There are times when the federal, state or local government needs land to build something for the benefit of the public. When the land is privately owned, there’s a mechanism in place for the government to acquire the land. If the government is trying to take your land for public use, the team at Green Mistretta Law can help you through the process to ensure that you get the best return for your property.
What Is Eminent Domain?
Eminent domain is the right of the government to seize land that it needs for the public good or use. As part of the seizure, the government must compensate you for your land. To qualify, the land must pass two tests:
- Public use test: Does the public have a right to defined use of the property?
- Public benefit test: If the government seizes the property, will the public enjoy a benefit from it?
When the property in question meets these qualifications and passes the tests, the government can move to seize the land. However, they must compensate you for the value of the land.
The compensation is typically the fair market value of the property in question. The government agency typically hires or assigns an appraiser to view the property and collect information before determining its fair market value. Some things the appraiser uses to determine the value include:
- Recent sales of nearby properties
- Current or best use of the property
- Any income generated from the property
- Location of the property
- Any effect the history of the property has on its value
- Improvements on the property, such as homes or outbuildings
After the appraiser finishes their work, the government will make an offer to buy the land. As with any real estate sale, the buyer wants to pay as little as possible while the seller wants to sell it for as much as possible.
Since the government uses its own appraisers, you can expect the offer to be on the low side. As the property owner, you can bring in your own experts and appraiser to evaluate the property.
The government and the property owner can usually come to terms with a selling price. However, there are occasions when the two parties can’t come to an amicable agreement. What then?
What Is Condemnation?
Condemnation is a type of lawsuit that occurs when the government and property owner can’t reach an agreement on the selling price or when the property owner simply doesn’t want to sell the property.
The condemnation lawsuit allows the government to seize the property and use it for the purpose they needed it for in the first place. When filing the lawsuit, the government must deposit the amount of their valuation of the property with the court.
If the entity filing the condemnation lawsuit is a state or local agency, after the funds are deposited, the title and rights of the property are transferred to it. You might hear this referred to as a quick-take proceeding. You can apply to the court to receive the deposit. It’s important to note that you can ask for the deposit even if you plan to dispute the value of the property in the future.
Frequently Asked Questions
When you get a notification that the government plans to use eminent domain to seize your property or a portion of it, you will certainly have questions. Here’s a look at some of the most commonly asked questions we’re asked about eminent domain and condemnation:
Can the Government Really Take My Property if I Don’t Want to Sell It?
Yes, the State of North Carolina along with federal and local agencies can seize your property as long as the agency follows the proper procedures and the use of the land is intended for the good of the public.
How Is the Value of My Property Determined?
The government agency that wants the land sends an appraiser to determine the property’s value. In North Carolina, there are three common approaches used to value the property in question. These include:
- Income approach
- Cost approach
- Market approach
You can expect the initial offer to be a low one, and you need to contact an eminent domain attorney to represent you and help you get the most money you can.
How Is the Value of My Property Determined if the Government Is Only Taking a Portion of it?
In some cases, the government agency only needs a portion of your property. This is typically referred to as partial taking. In North Carolina, the property values the property twice.
In the first valuation, the appraiser looks at the current value of your property and determines its worth. Next, the appraiser imagines the property after it’s been taken and the construction of the project completed. The appraiser determines the value of the remaining property after the project completes.
The appraiser looks at the value of the property before and the value after to determine the value of the partial taking.
For example, if your home and land are worth $200,000 today, and the government takes a small portion of the lot, this changes the value. Let’s say that after the government finishes the project, your home and the remaining land are only worth $150,000, the government would offer you $50,000 for the partial taking.
When the Government Makes an Offer, Do I Need to Accept Their Initial Offer?
No, you don’t need to accept the initial offer from the governmental agency. It’s always beneficial to retain the services of an eminent domain attorney at Green Mistretta Law to help you through this process.
What Happens if We Can’t Agree on a Price?
The government agency will file a condemnation lawsuit with the NC Superior Court in the county where you live. After placing a deposit with the court in the amount determined by their appraiser, they get the right to seize the land. This makes it essential that you retain an attorney to ensure you get the maximum value for your property.
Do I need to Pay Taxes on the Condemnation Funds?
It depends. If you reinvest the funds in a way that meets specific requirements via a 1033 exchange, the taxes can be deferred. You may owe taxes on the funds if you choose not to reinvest them.
Our Eminent Domain And Condemnation Attorneys Can Help
Eminent domain and condemnation procedures are complex, and can be hard to navigate and get the best price for your property if you haven’t gone through it before. While you can’t stop the government from taking your property if they follow proper procedure, you can get the best value possible with the help of one of our eminent domain attorneys here at Green Mistretta Law. Call us today or fill out our contact form to schedule a consultation today!