OCA Blog

April 11th, 2016 — In Articles

The Government is on My Property. What are My Rights?

As a United States citizen, the U.S. Constitution, federal laws and the Constitution and laws of your state protect you against government intrusion upon your private property.  While the Fifth Amendment to the U.S. Constitution establishes that government authorities may use the power of eminent domain to take private property, the Fifth Amendment limits the power of eminent domain by requiring that the taking of private property be for a public purpose and that just compensation is paid to the property owner.  Additionally, condemning agencies must follow specific procedures or steps when exercising the power of eminent domain.  While these procedures vary from state to state, there are some basic steps which we discussed in a previous post here (discussing the differences between eminent domain and inverse condemnation).

What if the government simply takes your property? While this may sound far-fetched, if it has happened to you, you know all too well that government agencies do not always play by the rules. In this situation, private property owners can defend their rights through a type of legal action known as “inverse condemnation.”

Inverse Condemnation: How to Protect Your Property Rights

What Constitutes a Taking?

A “taking” of private property occurs when a government agency acquires or appropriates private property for a public use or purpose.  However, the physical seizure of your property does not have to occur to constitute a violation of your Constitutional rights.  Far lesser actions can wrongfully impair your property rights.  From temporarily flooding private property to enacting a zoning ordinance that restricts the use of private land (referred to as a “regulatory taking”), there are numerous ways that government authorities can “take” private property.

Inverse condemnation is not limited to the permanent physical taking of property.  Rather, it can include a temporary taking or occupation of private property, such as flooding, and also includes government regulation which burdens your property in such a way that you can not derive any economical use out of it.  When government regulation significantly burdens private property the inverse condemnation may be referred to as a “regulatory taking.”  Most importantly, in an inverse condemnation or regulatory taking scenario the government has failed to pay just compensation for the private property rights that have been taken.

The Inverse Condemnation Process

When government acquires property without following eminent domain procedures, the affected property owner has the right to bring an inverse condemnation lawsuit against the government entity that has taken his or her property.  When the government skips the steps of the eminent domain process, property owners are often left with no choice but to take legal action against the government.

Each state may follow different procedures and may have differing statutes of limitations – the legal deadline for filing a suit – for inverse condemnation actions. Because your property rights are at stake, we recommend consulting with an experienced inverse condemnation attorney before filing an inverse condemnation or regulatory takings claim.

Taking Action to Protect Your Property

In a typical inverse condemnation case, the property owner seeks to recover just compensation based on the government’s possession or use of their property. In some states, property owners can recover their attorneys’ fees and other expenses as well. In cases involving regulatory takings, property owners may seek money damages, development or zoning permissions or simply may seek to have the offending regulations invalidated.

Inverse condemnation and regulatory takings cases can be quite complicated, particularly because the responsibility falls upon you, the affected landowner, to prove that a taking has occurred (and fighting the government is not easy).  The suit filed by the owner is “inverse” because it is brought by the property owner, not by the government agency having eminent domain power.  This is why the property owner carries the burden of proof that property rights were acquired without the payment of compensation.  (In a direct condemnation action in which the government follows eminent domain procedures, the burden of proof falls upon the condemnor to demonstrate that the acquisition is necessary and that the project has a true public purpose.)

Inverse condemnation cases, however, can be won.  Koontz v. St. Johns River Water Management District is an example of an inverse condemnation victory won by the property owners.  More about the Koontz case here and here.  (Disclosure: OCA filed an amicus brief with the U.S. Supreme Court in support of Koontz.)

Contact the Inverse Condemnation Attorneys at Owners’ Counsel of America

If you believe that the government has violated your Fifth Amendment rights, we encourage you to contact an inverse condemnation lawyer with Owners’ Counsel for more information about protecting your legal rights. Owners’ Counsel of America is a nationwide network of leading attorneys practicing in the areas of inverse condemnation and eminent domain.

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March 28th, 2016 — In Articles

Understanding the Tax Consequences of Condemnation

If your property was taken by eminent domain, you might owe taxes on the just compensation received.

If your property was taken by eminent domain, you might owe taxes on the just compensation received.

 

 

 

 

 

 

 

 

 

 

 

When a government agency or other entity with the power of eminent domain acquires or condemns private property, the private owner is entitled to “just compensation” for the value of the property taken. This compensation – or at least the majority of it – is essentially paid as the purchase price for the condemned property. Eminent domain involves the transfer of real estate title in exchange for the payment of compensation which the Internal Revenue Code (the “Code”) generally treats as an ordinary taxable sale of property.

This means, as you might expect, that the Internal Revenue Service (IRS) considers the just compensation received by a property owner as a “gain” for which taxes should be paid.  While the proceeds from condemned property are generally subject to taxation, the Code contains an important nonrecognition provision in Section 1033 which allows for certain exceptions to taxation for property taken by eminent domain.

Section 1033: Involuntary Conversions – Nonrecognition of Gains from the Transfer of Condemned Property

As a general rule, when a private property owner voluntarily sells a piece of real estate, he or she has the opportunity to reinvest the proceeds from the sale into like property and avoid paying income tax on the gains from the sale. This rule for voluntary sales exists under Section 1031 of the Code, and is why you generally do not have to pay income tax when you sell your house and use the proceeds to buy a new home.

Section 1033 contains a similar (though not identical) rule for condemned property. Under Section 1033, property owners are eligible for nonrecognition of gains for tax purposes if:

  • Their property is condemned, or there is a “threat of imminence” of condemnation;
  • They replace the condemned property within a specified time period (typically two to three years); and,
  • The replacement property is “eligible property” (similar to the like-kind provision in Section 1031) under Section 1033.

Forms of Compensation Not Eligible for Nonrecognition under Section 1033

While it is important for property owners facing condemnation to be familiar with the exceptions established in Section 1033, they need to understand the limitations as well. Although Section 1033 provides for nonrecognition of certain gains from the forced sale of property in eminent domain, it does not apply to all compensation received pursuant to a condemnation. Some of the forms of compensation that may not be eligible for nonrecognition under Section 1033 include:

  • Interest, including detention damages, delay damages and payments for delay in compensation
  • Lost business profits that would be treated as ordinary income
  • Compensation for destruction of property (under applicable circumstances)
  • Relocation costs and other expenses

In many cases, property owners will receive a lump sum condemnation award, which can make it difficult to allocate the compensation received into different tax buckets. As a result, before when accepting an award of just compensation or a condemnation settlement, it is important to discuss the tax ramifications with an experienced tax advisor or attorney.

Condemnation of private property can sometimes lead to income tax consequences, however, the exceptions for involuntary conversions in Section 1033 of the Code can benefit property owners who are forced to sell their property under threat of eminent domain or through condemnation proceedings.  Losing property in this way can be stressful and confusing.  Likewise, the provisions of Section 1033 can be confusing and complex.  If you are facing condemnation or are navigating eminent domain proceedings, it is crucial that you take action to qualify under the requirements of 1033 and any other specific tax code sections that may apply to your situation.  Consider consulting with a professional tax advisor or an experienced eminent domain attorney to ensure that you understand the tax implications involved in an involuntary conversion of your property due to eminent domain.

Owners’ Counsel of America | Leading Eminent Domain Attorneys Nationwide

Owners’ Counsel of America (OCA) is a network of the nation’s leading eminent domain attorneys who represent private property owners in matters involving eminent domain, inverse condemnation, regulatory takings and property rights claims. If the government is trying to take your property, contact us to speak with an eminent domain lawyer in your state today.

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March 22nd, 2016 — In Articles

Eminent Domain vs. Inverse Condemnation: What’s the Difference?

Owners’ Counsel of America member-attorneys are dedicated to assisting private property owners defend their property rights when those rights are threatened by government intrusion or overreach. We realize that many of terms we discuss here and the concepts involved in eminent domain law are complex and can be confusing.  To shed some light on this “dark corner of the law” we have answered some of the frequently asked questions landowners may have relating to eminent domain and the condemnation process here and here.  In this article, we discuss the differences between eminent domain and inverse condemnation.

Eminent Domain vs. Inverse Condemnation

Eminent Domain

There are two types of government acquisition or “taking” of private property.  One form of property acquisition includes the government’s exercise of its eminent domain power to force the sale of private property for a public project or use.  Eminent Domain – also referred to as “condemnation” – is the power of local, state or federal government agencies to take private property for public use provided the owner is paid just compensation. Sometimes, private corporations such as oil and gas companies, railroads or redevelopment authorities may be granted eminent domain power to construct projects providing a benefit to the public.

The use of eminent domain power to take property is referred to by many terms and varies from state to state as well as internationally.  The acquisition may be referred to as a “condemnation” or “direct condemnation,” “expropriation,” “appropriation” or simply a “direct taking.”  In a direct condemnation or direct taking scenario, the government agency or other entity using the power of eminent domain follows certain procedures to acquire the property, establish the amount of just compensation due for the property taken and provide payment of that compensation to the owner.

The Eminent Domain Process

The eminent domain process and the procedures condemnors must follow differ from state to state.  Further, the federal government and federal agencies may follow a process that is different from that which agencies within your state may follow.  It is important, therefore, to consult with a skilled eminent domain attorney experienced in the state or federal jurisdiction in which your condemnation case will be litigated.

There are some basic steps, which may be similar across the country, such as:

  • The government or agency having the power of eminent domain identifies a public project or use which may require the the acquisition of private property
  • The government, agency or company (also known as “condemnor”) notifies the potentially affected property owners that their property is needed for this purpose
  • The condemnor may make an offer to purchase, request a dedication of private property or may try to negotiate a price for the sale of the property
  • If negotiations are not successful, the condemnor will file suit to acquire the property using the power of eminent domain in exchange for just compensation
  • Depending upon the state-specific procedures, an independent commission, a sitting judge or a civil jury will determines the amount of just compensation due to the owner for the loss of the property and possibly for damages, if any, to remaining property.  In some states, the loss of business good will or profits may also be a component of just compensation and some states also provide for the recovery of attorneys fees, appraisal fees, and/or defense costs.  (We have written about the financial compensation available to property owners in eminent domain here and about attorneys fees.)

Inverse Condemnation

The second type of taking is referred to as inverse condemnation.  A taking of property by inverse condemnation occurs when the government acquires or appropriates private property without following eminent domain procedures and without paying just compensation.  An inverse condemnation taking may or may not be a physical acquisition of private property.  If land has been acquired by the government or other condemning authority without following the proper procedures, the landowner has the right to file an inverse condemnation claim against the government to recover just compensation for the property taken.

Inverse condemnation is not limited to the permanent physical taking of property.  Rather, it can include a temporary taking or occupation of private property, such as flooding, and also includes government regulation which burdens your property in such a way that you can not derive any economical use out of it.  When government regulation significantly burdens private property the inverse condemnation may be referred to as a “regulatory taking.”  Most importantly, in an inverse condemnation or regulatory taking scenario the government has failed to pay just compensation for the private property rights that have been taken.

The Inverse Condemnation Process

When government acquires property without following the eminent domain procedure, the affected property owner has the right to bring an inverse condemnation lawsuit against the government entity that has taken his or her property.  The suit filed by the owner is “inverse” rather than “direct” because it is brought by the property owner, not by the government agency or other entity having eminent domain power.  Therefore, the property owner carries the burden of proof that property rights were acquired without the payment of compensation.  This differs from a direct condemnation following eminent domain procedures which places the burden of proof upon the condemnor to show that the acquisition is necessary and that the project has a true public purpose.

As in the eminent domain process discussed above, each state may follow different procedures and may have differing statute of limitations for inverse condemnation. Because your property rights are at stake, we recommend consulting with an experienced inverse condemnation attorney before proceeding with an inverse condemnation or regulatory takings claim.

Owners’ Counsel of America: Skilled Eminent Domain and Inverse Condemnation Lawyers

If you are a property owner facing eminent domain or if you believe that you may have a potential inverse condemnation claim, learn more about how to protect your rights by contacting a lawyer with Owners’ Counsel of America.

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March 8th, 2016 — In Articles

State and Federal Legislators Considering Changes to Eminent Domain Laws

Recently, state and federal lawmakers from across the country have introduced a number of legislative changes in the areas of private property rights and eminent domain. In this article, we highlight some of the latest (potential) legislative developments.

Arkansas Congressional Delegation Proposes Federal APPROVAL Act

Last year, Senator Boozman and Congressman Womack from Arkansas proposed the Assuring Private Property Rights Over Vast Areas to Land (APPROVAL) Act, which is designed to, “restore states’ rights to approve or reject an electric transmission project prior to the federal government exercising its power to take private property.” More specifically, the APPROVAL Act would require the U.S. Department of Energy to obtain state-level approval (and, under applicable circumstances, tribal government approval) prior to approving the use of eminent domain for transmission projects nationwide. At last check, the APPROVAL Act remains under consideration in the Senate.

Pennsylvania Considering Increased Compensation for Condemnees

As we have previously discussed, eminent domain laws in many states provide property owners the opportunity to recover more than just the Constitutional guarantee of “just compensation” when the government condemns their property. For example, in Pennsylvania (as in other states), property owners are entitled to reimbursement for their relocation expenses. This is in addition to attorneys’ fees, appraisal fees, and other costs that are reimbursable under certain circumstances.

Such reimbursements are often subject to caps. In Pennsylvania, the caps on relocation expenses are currently set at $12,000 for businesses and farm operations; $27,000 for homeowners; and $6,300 for residential tenants. A proposed law under review in both the House and Senate would increase these caps to $25,000; $31,000; and $7,200, respectively.

Georgia House Passes Bill (Temporarily) Halting Use of Eminent Domain for Pipeline Construction

On February 29, a bill establishing a moratorium on the use of eminent domain to acquire private property for the construction of petroleum pipelines passed Georgia’s House with a vote of 165-2.  If it becomes law, HB 1036 would prohibit the use of eminent domain to force private landowners to grant easements for the purpose of constructing new petroleum pipelines through July 2017.  Believed to be aimed at stalling or blocking the proposed $1 billion Palmetto Pipeline, which is the first petroleum artery to be constructed in Georgia in nearly two decades, the bill establishes a 13- member commission of elected officials and experts  to study Georgia’s procedures for awarding corporations eminent-domain power.

Under current law, pipeline companies such as Palmetto Pipeline operator Kinder Morgan must apply with the Georgia Department of Transportation for authorization to use eminent domain.  Citing a failure to prove “public convenience and necessity,” GDOT denied the company’s application in May 2015. Kinder Morgan appealed the denial and on March 1, 2016 a Fulton County Superior Court Judge upheld the denial.

South Carolina to Consider “A Reform of Eminent Domain” in 2016

In an opinion piece published in a local newspaper called Bluffton Today, South Carolina State Representative Bill Herbkersman said that residents can expect the state’s lawmakers to consider “a reform of eminent domain” in 2016. According to State Representative Herbkersman:

“Unfortunately, [the] private condemnation process has been, from time to time, used in what many of us think are questionable circumstances.

“Our reforms will tighten up the language so as to make absolutely certain that the condemned property is for public use, and that it will never be diverted to private control.”

Herbkersman’s comments regarding “private condemnation” may reference the U.S. Supreme Court’s controversial decision in the case of Kelo v. City of New London. It was in Kelo that the Court first held that government authorities can us eminent domain to transfer property from one private owner to another if doing so will serve the public purpose of “economic development.” An issue that has faced near-constant scrutiny since the Court’s decision almost 11 years ago, this has recently become a hot-button issue in the 2016 Presidential race as well.

Or, Herbkersman may have been referencing S. 868 which passed the South Carolina Senate on March  3. Similar to their neighbors to the South, South Carolina legislators introduced S. 868 to block Kinder Morgan’s use of eminent domain to acquire easements across private property for the proposed Palmetto Pipeline.

We will continue keep you updated as these and other laws work their way through the state and federal legislatures.

Contact an Eminent Domain Lawyer at Owners’ Counsel of America

If you would like more information about federal eminent domain laws or the laws in your state, contact an attorney with Owners’ Counsel of America today. You can also call us directly at (877) 367-6963, or send us an email to learn more.

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March 3rd, 2016 — In Articles

I Received a Condemnation Notice. What are My Rights?

If you received a condemnation notice or a notice that your property may be needed for a public project, it means that a federal, state or local government authority is seeking to acquire your property (or an interest in your property) using the power of eminent domain.

Eminent domain is the power granted to the government and governmental agencies to seize private property for public use. This power is not absolute and as a property owner, you have a number of important legal rights. However, protecting these rights can be a challenge. For private owners who suddenly find that their properties sit in the way of public (and, in some cases, private) projects, the threat of condemnation can be a very real concern. As a result, if you have received a notice of condemnation, it is in your best interest to speak with an experienced eminent domain lawyer as soon as possible.

Your Rights After Receiving a Condemnation Notice

As the owner of a private property, your rights are protected by state law, federal law and the U.S. Constitution – specifically, the Fifth Amendment.

Private property owners’ rights include the following:

  • Public purpose – The Fifth Amendment requires that the government only condemn private property for a public purpose. While “public purpose” is not clearly defined, there are some guidelines outlining reasons the government can – and can’t – take private property.
  • Due process – Under the Fifth and Fourteenth Amendments, all citizens are entitled to due process of law, before the government can take their property. With respect to eminent domain, landowners are entitled to notice of and to be heard before the government can deprive them of their property. The notice must provide reasonable information that would provide affected landowners and other interested parties adequate time and opportunity to respond.
  • Just compensation – The Fifth Amendment also requires the condemning authority to pay just compensation for property taken using the power of eminent domain. The requirement that landowners receive just compensation for property acquired by eminent domain provides the owner a financial payment in exchange for the loss of his or her property to the use of the public.  When a portion of a property is taken, the owner may be entitled to compensation for the value of the part taken as well as any damages to remaining property.
  • Expense reimbursements – State laws across the country provide opportunities for landowners to recover some or all of their attorneys’ fees, relocation costs, appraisal or survey fees and other expenses incurred as a result of the government’s exercise of eminent domain.
  • Dispute – Perhaps most importantly, if the government attempts to condemn your property, you have the right to consult with an attorney and to fight back. An experienced eminent domain lawyer will be able to help you identify all possible grounds to challenge the government’s exercise of eminent domain, will assist you in obtaining just compensation for your property and will help you navigate the complex procedures and deadlines of eminent domain litigation.

Unfortunately, government agencies can exceed their authority in attempting to condemn private property. For owners who do nothing, this can result in serious violations of their Constitutional rights and potentially costly losses to their property. For owners who fight back, the process can be a struggle, but the outcome is generally worth the investment.

Contact an Eminent Domain Lawyer with Owners’ Counsel of America

From preventing an unconstitutional taking to ensuring the payment of just compensation, there are numerous issues to consider when you receive a condemnation notice. To learn more, read our FAQs or contact an attorney with Owners’ Counsel of America in your state today.

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February 22nd, 2016 — In Articles

Eminent Domain & Property Rights: Where Do the 2016 Presidential Candidates Stand on these Fundamental Issues?

Republican Presidential Candidates Discuss Their Opinions on Eminent Domain

With the Presidential race heating up and the field of candidates narrowing down, more and more issues are revealing distinctions between the hopefuls for the Oval Office. Somewhat surprisingly, one issue that recently created a bit of controversy among Republican candidates was the issue of eminent domain.  The current Republican front runners – Donald Trump, Ted Cruz, and Marco Rubio – have been attacking each others’ positions on this important issue and stating their own on the fundamental right to own property

Donald Trump

Donald Trump is an ardent supporter of eminent domain, in fact some might even consider him a promoter of eminent domain abuse. He has publicly announced his support for the U.S. Supreme Court’s decision in Kelo v. City of New London, in which the Court held 5-4 that government can use eminent domain to take property from one private owner and transfer it to another for purposes of “economic development.”  Further, he has publicly stated that he believes eminent domain can be an important tool for both public and private development projects.

David Boaz of the CATO Institute recently recounted how Trump lobbied local governments to use eminent domain in the 1990s.  In Atlantic City, NJ Trump envisioned a limousine parking lot where a residence owned by Vera Coking and 2 additional private properties stood near his Trump Plaza hotel.  He turned to the Casino Reinvestment Development Authority (CRDA) to use its condemnation power to acquire the properties standing in the way.  Similarly, in Bridgeport, CT, he proposed building a mixed-use entertainment and office park.  The plan, which ultimately fell through, included the City’s condemnation of five private properties, which Trump’s company would later buy from the City and redevelop.

Ted Cruz

Ted Cruz has recently used Trump’s position on eminent domain as grounds to attack the real estate mogul’s campaign. In one political ad, Cruz’s campaign calls eminent domain, a “fancy term for politicians seizing private property to enrich the fat cats who bankroll them — like Trump.”  The Cruz campaign has also released an ad that attacks Trump’s involvement in Atlantic City CDRA’s attempted condemnation of the Vera Coking property.

However, Cruz has also publicly stated his support for pipeline development – both in his home state of Texas and nationwide. As we have previously discussed, the oil and gas companies proposing such pipeline projects rely on the power of eminent domain to build what is often considered a “public utility” project.  However, as opponents of projects like the Keystone XL have argued, some pipelines do not benefit the landowners whose properties are condemned for the project.  Rather, end users hundreds of miles away and the energy company building the infrastructure become the true beneficiaries. Additionly, the Texas Tribune reports that Cruz supported TransCanada’s use of eminent domain to construct the Keystone XL pipeline through North Texas.

Marco Rubio

Like Cruz, Marco Rubio has criticized Trump’s support of using the power of eminent domain for private gain. However, his attack appears to be limited to Kelo-type uses, with his campaign website stating that he supports protecting private property rights over giving the government the power to “seize [private] property and sell it to rent-seeking private interests.”

Of all of the Republican candidates, Rubio’s record on eminent domain might be the most friendly toward private property rights.  In an October 2015 post in Hot Air, Rubio recounted his involvement in Florida’s response to Kelo.  Following the Kelo decision, Rubio led a special committee of the Florida House that drafted both a constitutional amendment and new state law to end the abuse of eminent domain and prohibit its use by the government to transfer condemned private property to another private entity.  Rubio wrote, eminent domain “is often wielded by crony capitalist politicians to benefit wealthy and powerful private developers.”

Owners’ Counsel of America | Leading Eminent Domain Lawyers Nationwide

As a property owner, understanding the candidates’ positions on eminent domain is an important step toward making an informed decision when it comes time to vote this November. At Owners’ Counsel of America, we encourage all voters to do their research before heading to the polls. For more information on the government’s power of eminent domain, visit our blog or contact us to speak with an attorney in your state today.

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February 1st, 2016 — In Articles

Can Prohibiting Demolition Constitute a Taking?

While it is clearly a taking when the government institutes condemnation proceedings to acquire private property and demolish any improvements upon the land, it’s much less clear that the government has taken an owner’s property rights when it tries to prohibit demolition on the owner’s private property. This issue arose in a recent case decided by Ohio’s First District Court of Appeals on December 30, 2015. The short answer: In some cases, prohibiting demolition can constitute a taking of private property under the Fifth Amendment.

The Saga of the Gamble House

In State ex rel Greenacres Foundation v. City of Cincinnati, No. C-150038 (Dec. 30, 2015) – the “Gamble House”—a private residence in Cincinnati that was originally owed by James Norris Gamble – the court found that the City’s failure to issue a demolition permit constituted a regulatory taking. (Side bar: Mr. Gamble invented Ivory Soap, and is the son of the “Gamble” in the ubiquitous Proctor & Gamble brand.)

When the current owners of the Gamble House applied for a demolition permit in 2010, the home had been vacant for nearly 40 years. The Court of Appeals described it as being in “an extremely dilapidated state,” with extensive damage and numerous animal infestations. At the time, the property was zoned for single-family residential homes without any sort of historic designation.

Upon receiving the permit application, Cincinnati’s chief building official declined to issue a demolition permit, citing the historic significance of the Gamble House. While the owners sought approval through a series of administrative appeals, the Cincinnati City Council adopted an ordinance designating the property as historic. It then issued a “Notice of Violation-Vacant Building” to the owners and denied the owners’ request for a waiver of the requirement to obtain a Vacant Building Maintenance License.

Subsequently, the owners sought a “Certificate of Appropriateness” to move forward with the demolition—as required under the new historic designation. The Historic Conservation Board denied the request and the owners took their case to court.

Just Compensation for Refusal to Permit Demolition

Almost two years later, the Ohio First Circuit Court of Appeals ruled that the city had acted improperly by relying on the late-applied historic designation to prevent the demolition. With its hand forced, the city issued a demolition permit and the owner promptly demolished the Gamble House.

Based on the Court’s ruling, in 2014 the owner filed a second lawsuit seeking just compensation for a taking of private property under the Fifth Amendment. Specifically, they argued that the city’s refusal to grant the demolition permit constituted a regulatory taking because the city’s actions deprived them of all economically beneficial use of the property.  Perhaps unsurprisingly, the city challenged the owners’ claim, by asserting that the owners could have continued to “use” the dilapidated home as they had prior to applying for the permit.

Here, too, the Court sided with the owners.  It rejected the city’s appraisal assigning value to the property since the cost of repair “would vastly exceed the value of the home,” and it agreed with the owners that they could not make any economically-viable use of the home in its pre-demolition state. However, it also ruled that the owners were only entitled to compensation from the date that the Historic Conservation Board denied their request for a Certificate of Appropriateness. Based on the Court’s ruling in the earlier case, this was the date that the regulatory taking occurred.

Contact Owners’ Counsel of America to Speak with an Inverse Condemnation Attorney in Your State

The saga of the Gamble House demonstrates the lengths to which some property owners must go to protect their rights. If you are facing a similar issue, your local OCA attorney may be able to help. To speak with an inverse condemnation lawyer in your state, please contact us today or locate a lawyer here.

(Side bar #2: We learned about both this case and Mr. Gamble’s P&G/Ivory soap fame from OCA Hawaii member, property rights attorney, and self-described “takings nerdRobert Thomas.  More analysis about this case can be found on his Inverse Condemnation blog here.)

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January 28th, 2016 — In Articles

Rails-to-Trails Takings: Property Owners’ Rights When Land Use Changes

In 1983, Congress enacted the federal National Trails System Act Amendment (known as the “Rails-to-Trails Act”) in order to preserve abandoned railroad rights of way by converting them into public recreational trails. Trails established under the Rails-to-Trails Act can range from walking and biking trails to green spaces for public use, such as the New York City High Line which was the subject of a recent takings case in the U.S. Court of Appeals for the Federal Circuit and a blog post.

The High Line case, like many others, focused on the adjacent landowners’ rights under the Fifth Amendment to the U.S. Constitution. While Rails-to-Trails cases involve situations where the land may have been encumbered by an easement, conversion of that easement to a different use is a taking of the landowner’s interest in the land requiring payment of just compensation.

Why Rails-to-Trails Conversions Require Payment of Just Compensation

When the government takes private property through its power of eminent domain, the Fifth Amendment requires payment of just compensation. What constitutes a “taking” is not always clear, and in many instances this is one of the central issues in eminent domain and inverse condemnation litigation.

However, when the government converts an abandoned railroad right of way into a public trail, some courts have held that this constitutes a taking of the adjacent landowner’s property under the Fifth Amendment. As a result, property owners affected by Rails-to-Trails conversions may be entitled to just compensation – despite the fact that their land was once encumbered by a railroad right of way.

If a rail company no longer has use for its railroad right of ways, it may abandon the rail line.  When the line is abandoned, ownership can revert back to the underlying landowner, usually the adjacent property owner.  An adjacent landowner may have a reversionary interest in the land if the railroad right of way was granted to the company as an easement for the purposes of operating the railroad.  In such situations, when a railroad abandons the line, it gives up its easement rights to use the land and “fee simple” – complete and exclusive – ownership reverts to the underlying landowner.

Courts have held that these landowners are entitled to just compensation because the landowners retained a reversionary interest in the land underlying a railroad right of way granted as an easement only.

Recent Rails-to-Trails Takings Cases

Nonetheless, Rails-to-Trails takings cases often end up in court. In the High Line case, the federal government argued that six words in the easement (which a prior owner granted in 1932) justified the conversion without just compensation. The landowners disagreed and their attorneys offered a different interpretation of the easement while also arguing that the government’s assertions were contrary to state law.

In another recent case, a group of landowners sought compensation when the government undertook a Rails-to-Trails conversion on their properties in Florida. The government refused to pay on the grounds that the railroad had not obtained an easement, but rather “fee simple” (outright) ownership in the subject property. Unfortunately, the federal trial court, federal appellate court and the Florida Supreme Court all agreed, and as a result the appellate court affirmed the denial of just compensation. The landowners are currently appealing the case to the U.S. Supreme Court.

Marvin M. Brandt Revocable Trust v. United States

If the Supreme Court accepts the case, it will likely consider the landowners’ claims in light of its decision in the 2014 case of Marvin M. Brandt Revocable Trust v. United States.  In this Rails-to-Trails case, the government sought to preserve the railroad right of way by filing a quite title action arguing that the federal government owned the land underneath the right of way to avoid paying the adjacent private landowner just compensation. Owners’ Counsel of America jointly filed an amici brief with the National Federation of Independent Business (NFIB) Small Business Legal Center in support of Brandt. The Supreme Court ultimately ruled that the landowner was the reversionary fee simple owner and entitled to just compensation for the taking of the property for the trail conversion.

Contact Owners’ Counsel of America About Your Rails-to-Trails Case

If you own land that is subject to an abandoned railroad right of way that is desired for public use as a trail, an eminent domain attorney with Owners’ Counsel of America can help you protect your Constitutional rights. To speak with a local attorney about your case, contact Owners’ Counsel of America today.

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January 25th, 2016 — In Articles

Georgia Court Rules Property Owners Are Entitled to Compensation and Attorneys’ Fees for Abandoned Condemnation Efforts

As we have previously discussed, while the Fifth Amendment to the U.S. Constitution requires payment of just compensation when the government exercises its power of eminent domain, several states have laws in place that provide property owners with additional financial remedies under certain circumstances. One such remedy that exists in many states is the ability to recover attorneys’ fees—typically when the government does something (such as making an unreasonably low compensation offer) that interferes with the property owners’ rights.

As highlighted by a recent Georgia case (brought to our attention by OCA Hawaii Member Robert Thomas in this post), another situation where state law may allow for recovery of attorneys’ fees is when the government abandons its efforts to condemn a person’s or business’ property. While Georgia’s statute regarding attorneys’ fees is relatively clear, this case in particular is notable because the Georgia Court of Appeals explicitly rejected the city’s argument that payment of attorneys’ fees plus compensation for the temporary taking of the property prior to abandonment would amount to a “double recovery.”

Right to Attorneys’ Fees for Abandoned Condemnation

Georgia is among several states that have laws providing for payment of landowners’ legal fees when the government abandons its efforts to condemn their property. Section 22-1-12 of the Georgia Code states:

In all actions where a condemning authority exercises the power of eminent domain, the court having jurisdiction . . . shall award the owner . . . his or her reasonable costs and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of the condemnation proceedings, if . . . [t]he proceeding is abandoned by the condemning authority.

In the case in question, the City of Canton initiated quick-take proceedings to condemn a parcel of land. It deposited roughly $800,000 with the trial court, which it had calculated as just compensation for the condemnation. The trial court promptly declared the city the title-owner of the property and granted it possession of the land.

The landowner subsequently challenged both the amount of compensation and the taking as a whole. Approximately 15 months later, with the parties still in litigation, the city abandoned its efforts to secure the property. The landowner sought to recover its attorneys’ fees and costs pursuant to Section 22-1-12, and the city actually agreed that it was liable for these amounts under the law.

Right to Compensation for Temporary Taking Prior to Abandonment

Where the city disagreed, however, was on the landowner’s action for just compensation under the Fifth Amendment. The city argued that the recovery of fees and costs should be the landowner’s sole remedy for the abandoned condemnation.

However, the Georgia Court of Appeals ruled that the landowner was entitled to both (i) attorneys’ fees and costs, and (ii) just compensation for the temporary taking. This decision was based in large part on the fact that the trial court had granted the city title in the original proceeding.

Are You Facing Condemnation? Contact Owners’ Counsel of America

While not all courts will award compensation for a temporary taking such as in the case discussed above, it is important for property owners facing condemnation proceedings to understand and protect their rights. If you are facing condemnation in Georgia or any other state nationwide, contact Owners’ Counsel of America to speak with a local eminent domain lawyer today.

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January 21st, 2016 — In Articles

The Government’s Offer Isn’t Always “Just” Compensation

In order to exercise the power of eminent domain, government agencies are required – by the Fifth Amendment to the U.S. Constitution – to pay just compensation to the affected property owners. We discussed the Constitutional “just compensation” requirement in a previous post, which also highlighted some state laws that provide for additional compensation to individuals and businesses when private property is condemned by the government.

Since the law requires the payment of just compensation, one would expect the government to pay it without putting up a fight.  Unfortunately, experience has shown that government agencies across the country routinely make unreasonably low offers in an effort to acquire private property for public projects. Gideon Kanner, an Honorary Member of Owners’ Counsel of America, keeps tabs on these offers in his “Lowball Watch,” which covered seven such cases in 2015. These cases included eminent domain proceedings from North Carolina to California, with disparities between the government’s initial offer and the final compensation award reaching upwards of $3 million.

California Jury Awards $3.2 Million After $1.8 Million Compensation Offer

One of the most recent cases involving a lowball condemnor offer was reported in November 2015. The California Department of Transportation (Caltrans) seized 34 acres from 94-year-old ranch owner, Lorraine Silveira, as part of a highway expansion project in the northern San Francisco Bay Area.  Caltrans offered Ms. Silveira roughly $1.8 million as “just compensation” for the taking of her property by eminent domain. It had valued the condemned property at just $575,000.

Ms. Silveira’s attorneys sought $6 million in compensation, and when Caltrans refused to pay, the Marin Independent Journal reports that extensive litigation ensued. The owner’s attorneys attacked the state appraiser’s “absurdly low valuation,” and presented evidence during the 20-day trial that the taking would damage the value of the remaining property and limit its future use as a winery. The jury returned a verdict awarding Ms. Silveira $3.2 million in compensation – $1.7 million for the property taken plus $1.5 million for damages to the remainder resulting from the highway expansion project.

The property owner is currently seeking to recover her attorneys’ fees from Caltrans.

Have You Received an Unreasonable Offer of “Just Compensation”?

Government agencies typically commence eminent domain proceedings by providing a condemnation notice or initial offer to the property owner. Condemnors must then follow certain procedures, which vary from state to state but often include conducting an appraisal and offering payment of just compensation. Unfortunately, many property owners accept the government’s offer or attempt to negotiate better compensation or better terms on their own behalf.

As this case and numerous cases before it has demonstrated, property owners need to be vigilant about protecting their property rights. If you have received an offer that you believe is unreasonably low, you have the opportunity – and the right – to make sure you are justly compensated. To learn more about protecting your constitutional right to just compensation, you can contact a local attorney with Owners’ Counsel of America for a free consultation.

Speak with an Eminent Domain Attorney with Owners’ Counsel of America

Owners’ Counsel of America is a network of the leading eminent domain attorneys nationwide. If you have received a condemnation notice from a local, state or federal government authority, we invite you to contact us for more information about your legal rights.

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