Condemnation refers to the legal power of the government to take private property for public use. The government acquires such property under the power of eminent domain. For example, a governmental agency might acquire a strip of land from you to construct a new highway, but you will be paid for it. This process is called condemnation, regardless of whether actual court action is involved.
This publication explains this procedure and outlines your rights under condemnation. However, it is only a general statement of the law and is not intended as a substitute for legal counsel.
If you are faced with the prospect of having some or all of your property condemned, don't hesitate to consult your attorney to determine your rights. If you know the nature and extent of your rights, you are in a much better position to negotiate successfully with the representative of the condemning authority.
If the power did not exist, government could buy only those lands which the owners had offered for sale. This would create problems in constructing highways, utility lines and other public services.
It is generally agreed that a government must have the power of eminent domain in order to serve its citizens. However, as an inherent power, it is limited by both the state and federal constitutions. The limitations on this power exist for the protection of private individuals and constitute the primary source of disputes that may arise between the parties to a condemnation proceeding.
The federal government also has authority to delegate the power of condemnation to subordinate units. Many state and federal statutes empower various governmental subdivisions to bring a condemnation proceeding. Unless the power of eminent domain is delegated to a given governmental unit by an enabling statute, the power cannot be exercised.
Projected use of the land. Assuming that such authority has been granted to an agency, there are two other limitations imposed by the state and federal constitutions. The first is that the land must be taken for public use. Public use means that the public must derive a benefit from the taking. It is not necessary that the land be open to the general public. However, property may not be taken for trade purposes or for the benefit of some select group.
Public use should be distinguished from public necessity. While one of the limitations on eminent domain is whether a public use exists, a landowner has no legal right to challenge public necessity in Missouri. Public necessity refers to how much public land is being appropriated and the right to appropriate more than the landowner feels is needed. In Missouri, this is considered to be a political question and as such is decided by the political process.
Usually a commission is set up to hold hearings regarding public necessity. This is the only method of challenging such action. The landowner has no right to refuse to sell the property on these grounds. Examples of challenges to public necessity are questioning the width of land to be taken for building a road or objecting to the method of construction of a bridge.
Right to just compensation. Another important limitation on eminent domain is the right of the landowner to receive just compensation for the property taken. The three elements used to determine just compensation to the landowner are fair market value, special damages and special benefits. Using these factors, a jury can determine an amount to be paid to the landowner that will be just compensation for the damages that she or he has suffered as a result of the taking.
The formula used in Missouri to determine just compensation is the fair market value of the entire tract of land before the taking minus the fair market value of any land that remains after the taking. The difference in the "before" and "after" values of the land is the amount of damages you should receive.
If all of your land is taken, the landowner is entitled to the fair market value of the land before the taking. Fair market value generally is defined as what a willing buyer would pay a willing seller for a tract of land. This means that no payment is required for feelings of personal loss one might have in giving up the land. He is treated as if he were willing to sell. On the other hand, this value does not refer to the value of land as if the seller were forced to sell in order to pay his debts.
When only a partial taking of your land occurs, the landowner is entitled not only to the fair market value of the land taken, but also to any special damages to the remaining land caused by the project. Special damages can be figured separately or can be taken into consideration when figuring the after value of the remaining land. Either way, a landowner must be paid for special damages when a partial taking occurs.
Special damages may be broken down into two categories: severance damages and consequential damages. Severance damages result from dividing property that was once one tract of property into two or more plots. This may lower the value of the property that remains; therefore, the owner must be compensated for this damage.
Consequential damages may occur when only a part of the property is taken but the remainder of the property has less value because the proposed public project will destroy or impair the fair market value of the remainder. For example, one property right is lateral support for property from adjacent landowners (e.g., if your neighbor digs a basement near your boundary, he must not permit your land to fall or slide into the excavation negligently). If such support is impaired or destroyed because of a public taking, then consequential damage has occurred which should be compensated.
Another example of consequential damage is the construction of a road or bridge that interferes with drainage so as to cause flooding of remaining land. In general, anything that lowers the fair market value of the remaining land after a taking may be considered consequential damage.
The final element in determining just compensation for land taken is special benefits. Special benefits are those things that increase the fair market value of the land that remains after the taking. Special benefits are basically the opposite of special damages.
Special benefits increase the value of remaining land, whereas special damages decrease the value of the remaining land.
For example, if the state takes part of your land for the purpose of improving drainage in a given area, you must be paid just compensation for the land taken. However, if the property remaining is more valuable due to the better drainage, you have experienced a special benefit. The value of this special benefit may be deducted from the fair market value of the land taken for construction of the ditches and from any special damages you also may have suffered.
It is important to note, however, that no deduction from your award will be made for benefits that are general -- those where the benefit is not unique to you. The same logic is true of special damages. If the damages to your property are general in nature -- that is, the damages are not unique to you -- no special damages will be paid to you. An example of general damages may be increases in traffic or noise caused by a new highway. General damages are sometimes also referred to as "inconsequential damages" and will not affect the determination of just compensation.
Before a landowner makes a final agreement to sell the property, even though he feels a fair value is offered, it is wise for him to seek competent legal counsel so that he may be fully informed of his rights. The lawyer knows the peculiarities of both real estate law and eminent domain law and can guide the landowner in reaching his decision. His advice in such matters may prove valuable in determining how much compensation must be paid.
Judicial determination of damages. If no agreement can be reached, the court procedure begins. The first step occurs when the condemning agency files a petition in circuit court. This is the same method by which any lawsuit begins, since a condemnation proceeding carries a guarantee of trial by jury of all factual issues.
The petition names the condemnation agency as plaintiff, and those having compensable property interests as defendants. It also contains a statement setting out the statute that enables the agency to take land. The clerk of the court will then issue a summons giving interested parties notice that a hearing will take place. The notice may, under extraordinary circumstances, be made by publication in a newspaper in a manner specified by law.
Regardless of whether notice is given personally or by publication, the initial hearing gives the landowner the opportunity to challenge the agency's legal procedure as well as its power to condemn property. If the proper procedure has been followed, the judge will then appoint three disinterested freeholders (property owners) as commissioners to assess the damages.
After examining the property, these commissioners file a report with the court. At least two of the commissioners must concur in the report before it is returned to the court. The clerk of the court then gives all parties to the condemnation proceeding notice of the report.
The agency and the landowner have 10 days after such notice to file exceptions to the report. If exceptions are filed, then a trial by jury will follow to determine just compensation. However, if neither party objects to the report, the agency pays the landowner the amount listed in the report, and title to the property is conveyed to the agency.
Even if exceptions are filed to the commissioners' report and the case is to be tried before a jury, the condemning agency can take immediate possession of the land by depositing with the circuit clerk the amount set by the commissioners as just compensation. If the jury should later set the award higher than the commissioners' award, the amount set by the jury will be the just compensation.
Only a small percentage of condemnation procedures initiated actually result in a trial. More often, a settlement is reached long before the trial stage.
When the U.S. government or its agencies condemn property, the procedure differs somewhat from Missouri judicial procedure. If the enabling statute requires that a tribunal has the power to determine just compensation, then their determination will be final on that issue. However, other issues may be taken before the federal courts, such as whether a public use exists or whether the statutory authorization exists.
If the statute does not require a tribunal to determine just compensation, the federal District Court, at its discretion, will appoint commissioners to determine just compensation or hold a trial on the issues with a jury to make the findings. If impaneling a jury and holding a trial would place a hardship on jurors and the circumstances surrounding the evaluation of the property appear to require special knowledge, the District Court will appoint commissioners.
Perhaps the primary question in the minds of persons whose land is being taken is what sorts of things must be compensated. In general, any interference with a possessory interest in property must be compensated. Such interference may occur when the property owner is deprived of any of the following property interests:
For example, suppose a tract of land is currently being used for agricultural purposes, but it is located to permit residential development. If its fair market value for residential purposes is greater than its value for farming at the time the land is condemned, the owner is entitled to be paid on the basis of its value for residential use. However, the owner isn't entitled to be paid for the increase in the value of the property because of the public improvement.
The Uniform Act provides for monetary payments for people displaced from their homes to help defray the costs of moving and acquiring a new home.
This distribution among the respective interest holders is not, however, made by the jury hearing the condemnation suit. The jury will set only a lump-sum award for the property, leaving the interest holders to decide how the award will be divided.
If such use occurs and is not challenged for a long period of time, the landowner runs the risk of not receiving damages. In addition, the public may obtain the right to continue using the property by virtue of such extended use under some circumstances. This is known as the "adverse user" doctrine. Therefore, if members of the public are presently making an uncompensated and unauthorized use of your property, it would be wise to consult your attorney about your rights.
If the jury ultimately determines that your property is worth more than the amount listed in the commissioners' report, the agency must pay interest at the statutorily prescribed rate of 6 percent for any amount in excess of the commissioners' assessment.
Another important factor of which you should be aware is the federal income tax treatment of the money you receive for property taken by condemnation. You legally can avoid paying any income tax on this money if you purchase qualified replacement property within the period of time specified by the tax laws.
For information concerning the tax aspects of condemnation, see Internal Revenue Service Publication #549, Condemnation of Private Property for Public Use, available at your local IRS office.
Issued in furtherance of Cooperative Extension Work Acts of May 8 and June 30, 1914, in cooperation with the United States Department of Agriculture. Ronald J. Turner, Director, Cooperative Extension Service, University of Missouri and Lincoln University, Columbia, Missouri 65211. • University Extension does not discriminate on the basis of race, color, national origin, sex, religion, age, disability or status as a Vietnam-era veteran in employment or programs. If you have special needs as addressed by the Americans with Disabilities Act and need this publication in an alternative format, write ADA Officer, Extension and Agricultural Information, 1-98 Agriculture Building, Columbia, MO 65211, or call (573) 882-8237. Reasonable efforts will be made to accommodate your special needs.