Eminent Domain FAQ

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

The Condemnation Clause of the Lease - Frequently Overlooked

A. The Problem

The condemnation clause is one of the most overlooked clauses in the lease agreement. Many lessors and lessees give it little attention, reasoning that it is unlikely that a condemnation will occur or, even if it does, that it will be many years away and will have little significance. It is, however, of great importance.

This approach, however, has adverse consequences when the property is affected by a condemnation. The likelihood of a condemnation taking place is greater than generally believed especially in rapidly developing areas such as Long Island. The most common type of condemnation is not a total taking, but a partial taking usually associated with a road widening or intersection improvement. Many of Long Island roads were originally mapped out decades ago (if not centuries ago e.g., Routes 25A and 27A) and are in need of major expansion. The properties located along these thoroughfares have already or are almost certain to experience partial takings to accommodate road improvements and expansions.

In a condemnation, there are generally two types of damages: direct and indirect. The direct damage is simply the damage for that property (land and/or improvement) physically and actually taken. The indirect damage also called severance or consequential damages is the diminishment in value to both the land and improvements on the remainder property. In a partial taking, most of the damage is indirect; however, this damage can be quite substantial and is frequently in excess of the direct damages. See, e.g., Pollak v. State, 41 N.Y.2d 909, 394 N.Y.S.2d 617 (1977); Overseas American Bay Shore Associates, L.P. v. State, Claim No. 101771 (Ct. Cl., June 21, 2004); JWD v. State, Claim No. 102213 (Ct. Cl., Sept. 15, 2003); Bob Lee v. State, Claim No. 96782 (Ct. Cl., December 20, 2000); Ornstein Leyton Realty Inc. & OLWG, LLC v. County of Suffolk, Index No. 03-0312 (Sup. Ct., Suffolk County, 2004); In the Matter of the Application of the Town of Hempstead [Razzano], Index No.

16307-88 (Sup. Ct., Nassau County, 1997).

B. The General Rule

What happens when there is a taking and a tenant is adversely affected? Who collects the award and under what standard? In New York, the rule is a simple and rigid one the explicit terms of the condemnation clause govern the allocation. Concepts of equity and fairness play little, if any, role.

The constitutional right to just compensation may be waived and the Courts of this State have consistently and repeatedly held that a tenant, in its lease, may waive all or part of its condemnation claim, and that such a waiver or limitation is valid and enforceable.