Unlike most types of litigation, a direct condemnation case generally assures the owner of at least some compensation for the property taken. So when an owner approaches an attorney, it’s usually to see if it’s possible to get more than what’s been offered. Low risk, right? Sadly, no.
Before advising on whether to accept or contest an offer, it’s essential to make an early assessment on the value of the property and to consider whether the costs of even an ostensibly successful litigation would ultimately reduce the owner’s take-home. Get it wrong and you could cost your client, or even face a malpractice claim. See County of Los Angeles v Kling (1972) 22 CA3d 916.
But what information should you gather? Here are 5 basic steps for conducting a preliminary assessment of a condemnation claim:
1. Get the basic facts on the property and the planned activity. At the initial interview, ask the owner to bring the most recent tax assessment notices, any pleadings that have been served, any maps, photographs, or diagrams of the property, and all title-related documents.
In addition, get the following documents as early as possible:
- Title information. Find out the circumstances in which the client acquired interest in the property (e.g., when, for how much) and the nature of that interest (e.g., fee, leasehold, joint tenancy).
- Existing offers. Discover details of any bona fide offers to buy or sell the property.
- Encumbrances. Inquire about any encumbrances on the property, including mortgages or deeds of trust, leases, listings, options to purchase, rights of entry, and negotiations or agreements with adjoining owners.
- Derived income. Calculate the approximate gross and net income that has been derived (and potentially will be derived) from the property.
- Physical condition. Get details of any fires, floods, earthquakes, or other disasters that have affected the property in the past. Collect maps and color photographs of the “before” condition. Ask about any permanent improvements that have been added at the owner’s expense.
- Communications with the agency. Find out whether the client has communicated anything to the condemning authority about the value of the property.
- Violations. Determine whether there have been any zoning code violations or related issues affecting the property.
- Plans for the project. Determine the nature and extent of the project. Research past proposals, plans for future development, and any existing environmental impact reports for the project.
- Expert determinations. Find out whether any expert determination has been made on the highest and best use of the property.
- Appraisals. Discover any appraisals for financing or other purposes, including any challenge to the county assessor’s valuation of the property.
Corroborate any information obtained at the interview with a close examination of the relevant documents. Fill in gaps by visiting the property, consulting public records, communicating directly with the condemning agency, and, if necessary, using general discovery procedures.
2. If it’s a partial taking, determine the effects on the remaining property. When the condemnor is taking only a portion of the property, the owner may be entitled to severance damages for any impairment on the remainder. CCP §1263.410. Determine the effect of the activity on the remaining property, including temporary use by the condemnor, impairment of the owner’s access, and any interference with the aesthetic values of the remainder.
3. Determine whether additional experts are needed. If the owner decides to pursue litigation, a professional appraiser will be required to evaluate the property. Additional experts, such as civil engineers, architects, or geologists, may also be necessary to address special valuation issues.
4. Get a preliminary appraisal. To really evaluate the desirability of litigation, conduct a preliminary appraisal to measure the difference between your valuation of the property and the agency’s offer. A relatively economic approach is to consult local realtors, knowledgeable neighbors, or colleague attorneys or appraisers who have represented clients in the immediate vicinity of the taking. Although this method is far from foolproof, it may be the best that can be done on a small budget. In addition, CCP §1263.025(a) requires the condemnor to pay the condemnee the reasonable cost, up to $5,000, to obtain an independent appraisal to assist in negotiations. This is a great option for low- to medium-priced parcels.
5. Advise the client on the costs and delays inherent in contesting the offer. Finally, it’s crucial to make the client aware of the inevitable costs and delays of litigation. Although CCP §1250.410 allows reasonable litigation expenses, relief is available only when the condemnor’s final offer is unreasonable and the owner’s final offer is reasonable. The client should also understand at the outset that the value of the property has to be proved at trial through expert testimony and that other experts may be necessary. And despite the statutory priority of condemnation proceedings under CCP §1260.010, the reality is that condemnation cases are often delayed for months or even years. So make sure the owner isn’t overly optimistic in weighing his or her options.
Although a preliminary assessment is essential, it’s only the first step in the factually complex and strategically hairy area of condemnation law. Learn more about how to handle condemnation cases, including inverse condemnation and related causes of action, in CEB’s Condemnation Practice in California.
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