One of the most fundamental constitutional rights in America is the right to own, use and exclude others from your property. However, our property is subject to the government's power of eminent domain or condemnation. The government is authorized to acquire property rights for a public purpose. Public utility companies and railroads also have the power of eminent domain. Whenever property is taken by condemnation, the government must pay "just compensation" to the affected property owner.

Under Michigan law, if your property is going to be acquired, the government must first make a good faith offer accompanied by an appraisal or written explanation showing the basis for the offer. If you do not come to a voluntary agreement to sell the property or property rights, the government can file a lawsuit to acquire your property.

If your property is about to be condemned, it is extremely important that you consult with an experienced condemnation attorney as early as possible. A complete understanding of the condemnation process is essential in order to protect your rights. The condemnation process begins with the good faith offer.

Mr. Strauss has over 15 years of experience representing both property owners and governments in condemnation actions. He is a member of the Michigan State Bar subcommittee on Eminent Domain, as well as the International Right of Way Association, where he was appointed co-chair of the law and legislation committee. Mr. Strauss is a frequent speaker on eminent domain issues and has had numerous articles published which deal with various condemnation related issues.

The Condemnation Process

  • Pre-Acquisition Activities

    When the government decides that it must acquire private property for a public project, it must determine the property that is reasonably necessary for the project. While the government has great latitude in determining what property is "necessary" for the project, there are instances where a court will not permit the proposed taking. For example, property generally cannot be acquired for use for an undefined project or for an unspecified time in the future.

    After the decision has been made as to what land is necessary, the condemning agency is required to make a good faith offer to the owner(s) of the property. The good faith offer must be based upon an appraisal of the property by a licensed real estate appraiser and is intended to establish the government's position of "just compensation" for the property being acquired. In some situations, a written statement may be provided. For reasons beyond the scope of this article, a condemnation appraisal is a distant cousin of the traditional real estate appraisal. Very few real estate appraisers are competent to appraise property for a condemnation case. Various statutes and Michigan case law define what factors may and may not be considered when determining just compensation.

    When the appraisal is completed, the good faith offer and appraisal are provided to the owner and/or the owner's attorney. A certain period of time is allotted during which the owner has an opportunity to consider the appraisal and decide if he or she will sell the property for that amount. If the price is not acceptable, the parties will attempt to negotiate. If a price is agreed upon, a voluntary sale occurs and the matter is resolved.
  • The Complaint

    If an agreement price for the property cannot be negotiated, the government generally will file a condemnation lawsuit. The condemning agency generally is liable for the owner's attorney fees, equal to 1/3 of the difference between the good faith offer and the ultimate determination of just compensation, including interest. When the condemning agency takes possession of the property, it must pay the owner the amount of the good faith offer. That is the quid pro quo for taking possession.

    Once the complaint is filed, the owners have 21 days (28 days if out of state) to decide if they want to challenge the necessity of the project. After this period has passed the condemning agency can request that the court enter an order transferring possession and payment of the estimated just compensation.
  • The Litigation Stage

    If necessity is not challenged or the court confirms necessity, the owner is required to file a statement setting forth damage claims it believes the condemning agency overlooked in the appraisal supporting the good faith offer. There are specific time limitations during which the landowner must file these claims in order to preserve the right to be paid for such damages.

    An order will be issued early in the proceedings setting a date for simultaneous exchange of appraisals. The condemning agency must update its appraisal, consistent with values on the date the complaint was filed. The owner also will produce an appraisal consistent with the date of taking.

    After the appraisals are exchanged, they will be analyzed by each party. The appraisers usually are deposed within a few months of the exchange. During the deposition, the attorneys attempt to discover the basis for the appraiser's opinion and weaknesses that can be used during trial.

    Case evaluation also is scheduled early on in the proceedings and occurs after depositions and other discovery (processes for obtaining information and documents from the opposing party). During case evaluation, the parties will submit summaries demonstrating the strength of their appraiser's opinion and the weaknesses of the opposing side. A panel of three case evaluators will arrive at an award, a value they believe will settle a case. If both parties accept the award, the just compensation phase is over. Generally, a case evaluation award does not include the owner's attorney fee, the owner's appraisal fee and some other costs. These items, which the condemning agency must reimburse in full or in part, will be decided in separate proceeding or by agreement.

    The period after case evaluation also provides a viable opportunity to settle the matter. As the trial date nears, both parties seriously consider the time and expense of going to trial, as well as the likelihood that the party can improve its position relative to the case evaluation award. In cases where the spread is not that great, the expense of trial may not warrant going to trial.

    Prior to and after case evaluation, the parties engage in motion practice. A motion is merely a formal request that the court grant relief of some kind. Common motions might seek to exclude certain evidence or have the opposing party's appraisal tossed out of court for a violation of condemnation law. The results of motions further shape the case for trial and/or settlement.
  • Trial

    If no settlement is reached, the case will go to trial. Generally a jury is selected to determine just compensation. On some occasions, if the parties do not demand a jury trial, the judge will decide the case.

    Prior to trial, the parties might file more motions, to exclude certain evidence. Such motions often are necessary to preserve issues for appeal, if the need arises after the verdict.

    As in most things, preparation is of key importance. The attorney and appraiser work on a presentation of the appraisal opinion that is designed to relate to a jury of people who have little or no knowledge of the valuation process. Attractive and engaging exhibits are indispensable. The appraiser should be prepared to deal with weaknesses in his or her position on cross examination. While every point of attack cannot be anticipated, thorough substantiation for all aspects of the appraisal is advisable.
  • Post Trial Matters

    As mentioned, the condemning agency must reimburse the owner for attorney fees, expert fees and some costs of litigation. At this stage, it is important to know the relevant case law that has defined what expenses and fees may be recovered.
  • Appeal

    If one of the parties believes that the trial court committed a legal error in the proceedings, an appeal might be considered. Many legal issues often arise in a condemnation case concerning both the exclusion and inclusion of evidence. Most courts do not deal with condemnation on a regular basis and there often are rulings that create issues for appeal.

Inverse Condemnation

Inverse condemnation refers to a situation where the property owner files a lawsuit claiming that the government has taken property without filing a condemnation action. An inverse condemnation may occur when the government physically uses private property without paying compensation. An inverse taking may also occur when governmental regulations prevent any profitable use of the property.

The laws governing inverse condemnation can be very complex and depend on the particular facts of each matter. If you believe that the government has acquired your property through its conduct or as a result of regulations, contact Mr. Strauss for a review of your situation.