Precondemnation Planning

Should I be doing anything before my property is condemned?

There are several actions an owner may take before his property is condemned. In general, it is wise for an owner to seek the advice of a lawyer when considering precondemnation actions. This is because the actions an owner takes before the property is condemned may help or hurt his case.

The owner should avoid taking positions, especially written positions, which may be used against them in the condemnation proceeding. If the owner contests the tax assessment, for example, stating that his property is worth less than the county’s estimate, that appeal may be used against him if, in the condemnation case, the owner asserts a higher value.

Leases and mortgage agreements signed by the owner prior to condemnation may affect the portion of the final award to which the owner will be ultimately entitled. The parties’ lawyer should be consulted on condemnation clauses contained within these documents. See the compensation section for a discussion of apportionment issues.

The owner should maintain the appearance and condition of the property. Visual impressions, even to sophisticated professionals, are important, and the condemning authority’s appraisers will be inspecting the property long before it is condemned. It behooves the owner to have the property looking as good as possible.

Contamination on the property could reduce the condemnation award, delay the payment of funds to the owner or result in the owner incurring liability for environmental cleanup charges. It thus behooves the owner to take those steps necessary to assure that the property remains free of contamination. In addition, if there is contamination on the property, the owner may be well advised to consult with an environmental lawyer.

Property owners are often in the process of planning for a development or redevelopment of their property when the government announces its plans to condemn the property. Land use and building applications can have a significant effect on both the use of the property and the condemnation case. For this reason, the owner should discuss all plans for the property with the condemnation lawyer.

What can a landlord and tenant do to avoid uncertainty and legal disputes over the condemnation award?

The single best protection for both landlord and tenant is a clear lease provision called a “condemnation clause”. This clause should spell out which part of the award goes to the landlord and what goes to the tenant in the event a taking occurs.

The condemnation clause should anticipate an allocation in the event of a whole taking of all leased property; a partial taking which effectively destroys or severely damages the untaken remainder; and a partial taking which has little effect on the remaining property.

The length or term of the lease may also have a significant effect on the amount awarded to the parties. If you have knowledge of a future taking, it is wise to consult your condemnation attorney about your lease. The full compensation to which you are entitled includes not only the value of the property taken but also includes compensation for reduction in value to the property which the government does not take. This compensation is called “severance damages”.