ULC

Eminent Domain Code Summary

Condemnation of property on behalf of both private and public entities has been a common occurrence in the United States. The procedural aspects of condemnation traditionally are treated separately from other kinds of civil litigation. The procedures have accumu­lated much that is archaic and much that does not make sense with respect to modern procedural concepts. The new Uniform Act is designed to treat the subject of Eminent Domain in its traditional fashion, but to provide a modern code of procedure which incorporates better considered modern concepts.

The basic policies which were meant to be achieved by the new Uniform Code are these: (1) the Code should, insofar as practicable, apply equally to public and to private condemnors; (2) the Code should not attempt to establish the substantative law concerning who may condemn property or for what purposes property may be con­demned; (3) the Code's subject matter should be limited to the pro­cedure for condemning property and to the methods and standards for compensating property owners; (4) the Code should establish procedures that are consistent with federal standards so that the state and local agencies may, by complying with this code, be eligible for federal assistance in carrying out projects that re­quire the use of the Eminent Domain power; (5) the Code should set standards for payment of the owner's litigation expenses when the condemnor abandons the condemnation efforts or is ajudged not to have the right to take the property at issue; and (6) the Code should set standards for relocation assistance in all eminent domain land acquisitions.

It is well to note the interests of the federal government in uniformity of law between the states with respect to Eminent Domain procedures. The NCCUSL received a substantial grant from the De­partment of Transportation to develop the new Uniform Code. In ad­dition, the Department of Transportation contributed advisors from the Federal Highway Administration to advise and assist the drafting committee. A great share of the condemnation activity in the United States is involved with highways. The federal govern­ment contributes substantial resources for highway development. Uniform legislation which will meet acceptable standards of practice are important for furthering federal and. state cooperation in the matter of highway construction.

 

As a procedural act, the Uniform Eminent Domain Code provides for all stages of the condemnation action. This includes such matters as preliminary negotiations, entry on the land to determine suitability, condemnation authorizations, the joining of the issues and trials, pre-trial discovery, the actual trial procedure, and the number of necessary items post-trial regarding compensation, its payment, and any problems relating to compensation to be awarded. In addition, there are sections regarding informal procedures for smaller condemnations. One of the most innovative of the sections involves relocation assistance for persons uprooted by major pro­jects involving condemnation. There are also provisions for arbitra­tion of compensation outside the forum of the court. This is meant to be a comprehensive, broad-based act.

 

The magnitude of this act, in a parallel sense to the Uniform Rules of Criminal Procedure, prevents a detailed description of all of its provisions. Some of the more innovative sections may be highlighted, however.

 

Most civil actions begin with the filing of a complaint in a court of appropriate jurisdiction. In condemnation actions, however, there are some necessary activities which precede the filing. It is necessary, for example, to determine if an area is suitable for the particular project which is contemplated. The Uniform Act provides the condemnor with a right to reasonable entry upon the land to make suitability studies. There are rules to prohibit un­reasonable action. There must be adequate and timely notification to the owner of the entry. The entry must be accomplished during reasonable daylight hours, and it has to be accomplished peaceably. If a land owner objects to entry for suitability studies, the con­demnor may obtain a court order permitting such entry. To get a court order, the condemnor has to deposit a sufficient amount to cover any damages which might occur. Obviously, the land owner has a right to any damages which may accrue from such an entry.

 

Before any condemnation action is filed, under the Uniform Act, the condemnor must adopt a written resolution authorizing the condemnation. Such an authorization has to contain certain definite things. These include a general statement of the proposed public use, with a reference to the specific statutes authorizing such a taking. There must be a description of the general location and the extent of the property to be taken. The statement must also include a declaration that the use is required by public convenience and necessity, and that a taking of the described property is necessary and appropriate for the proposed public use. The legal effect of the authorization is to create a rebuttable presumption that the matters set forth within the resolution are true. The recitals in the authorization resolution allow the condemnee to determine whether the condemnor is acting within its lawful power of eminent domain. The authorization is notice given to the condemnee.

 

Settlement of condemnation actions without trial would generally be considered the most efficient means ox handling eminent domain actions. The condemnor is given two fundamental responsibilities which would tend to prevent unnecessary litigation. First, the condemnor is obligated to make every reasonable and diligent effort to acquire property by negotiation. Before negotiation may be initiated, the condemnor is required to have an appraisal made of the property's value. The appraisal must be provided to the pro­perty owner, and is the basis of the offer which the condemnor has to make as he initiates negotiations. It is not the intent of this act that the condemnor be able to cheapen the offer to achieve the lowest price possible. A fair price for the property is the stated goal. Therefore, the condemnor must make the appraisal in­formation available, and he must enter into "good faith" negotia­tions based upon an offer rooted in the appraisal.

 

After these preliminary matters are accomplished, and assuming that negotiations do not achieve a settlement, then the action will go forward. The procedure is not essentially different from any civil action. A complaint is filed, and the defendant responds. The issues are joined which will carry the parties to trial. There are some differences from ordinary civil procedure, however. The Uniform Act provides new aspects of condemnation procedure which have not normally been part of the condemnation action.

 

Perhaps the most important additions to condemnation procedure in the Uniform Act are the provisions for discovery. The scope of discovery on behalf of either party includes written appraisals, reports, maps, diagrams, charts, tables, or other documents in pos­session containing engineering, economic evaluation, comparable sales, or other data pertaining to the issue of compensation. Either party may also discover individuals consulted, but who are not to be used as witnesses. The scope of discovery in the Uniform Act is generally expanded over discovery practices now existing in most jurisdictions for condemnation actions.

 

Different from normal civil procedure are the provisions for deposit of funds for compensation, and for the early taking of possession by the condemnor in the Uniform Act. Assuming that the only dispute between parties relates to compensation, there is little reason in many cases why the condemnor cannot take possession prior to the time the exact dollar value for compensation is deter­mined.

 

The orderly conduct of the major projects for which condemna­tion is often used can be facilitated by an early taking and by establishing a certain date of taking not necessarily dependent upon the date of final award.

 

The Uniform Act permits early taking, with the principle con­dition being the deposit of sufficient funds with the court to cover the eventual award of compensation. If the condemnor chooses to seek an early taking of the property, the deposit is made. The amount depends upon an appraisal provided to the court at the time of the deposit. Immediate notice must be given to all condemnees who are subject to the early taking. Condemnees have the opportunity to object to the taking or to the amount of deposit, and to move for increasing its amount. Once the court has determined that the action is warranted, and that the amount of deposit is adequate, it may then issue an order permitting the condemnor to take possession. Thus the process of early taking is facilitated, and the condemnees' interests are protected.

 

Deposits may be made even though an early taking is not con­templated. Also, the court can order deposits to be made notwith­standing intentions of the condemnor with respect to early taking. Deposits can be made or can be ordered in an effort to provide ad­equate protection to the condemnees in a condemnation action.

 

One of the interesting innovations of the Uniform Act is the article dealing with informal procedures for disputes involving limited amounts. The limited amount concept has two aspects. The informal procedure may be instituted if the total compensation de­manded is less than $20,000. The informal procedure also may be utilized if the difference between the latest offer of the condemnor and the latest demand by the condemnees is less than $5,000. These dollar amounts are only suggested figures, and it is up to the juris­diction to determine which exact figures would meet its requirements. To initiate an informal procedure, a party may file with a court a written request that the informal procedures be utilized. The procedure itself involves a hearing without jury. The parties may appear informally and the rules of evidence need not be followed. If a party is dissatisfied with the outcome of informal procedure, that party may seek a de novo review of the condemnation action within 30 days after entry of judgment.

 

The crux of any condemnation action is the evaluation of the property to be condemned. The right to compensation accrues upon the date the complaint is filed. The basic measure of compensation is the fair market value of the property as of the date of evaluation. Market value, for most property, is the price that would be agreed to by an informed seller who is willing but not obligated to buy. If there is no relevant market, any fair and just means of evaluation are acceptable. If the property is owned by a public entity or is held by a non-profit organization, the market value is not less than the reasonable cost of functional replacement, assuming that the property is devoted to a public function or to a non-profit, educational, religious, charitable, or eleemosynary service, and the facilities or services are available to the general public.

 

There are also special rules for special circumstances. For example, if there is a partial taking of the property, the value may be the fair market value. It may also be the amount by which the fair market value of the entire property exceeds the fair market value of the remainder immediately after taking. Whichever amount produces the greater valuation between the two means of determining value would be the prevailing means.

 

There must also be rules for the effect of the condemnation action and the project to be developed upon market values. Basically, a condemnee would not be able to receive any increase in market value because of the nature of the contemplated project. This rule reflects the fact that property values often increase in any area surrounding any given kind of project. However, if there is only a partial taking of property, the increase or decrease of property value shall be ascribed to the remainder left to the con­demnee. There are other special rules regarding things like crops and improvements, divided interests, and interests in land other than fee simple. A special provision relates to compensation for loss of good will on the part of a business.

 

As important as valuation itself is the question of the evidence introduced to prove values. The Uniform Act conforms to standard practices. Basically, evidence of values may be the testimony of experts in the field of valuation who have examined the property, and/or evidence of comparable sales.

 

Perhaps the most important innovative and unusual provisions of the new Uniform Act are found in the article dealing with re­location assistance. Relocation assistance in real property ac­quisition has been mandated in federal law since the Federal Uni­form Relocation Assistance and Real Property Acquisition Policy Act of 1970 (P.L. 91-646). Where federal financial assistance is available to state and local agencies, those agencies must conform to the provisions of the federal act. The article in the Uniform Eminent Domain Code pertaining to relocation assistance provides a state law which would automatically place all agencies in con­formance with the federal statute. However, relocation assistance is provided for other reasons than compliance with federal law. Adequate relocation assistance for people who have to move because of condemnation has long been needed in all condemnation activities. Therefore, the Uniform Eminent Domain Code applies the relocation assistance article to all projects utilizing condemnation, whether or not federal assistance is part and parcel of the project for which condemnation takes place.

 

If a condemnor requires property, and displaces people by making them move, either because of direct acquisition or because of the nature of the project itself, then relocation assistance must be made available. The condemnor is responsible to the displaced person for reasonable moving expenses, direct losses of tangible personal property, and reasonable expenses in searching for a re­placement business or farm, if applicable. The person who is displaced has some alternatives to receiving the direct expenses as indicated. The displaced person may accept a fixed amount for relocation assistance. For a dwelling, the fixed amount would be maximum of $500.00. If a farm and business is involved, the amount would be a sum between $2~500.00 and $10,000.00. In addition, there is special provision for assistance to individuals who will be displaced from dwellings owned and occupied not less than 180 days before initiation of negotiations for the acquisition of the property. There are provisions for assisting tenants to find replacement housing. Each condemnor is required to provide a re­location assistance advisory program to aid any person, business or farm operation displaced. The program is responsible for determining the need for relocation assistance, for providing current information to those who need such assistance, and to assure that there will be reasonably similar dwellings or facilities available for those people who are displaced. Thus, the condemnor must provide an easily identifiable agency or office where people needing reloca­tion assistance may go to provide the necessary services.

 

The Uniform Eminent Domain Code provides comprehensive rules for the conduct of eminent domain actions. It prepares a state to enter into better cooperation with the federal government when federal participation in a project is contemplated. Moreover, people can expect fair practices and fair compensation as a result of this Code. The NCCUSL hopes that these gains will persuade states to give the Uniform Eminent Domain Code serious consideration.