Understanding Condemnation

For general Information about the Odom Firm's Eminent Domain and Land Condemnation Practice, click here.

What follows is a detailed outline of the general legal principals in North Carolina which govern Eminent Domain and Land Condemnation cases.  Tommy Odom and David Murray give a yearly presentation at the North Carolina Advocates for Justice Convention on updates in North Carolina law which affect Eminent Domain and Land Condemnation cases and their clients.

What is condemnation?

THE INHERENT POWER OF THE GOVERNMENT TO TAKE PRIVATE PROPERTY FOR A PUBLIC USE.

This inherent power is restrained by:

  • The Fifth Amendment to the United States Constitution applicable to the States through the Fourteenth Amendment which provides in pertinent part as follows:

    No person shall be . . . deprived of . . . property without due process of law; nor shall private property be taken for a public use without just compensation.

  • Article I, Section 19 of the North Carolina Constitution which provides in pertinent part as follows:

    No person shall be . . . disseized of his freehold . . . or in any manner deprived of his life, liberty, or property, but by the law of the land.

These constitutional limitations require:

(1) the taking be for a public use or purpose and, if so,
(2) just compensation.

Overview of the process of taking private property

  • Controlling provisions of North Carolina General Statutes:
    • Chapter 40A - applies to private condemnor.
      See N.C. Gen. Stat. 40A-3(a).
    • Chapter 40A - applies to public condemnors.
      See N.C. Gen. Stat. 40A-3(b).
    • Chapter 136 - Department of Transportation and other state agencies.
      See N.C. Gen Stat. § 136-19.

    Note: Public condemnors, like the City of Charlotte, are now using Chapter 136 instead of Chapter 40A.

  • No Requirement of offer by the Condemnor prior to taking under Chapter 40A, but is required under Chapter 136. In practice the government entity will usually have landowner notified and attempt to purchase the property.
  • Rights of Condemnor to enter property prior to condemnation.

    General Rule: Such entry is not a taking or a trespass but landowner is entitled to damages caused by the entry.

  • Legal Process of the taking under Chapter 136 (there are somewhat different but similar procedures under Chapter 40A):
    • Complaint and Declaration of Taking - title vests in Condemnor unless prior injunctive relief granted.
    • Deposit of Estimated Just Compensation with Clerk.
    • Answer within (120 days of service under § 40A) one year under §136.
    • Request commissioners before clerk or not? Probably not.
    • Application for Deposit: May waive right to contest public use if you "withdraw the deposit."
    • Discovery - North Carolina Rules of Civil Procedure allow interrogatories (written questions), document productions & depositions. The Public Records Act may also be available.
    • Section 136-108 Hearings. "All other issues" besides just compensation raised by the pleadings before a Judge.
    • Mediations are required in Superior Court.
    • Motions in Limine before the trial judge.
    • Trial-Opinions of fair market value on the date of the taking. - Burden of Proof on landowner.
    • Motions to exclude experts who are tendered.
    • Motions to exclude comparable properties.
    • Jury Verdict.
    • Post-trial Motions.
    • Appeal to North Carolina Court of Appeals, North Carolina Supreme Court, and United States Supreme Court.
    • Interest on Judgment - 8% from date property taken. Can request higher interest rate.
    • Certain costs can be taxed against the condemnor at the discretion of the Court. Attorney's fees are not provided in § 40A-8(a) and § 136-119 and cannot be taxed as costs. Expert Witness fees such as appraiser and engineering costs may be allowable as cost if recognized as an expert.

Challenging the right to condemn

General Rule:

The extent and amount of property for a public use and the rights or interest in the property are generally left to the discretion of condemnor, and are not subject to judicial inquiry except under facts that show bad faith on the condemnor or an oppressive or manifest abuse of discretion.

Can you challenge the public use or purpose?

Yes. But the standard makes it nearly impossible to successfully challenge.

Public use or purpose has two prong analysis:

(1) It must involve a reasonable connection with the convenience and necessity of particular municipality and

(2) The activity benefits the public generally, as opposed to special interests or persons.

Just Compensation, Project Impacts & Partial and Total Takings.
Who can testify - expert vs. lay witness?

Just Compensation in a Total Taking: Chapters 136 & 40A - Fair Market Value of the property on the date of the taking.

Fair market value: In the land's condition on the date of the taking, what was the value of the land for the highest and best use to which it could be put by owners possessed of prudence, wisdom and adequate means?

Just Compensation in a Partial Taking:

Under Chapter 136, the difference between fair market value of land immediately prior to the taking and the value of the remainder immediately following the taking. Condemnor can plead and has the burden to prove an offset of special and general benefits. Damages can be zero.

Under Chapter 40A, the greater of the fair market value of the land acquired and the difference between the fair market value of the remainder immediately after the taking. Damages to the remainder may be offset by special and general benefits to the remainder tract.

Project Impacts: "Before" and "after" rule of damages. Property to be evaluated in its "as is" condition immediately before the taking. Before value to be determined without consideration of any condemnation or project-related impacts. No condemnation boom or blight. No benefit or detriment of project impacts on the property.

Refund of Deposit: Yes, if landowner receives less money than amount deposited, the condemnor is entitled to judgment and costs against person(s) receiving the money.

Expert witness:

  1. The trial judge determines after a voir dire examination if the person is qualified as an expert.
  2. Expert witnesses are given wide latitude in formulating and explaining opinions of value.
  3. Three traditional basis for determining fair market value on the date of the taking:
    1. Market Data Approach
    2. Cost Approach
    3. Income Approach - fair rental value of the property, not income from a business.
  4. Other experts: Land use experts, engineers and, attorneys may be able to give opinions upon which the appraiser can use for an opinion of value.

Lay Witness:

  1. One familiar with the property may testify as to his opinion of value even though he is not an expert on market value generally.
  2. Property owners may testify if they are familiar with the value of property in the vicinity, and they have an opinion of value.
  3. Opinions of relatives have been allowed even though the a) witnesses are interested because they are relatives, b) no personal knowledge of comparable sales, no expertise in land development.

Inverse condemnation and regulatory takings

  1. Inverse Condemnation:
    1. Discharge of foul matter from its sewage disposal plant on plaintiff's land.
    2. Trees cut on plaintiff's land.
    3. City created nuisance resulting in property damage to plaintiff by filling hole in "unimportant street" with garbage and trash.
    4. Discharge of improperly treated sewage into stream upon which plaintiff resided.
    5. Maintaining filthy drain on lot adjoining plaintiff causing pollution.
    6. Erection of a silver-painted water tank across street from plaintiff's house that caused a reflection of the sun's rays onto plaintiff's property.
    7. Maintaining a road at such a grade that a storm caused water to become impounded on plaintiff's property.
    8. Frequent flights of aircraft over property at low altitudes.
    9. Severe air pollution peculiarly affected a particular property.
    10. Foreseeable increase in propensity for flooding on plaintiff's property held enough to require compensation.
    11. There is, however, no "right to be seen" vested in the owner of billboards; and inverse condemnation is not proper where the Department of Transportation blocks the view of billboards by planting trees on its road right-of-way.

Remedy of landowner whose property rights have been infringed by governmental action to a degree significant to be a compensable taking.

Exclusive remedy for governmental takings of real property. There is no action in trespass.

Landowner can file separate action or counterclaim in the original action.

Statute of Limitations of two years in 40A-51 and 136-111. Railway right of ways five years and utility companies for utility lines is three years.

Quite common.

If landowner is successful and recovers damages, reasonable attorneys fees, appraisal costs and engineering costs may be awarded within the discretion of the Court. G.S. §40A-8 and 136-119. In practice they are likely to be awarded. This gives landowner an important leverage to attempt to obtain adequate compensation and to be made whole.

Examples of inverse condemnation:

  • Regulatory Takings:
    1. Economic impact of the regulation on claimant.
    2. Extent regulation has interfered with distinct investment- backed expectations of claimant; and
    3. Character of governmental regulation.

General Rule - subject to certain qualifications, a regulation that "denies all economically beneficial or productive use of land" will require compensation to be paid under the Takings Clause.

Medians, Access & Change of Grade - Police Power or Compensable Taking?

Medians:

General Rule: Not compensable - damages flowing from medians are not compensable.

Change in Quality or Quantity of Access:

General Rule: Not compensable - owner not entitled to access at all points, only reasonable access.

Change of Grade:

General Rule: Not compensable - damages flowing from change of grade are not compensable unless change of grade occurs on the property taken.

Police power to regulate the use of property is non-compensable, while the taking of property for public use through the power of eminent domain is.

How do you tell the difference?

North Carolina Courts have failed to delineate a clear rule to distinguish the difference and there is no consistent set of rules. Most likely, a particular project will have both non-compensable impacts and compensable takings which may have common effects on the property.

Abutter's Rights. What are they?

Owner of land abutting a highway or street has the right of direct access from his property to the traffic lanes of the highway. If direct access is eliminated, there is a compensable taking.

Owner has easement that consists of the right of reasonable access to the particular highway on which his land abuts.

No right, however, exists as to multiple points, or any particular point. An owner's access may be restricted to such points that are "reasonable and proper" without there being a taking.

Abutter's rights apply equally to new and existing roads converted to controlled access facilities.

Loss of direct access may not be cured by access to local roads, but service roads may suffice. If landowner receives substitute access via service or frontage road, which abuts the property, compensation may be denied.

General Rule: No compensation for inconvenience, circuitivity of travel and dead-ending. There may be an exception if part of the property is taken as well.

Relocation Assistance

The purposes of Relocation Assistance Programs are:

To ensure fair and consistent treatment of all displaced persons and businesses that occupy acquired right of way in a way that does not cause a disproportionate hardship as a result of programs designed for the benefit of the public as a whole.

To put the displaced person in the same position he was in before the project forced him to move.

Individuals may be eligible to receive:

Relocation Housing Payment (up to $22,500, but may increase in "Last Resort")

Rent or Down Payment Supplement (up to $5,250, but may increase in "Last Resort")

Closing Costs

Increased mortgage interest

Moving Expenses

Businesses may be eligible to receive:

Moving Expenses

Search Expenses

Reestablishment Expenses

Other important information:

90 - Day Notice to Vacate

Relocation Payments Not Taxable