One of the most deeply rooted American rights is the right to own property. However, this right is not absolute. The government can infringe upon this right through the Fifth Amendment, which states, in part, “. . . nor shall private property be taken, for public use, without just compensation.”

The legal process for the government to take property is known as eminent domain. Eminent domain is commonly used for the construction of new roads, highways, and public parks. Another process related to the taking of property by the government is inverse condemnation, where the government does not buy property outright but, through regulation or government action, devalues the property without initially providing compensation to the property owner.

This article provides an overview of eminent domain, including the legal process, method for challenging, and tips to remember if you have a client who becomes involved in the exercise of eminent domain. A future article will provide an overview of inverse condemnation.

Eminent Domain

In order for governments in Alabama, whether state or local, to seize private property through eminent domain, two main requirements must be met:

1. Public Necessity or Public Purpose: The subject property must be seized for public necessity or public purpose. Public necessity or public purpose generally means the use of the property being seized will confer some type of benefit or advantage to the public. This may be through the construction of a new road or highway, building a new public school, laying pipelines or utility lines, and many other uses which confer a benefit or advantage to the public.   
2. Just Compensation: The property owner must receive “just compensation” for their property. In Alabama, just compensation is determined by conducting an appraisal to determine the fair market value of the property at issue. Ala. Code § 18-1A-21.

Procedurally, after the appraisal referenced above is completed, the government entity attempting to seize the property (the “condemnor”) then makes an offer to purchase the property for the full appraised value. Ala. Code § 18-1A-22. If the property owner refuses to accept the condemnor’s offer to purchase, the condemnor may then file a condemnation action in the probate court of the county where the property is located. See Ala. Code § 18-1A-71.

The Condemnation Action

Once a condemnation action has been filed in probate court, a property owner may file an answer and preliminary objections but is not required to do so. Note that only a few objections, if proven, will prevent the taking from occurring. Those objections are as follows:

• Not a lawful seizure: The condemnor is not lawfully entitled to seize the property. For example, the property owner may show that the property is not being seized for a public necessity or public purpose.
• Procedural Failure: A required precedent in order for the government to seize the property has not been met. Examples include:
• The condemnor failed to make an offer to purchase the property prior to filing the condemnation action; or
• The probate court either lacks jurisdiction or is not the proper venue for the condemnation action because the property is not located in the county of the probate court.

                        See Ala. Code § 18-1A-91(b).

Hearing

A property owner may also present objections at the hearing, to which the property owner is entitled. Ala. Code § 18-1A-93. After this hearing, the probate court will then enter a judgment.

Judgment

If the probate court allows the property to be condemned, the judgment should include a monetary amount for just compensation, at the amount determined by the probate court to be just. Ala. Code § 18-1A-210. If the probate court finds the property owner’s objections to be valid, the probate court may dismiss the condemnation action.

The probate court may also order a conditional dismissal, requiring the condemnor to take corrective action. This corrective action is typically based on the condemnor’s failure to complete a mandatory condition precedent to seize the property, such as failing to have the property appraised. After completion of the corrective action, the probate court may condemn the property.  See Ala. Code § 18-1A-95.

Ultimately, if the judge condemns the property, the condemnor must pay the amount determined to be just compensation to the property owner within 90 days of the determination. See Ala. Code § 18-1A-290.

Appeal

If unsatisfied with the probate court’s ruling, a property owner may appeal the ruling to the circuit court and potentially the Court of Civil Appeals or the Alabama Supreme Court, depending on the dollar amount involved.  See Ala. Code § 18-1A-283 and § 18-1A-288.

Just Compensation – Valuation Disputes

One of the most difficult aspects of eminent domain is the valuation of the property. Unlike normal real estate transactions, eminent domain proceedings encompass unwilling sales, placing even greater stress on the valuation of the property. If the owner does not agree with the offer by the condemnor, or government, the owner can present evidence in court, including the owner’s opinion as well as an appraiser’s opinion as to value. Here are some notes for REALTORS® to consider when assisting clients develop evidence on a property’s value.

• Burden of Proof: Neither party has the burden of proof, so both parties can present evidence of “just compensation.”
• Witnesses: The owner of the property, a qualified witness (think appraiser), and/or officer or designated employee of a company (when a company owns the property) may provide opinion evidence on the value of the property.
  • Appraiser: In forming an opinion on value, a qualified witness may consider sales of the property or other comparable properties, the terms and circumstances of good faith leases on the property or other comparable properties, actual or reasonable rental income from the property, the cost of replacing improvements, and the nature, condition, and use of nearby properties.
  • Owner: The owner has considerably more leeway and is allowed to consider any “nonconjectural matter” in forming his or her opinion on value. Ala. Code § 18-1A-195

• Supporting Evidence: The law specifically provides certain factors to be considered in conjunction with the witness testimony above. These include:
  • The extent of the loss of property and improvement;
  • The property’s current use and reasonably foreseeable better uses for which the property is reasonably suitable;
  • Any loss of a legal nonconforming use;
  • Damage to crops; and
  • Zoning or other use restrictions and reasonable probability of a change in those use restrictions.

• Partial Taking: The just compensation for a partial taking is the difference between the value of the property before the taking minus the value of the property after the taking. Factors to consider when valuing the remainder portion include, whether the taking helped or hurt the property’s productivity and convenience of use, how the project causing the taking impacted access to the property, whether the project enhanced or damaged the property, and the cost of fencing off the remainder if reasonably necessary.
  
  

See Ala. Code §§ 18-1A-190-18-1A-197.

Things to Remember

• Settlement: If a property owner is agreeable to the eminent domain action, the parties may negotiate and enter into a settlement at any time during the proceedings. Ala. Code § 18-1A-4.
• Arbitration Parties may agree to arbitration and avoid costly litigation. However, the parties will be bound by the arbitrator’s decision. See Code § 18-1A-250(a), § 18-1A-251, and § 6-6-14.
• Litigation Expenses: If the condemnation action is dismissed, the probate court is required to award litigation expenses to the property owner which includes attorneys’ fees and court costs. Ala. Code § 18-1A-232.
• Relocation Expenses: The property owner or occupant may be entitled to receive relocation expenses if the property acquisition is being performed by a state agency and results in the displacement of the owner or occupant. Ala. Code § 18-4-4.
• Notice to Vacate: Except in an emergency situation, the property owner or occupant must be given at least 90 days’ notice to relocate. Ala. Code § 18-1A-24.

Additional Materials

NAR policies related to eminent domain can be found here and here.

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