READ THE SMALL PRINT – JUST COMPENSATION IS CALCULATED BY ASSUMING THE AGENCY WILL USE ALL ACQUIRED RIGHTS

Property owners must fully understand the rights being acquired from them to avoid nasty surprises later.  In some instances, property owners can reduce the impact of onerous easements.

When a condemning authority takes less than the full parcel of property, it is known as a partial taking.  Partial takings commonly occur when frontage is acquired to expand the road, construct a sidewalk or install utilities.  A partial taking can also occur when a utility easement is imposed over a piece of property.

Michigan law requires that “in valuing what is left after the taking, the jury must assume that the condemning authority will use its newly acquired property rights to the full extent allowed by the law.”  Sometimes, condemning authorities obtain rights that appear vastly in excess of what they actually need.  However, Michigan law protects property owners.  It is invalid for a condemning authority to take expansive legal rights and then attempt to pay just compensation by asserting they will not actually use all of those rights.

Several years ago, I handled a matter against a natural gas pipeline company.  The company based its good faith offer upon the assertion that it was merely installing one pipeline along the edge of the property and that the only true effects were limitations on building in an area that was mostly within the side yard setback and the removal of some vegetation.  However, the rights obtained by the pipeline company allowed it to “lay, construct, maintain, lower, inspect, repair, replace, alter, relocate, change the size of, operate, and remove a pipeline.”  The easement also encumbered the entire owners’ property, including the land under their home.  This led the real estate appraiser that the owner retained to conclude that “given the rights granted to the condemning authority, the pipeline could at a later date be relocated to an area that could affect the subject dwelling.  Therefore, the dwelling located on the subject property loses economic life.  The likelihood that the pipeline will be relocated in the future is unknown.  However, we must assume that the property rights acquired will be used to fullest extent allowed by the law.”  Because of this conclusion, the appraiser asserted that the property owners were entitled to  damages of approximately 60% of the entire value of the property.  This was substantially more than the nominal offer made by the pipeline company.  We resolved this case by limited the right-of-way to a 50 foot wide area away from the home as opposed to the entirety of the property and still reached a settlement many multiples higher than what was originally offered. 

In other instances, condemning authorities will ask property owners to voluntarily provide additional rights that are greater than what they actually require.  Some property owners who do not understand the impact of the easements upon their property voluntarily convey the expanded rights.  If a property owner contests the taking and eminent domain is initiated, the condemning authority may acquire lesser rights from the savvier owners.  This reduces both the impact on the property owners and the amount of just compensation that the agency must pay. 

For example, I have and/or I am currently representing over 50 property owners in Washtenaw, Oakland and Wayne Counties from whom International Transmission Company (“ITC”) has sought vegetative management easements.  Before initiating the formal condemnation process, ITC requested that property owners voluntarily grant easements containing the following language:

No building or other above-ground structures, with the exception of the existing structures, shall be installed, constructed or permitted in the Easement Strip without the written approval of ITC.  ITC may remove prohibited structures from the Easement Strip without prior notice and without responsibility for any damage that occurs as a result of such removal.

Thus, property owners who voluntarily granted an easement to ITC agreed that they could not build anything within a swath of property 85 feet on either side of the transmission lines.  In some instances the easement included the building footprint of vacant lots or prevented expansion or renovation of existing homes.  In many instance, acquisition of such rights would substantially impair the future value of the properties.  When ITC initiated the formal condemnation process, this language did not exist in any of its easements.  ITC clearly recognized that it would be required to pay significant amounts to acquire easements containing this language but was happy to let unsophisticated owners give those rights to it voluntarily.

Sometimes condemning agencies will react to the just compensation issues being raised by property owners to minimize the future impact upon properties and thus the just compensation that they must pay.  To ITC’s credit, it has added language obligating it to pay property owners for damages to property caused by ITC or its contractors in response to just compensation claims that I made on behalf of property owners in the first cases they filed.  Similarly, ITC has started clarifying what will be done to dispose of vegetation cut on my clients’ properties.

In sum, it is incredibly important to fully understand the rights being taken from your property by speaking with an attorney who specializes in this area.  Things that may not be apparent immediately may become time bombs that later surprise property owners.

If you have any questions about condemnation and eminent domain issues, please do not hesitate to contact me.