Real Estate & Property Law

Securing your rights in eminent domain cases

By Alan Ackerman

Cyber Homes

You may think it can't happen to you, but so did dozens of residents of New London, Conn., when economic development officials took their homes by eminent domain in 2000 to allow Pfizer Corporation to build a research campus in their coastal Connecticut town.

They are among tens of thousands of U.S. residents affected by eminent domain cases in which governments and governmental bodies appropriate private land for public-use development. The New London eminent domain case led to a 2005 Supreme Court case in which justices ruled that state and local governments could force private landowners to turn over their properties for publicly sanctioned private development.

Originally viewed as a setback for private property rights, the case has actually had the opposite effect, as more than 40 states have passed laws or promulgated regulations designed to protect the rights of landowners and restrict the use and abuse of eminent domain. Ironically, in November 2009, Pfizer announced that it planned to abandon its New London research facilities and consolidate those jobs into a campus a few miles away in Groton.

‘Displaced for nothing'

This change in plans reveals a cruel twist in many successful eminent domain takings, according to Sandra Phillips, an assistant professor of finance at the Whitman School of Management at Syracuse University. 'A lot of times private developers will say they want so many parcels of land to build a development, but my study and a lot of other studies have shown that often times these developers don't ultimately move ahead with the project that they said they would, and the homeowners and business owners are displaced for nothing,' she says.

And while the new eminent domain laws restrict the circumstances under which private developers and governments can take private land and the compensation that must be provided when they do, there are still many takings to accommodate construction of highways, airports and even sports stadiums. Eminent domain laws also come into play if a government or government-sanctioned private company wants access to your land for a specific purpose such as to lay pipes, says David Kaufman, J.D., Ph.D., of Kaufman Law in Fairfax, Va.

So what are your options if your property is targeted? Your first step should be to obtain representation by a lawyer experienced in eminent domain issues in your area, says Alan Ackerman, managing partner at Ackerman, Ackerman and Dynkowski, a law firm in Bloomfield Hills, Mich. 'Because the laws vary so much from state to state, you need an attorney who is expert in the laws in your state and the type of eminent domain taking you are looking at,' he says.

Cases can take years to resolve, or at least months, so don't rush into an agreement with whatever entity wants to take or use your property. It's important to get a qualified appraiser to assess the value of your property, Ackerman stresses. Depending on where you live, you may also be entitled to additional compensation for the expenses and hassles involved in moving or living with the inconvenience of having your property torn up for months or years, says Kaufman.

Focus on compensation

Stopping eminent domain takings is very difficult, so in most cases the best approach is to focus on getting the most rewarding compensation package possible. You don't want to lose money as a result of losing your home or allowing access for a public purpose to your land.

In many states, such as Michigan, compensation paid to landowners in eminent domain proceedings is a fixed percentage based on the current fair market value of your property, says Ackerman. 'Here, a resident who lives and pays taxes on their home gets 125 percent of the value of their property.' Some states also provide that residents won't be forced from their properties until they have money in hand to compensate them for the taking, so that they can buy or rent property elsewhere.

It's vitally important to know your rights in an eminent domain taking, stresses Phillips, because many people, especially low-income homeowners, have been forced from their homes without sufficient compensation. Although some states offer money above and beyond fair market value, not all states do, and the fair market price isn't always sufficient to find comparable replacement housing. 'Just compensation is rarely enough,' she says. 'You rarely get fair market value for what it would cost to buy a new home, let alone compensation for the ancillary costs that are not taken into consideration, such as the time in your community, the neighbors, the churches, and the social outlets.'

Full post as published by National Eminent Domain Blog on November 30, 2009 (boomark / email).