Compensations and Negotiations
If I don’t agree with the State’s offer, who decides how much money I get?
A jury. State law provides that a jury of twelve persons determines the amount of compensation to be paid to an owner who loses his property through condemnation.
Most courts will not schedule a jury trial until the case goes to mediation.
The taking of my property will hurt my business. Am I entitled to compensation for damage to my business?
It depends. Illinois has a business damage statute which allows an owner of a business to recover compensation for business damages if part of his property is condemned by the Department of Transportation, or by a county, municipality, board, district, or other public body. In order to qualify under this statute, however, the business owner must meet the following criteria:
- The condemnation must be undertaken by the Department of Transportation, or by a county, municipality, board, district, or other public body. For example, an owner whose property is condemned by the county may thus qualify, while another owner whose property is condemned by a public utility may not.
- The condemnation must be for a right-of-way. An owner whose property is condemned for the construction of a road, for example, may qualify, but an owner whose property is condemned for a school, for example, may not.
- The taking must be a “partial taking,” that is, a taking of only a portion of the property, and the business affected must be located on both the part taken and on the remaining portion.
- If the condemnation action is filed before January 1, 2005, the business must be an established business of at least four years standing. If the condemnation action is filed on or after January 1, 2005, the business must be an established business of at least five years standing.
If a business owner does not meet each of these requirements, it is probable that he will not be able to recover compensation for business damages, even if the taking damages the business.
If my business will be hurt by the taking and I qualify for business damages, is the condemning authority required to convey the first offer to settle my business damage claim?
No. Under Illinois law, the business owner, not the condemning authority, must convey the initial offer to settle a business damage claim. The condemning authority must provide written notice to all business owners, including tenants, who operate a business located on property to be acquired that it intends to condemn the property. Within 180 days after receiving the condemning authority’s written notice, the business owner must submit to the condemning authority a good faith written offer to settle business damages.
The business owner is also required to provide the condemning authority with copies of the owner’s business records which substantiate the offer to settle the business damage claim. The condemning authority must respond to the business owner’s offer within 120 days after receipt of the business damage offer.
If a business owner fails to meet the 180-day deadline for submission of the business damage offer, then the Court must strike the business owner’s claim for business damages absent a showing of a good faith justification for failing to meet the 180-day deadline.
Are tenants allowed to recover business damages?
I have only been in business for three years, but the business I operate has been at this location for 20 years. I bought the business three years ago and have continued the same operation. Do I qualify for business damages?
It depends. The law allows “tacking ” which means that in determining whether a business is “an established business of four years standing,” a business owner may “tack on” or add the years of operation of prior owners in order to meet the four-year requirement.
The court will generally allow “tacking” when it finds that the business on the condemned property has been substantially the same business for four years or more. If there has been a change in ownership, the prior owner’s years will be “tacked on” if the court finds that the business, and not just the business site, was purchased and continued. In this regard, the court may look to such indications as whether accounts receivable were purchased and accounts payable assumed.
My business has been losing money, but the condemnation of my property will hurt my business even more. Am I prevented from recovering business damages because I haven’t been showing a profit?
No. If a business owner meets all of the tests for the recovery of business damages, he is not disqualified because he has not recently shown a profit.
I rent my property to tenants. Are they entitled to compensation?
Yes, but the compensation which your tenants receive may affect your own recovery.
Your tenants’ rights will be protected in any condemnation case or precondemnation negotiations. The condemning authority usually seeks title free and clear of all interests, including leases.
In order to assure that it receives free and clear title, the state will name the tenants as defendants in the condemnation case or will require the receipt of subordination or assignment of lease documents if the taking is settled before a condemnation lawsuit is filed.
The real estate award which the condemning authority is required to pay is an all-inclusive award and is subject to the claims of all tenants. The award will be made in the name of all parties having an interest in the property, including tenants.
Whether a tenant may recover a portion of the real estate award is generally determined by the terms of the lease and whether the tenant is paying less than fair market rent.
If the lease is silent on the issue or allows the tenant to claim a portion of the award, the tenant may be able to receive a portion of the award. This portion is generally measured by the present value of the economic advantage of the lease during the remaining term of the lease and option periods.
Since compensation for the taking of the tenant’s lease comes from the all-inclusive real estate award, otherwise paid to the owner, the more the tenant receives for the value of his lease, the less the owner receives for his interest.
There is no similar sharing arrangement for business damages. The amount a business tenant receives from the condemning authority does not serve to reduce the compensation to which the owner may be entitled, and the owner, who does not have an interest in the tenant’s business, does not share in the business damage award.
In certain types of projects by certain condemning authorities, tenants may also be eligible for relocation assistance under the Federal Relocation Assistance Act outside the condemnation case.
If I offer to settle for less than our claim and the case does not settle, will the jury be allowed to hear how much I offered to settle for?
No. Offers to settle are not admissible in evidence.