the bank has the first lien or priority against any condemnation award. The clauses appear to be detailed, usually stating that the condemnation award is deemed “assigned” to the bank and further that the condemnation does not affect the bank’s right to enforce its mortgage and bond accordingly. If you read the typical mortgage clause, it would appear that in the event of a condemnation, it will collect out of the award both the principal of the award and interest at the rate set forth in the mortgage and mortgage bond.

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*The reader should note that since the original issuance of these articles, there have been additional cases decided by the courts on these subjects.

Other Articles on Eminent Domain/Condemnation:

  • Environmental Contamination - Effect on Valuation
  • Title Issues in Eminent Domain
  • How the Exercise of Eminent Domain Effects the Mortgage Interest Rate
  • Hidden Damages - the Partial Taking
  • The Expert Witness
  • Relocation Assistance
  • Damages for Loss of Frontage

Articles on Real Property Tax Appeals (Tax Certiorari):

  • Tax Appeals: Valuation and Procedure
  • Tax Appeals: Negotiation
  • Real Property Tax Valuation of Contaminated Property
Articles on these subjects, as well as others, will be periodically added to this site. However, if you are interested in these subjects, please contact Saul Fenchel, Eminent Domain Lawyer.