Jul 1, 2021 | The Practical Real Estate Lawyer

“‘… [W]hen the court adopts the standards of the market place in making valuations there is no reason why it should close its eyes to how the market place arrives at and applies the standards. …‘, ‘It is difficult to perceive why testimony, which experience has taught is generally found to be safely relied upon by men in their important business affairs outside, should be rejected inside the courthouse.’”

Attorneys and Appraisers Must Collaborate to Protect the Right to Just Compensation - by Baker, Grace, Willis


When private property must be taken for public use an owner is to be made whole—they must be paid just compensation. “One of the principal purposes of the Takings Clause is ‘to bar Government from forcing some people alone to bear public burdens, which in all fairness and justice, should be borne by the public as a whole.’” To aid in this process, both the condemnor and the property owner engage real estate appraisers to analyze how actors in the free market would have valued the very same transaction that the government forced to occur.

Accordingly, just compensation cases represent a cross section of legal and practical real-estate concerns. They often see the convergence of constitutional law, property law, business law, home ownership, real-world development concerns, real estate principles, accounting principles, unique business concerns, rules of evidence, studies in commerce and trade, and other case-specific complicating factors—all of which must be synthesized to form opinions about the impact the taking has had on the value of a particular piece of property or business.

It is exceedingly rare that an entire property is taken. Often, only a portion of the property is taken. For example, a typical road widening will take some amount of property and impose new utility, drainage, slope, or other easements, including temporary construction easements. An appraiser valuing this scenario must determine the value of the taking, as well as the overall impact, if any, to the remaining property and must do so as of the date of the taking. The appraiser for the government most often reaches their opinion prior to the taking, while the appraiser for the land owner reaches their opinion after the taking. Accordingly, these cases, by their nature, require the parties and experts to engage in a speculative simulation of what market participants in the same transaction would have considered, pretending that the transaction was actually arm’s length.

The Practical Real Estate Lawyer

CLICK HERE to read the full article, which was originally published in ALI CLE’s The Practical Real Estate Lawyer. 

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