The Anatomy of an Eminent Domain / Condemnation Case |
We primarily represent property owners so this is a discussion of how a typical case proceeds from a property owner’s perspective.
Initial Contact
First, the city, state, ADOT or a utility will notify a property owner that private property is needed for a governmental purpose. Examples of a public purpose are roadway expansion, light rail, flood control, or power lines. The condemning authority will order an appraisal and will make an initial offer to purchase the private property at a price supported by that appraisal.
The Purchase Offer
If the property owner believes the price offered is fair, the purchase of the property would proceed like a normal real estate transaction without any further actions required.
However, when the property owner believes the offer is not fair, negotiations become complex and it may be in the property owner’s best interest to seek legal counsel.
The Complaint
Once a property owner has notified the government entity that they will not accept the offer, Arizona law allows a city or state to file a condemnation action anytime after twenty days from when they have submitted the purchase offer. Sometimes, condemning authorities forget to follow this procedure, but generally the offer is included with a written threat to file a lawsuit if the offer is not accepted. Frankly, the threat lacks economic substance because the condemning authority, such as the City, cannot get control of your property until a judge says so.
Possession
A Superior Court Judge will not grant possession to a city for a public project until cash or a security bond has been posted in an amount equal to its last offer to the property owner. Assuming that there are no loans on the real property, the amount of the offer can be released to the property owner without affecting the property owner’s efforts to receive “just compensation” – a fair price for the property. Just compensation also could include a fair price for relocating a property owner’s home or business.
Typically, there is a hearing for possession called an “Order To Show Cause” that can occur within forty-five days from the filing of a Complaint. Assuming possession is granted, then the parties engage in discovery, which means the disclosure of witnesses, exhibits, and the development of expert valuation reports. Because this is eminent domain, the expert work almost always includes a report from a licensed appraiser and often includes studies from land planners or engineers for property that has particular planning issues.
Settlement Discussions and Trial
Once the expert reports have been prepared, Arizona courts often order participation in some form of mediation. The mediator attempts to find common ground between the parties to make a deal, but the mediator has no authority to force resolution. The mediation job is to attempt to get the parties to reach a mutual settlement. In the event that mediation fails, then there will be a trial, often before a jury. In Maricopa County, you can count on a trial date within 12 – 18 months from the original filing of the Complaint.
The Economic Cost
As to the economics, most lawyers that represent property owners offer contingent fees of a percentage of any increase obtained by the lawyers for the benefit of the property owners. The fees generally depend on the complexity and scale of the specific case. While it is also typical that the property owners are responsible for expert costs incurred, contingent lawyers do not share in any portion of the original condemning authority offer. Hourly fees are also available for owners who understand the costs and risks of litigation.
Last, in the event that the property owner has no immediate need for the funds placed on deposit as a condition of possession, those funds and any increase in just compensation all bears interest at a State Law rate which is all substantially equal to the prime rate. In the last few years, the prime rate has been in the range of 3.25% to 4.25%.
Generalities about anything are fraught with error; however, any eminent domain starts with a rejected low-ball offer from the condemning authority, a Complaint, an Order to Show Cause, a deposit, expert reports, mediation, and then trial if mediation fails. For owners with questions about their particular property, we are always ready to respond and to offer a no-cost consultation.
Call us at (602) 230-0030 or send us an e-mail.
Initial Contact
First, the city, state, ADOT or a utility will notify a property owner that private property is needed for a governmental purpose. Examples of a public purpose are roadway expansion, light rail, flood control, or power lines. The condemning authority will order an appraisal and will make an initial offer to purchase the private property at a price supported by that appraisal.
The Purchase Offer
If the property owner believes the price offered is fair, the purchase of the property would proceed like a normal real estate transaction without any further actions required.
However, when the property owner believes the offer is not fair, negotiations become complex and it may be in the property owner’s best interest to seek legal counsel.
The Complaint
Once a property owner has notified the government entity that they will not accept the offer, Arizona law allows a city or state to file a condemnation action anytime after twenty days from when they have submitted the purchase offer. Sometimes, condemning authorities forget to follow this procedure, but generally the offer is included with a written threat to file a lawsuit if the offer is not accepted. Frankly, the threat lacks economic substance because the condemning authority, such as the City, cannot get control of your property until a judge says so.
Possession
A Superior Court Judge will not grant possession to a city for a public project until cash or a security bond has been posted in an amount equal to its last offer to the property owner. Assuming that there are no loans on the real property, the amount of the offer can be released to the property owner without affecting the property owner’s efforts to receive “just compensation” – a fair price for the property. Just compensation also could include a fair price for relocating a property owner’s home or business.
Typically, there is a hearing for possession called an “Order To Show Cause” that can occur within forty-five days from the filing of a Complaint. Assuming possession is granted, then the parties engage in discovery, which means the disclosure of witnesses, exhibits, and the development of expert valuation reports. Because this is eminent domain, the expert work almost always includes a report from a licensed appraiser and often includes studies from land planners or engineers for property that has particular planning issues.
Settlement Discussions and Trial
Once the expert reports have been prepared, Arizona courts often order participation in some form of mediation. The mediator attempts to find common ground between the parties to make a deal, but the mediator has no authority to force resolution. The mediation job is to attempt to get the parties to reach a mutual settlement. In the event that mediation fails, then there will be a trial, often before a jury. In Maricopa County, you can count on a trial date within 12 – 18 months from the original filing of the Complaint.
The Economic Cost
As to the economics, most lawyers that represent property owners offer contingent fees of a percentage of any increase obtained by the lawyers for the benefit of the property owners. The fees generally depend on the complexity and scale of the specific case. While it is also typical that the property owners are responsible for expert costs incurred, contingent lawyers do not share in any portion of the original condemning authority offer. Hourly fees are also available for owners who understand the costs and risks of litigation.
Last, in the event that the property owner has no immediate need for the funds placed on deposit as a condition of possession, those funds and any increase in just compensation all bears interest at a State Law rate which is all substantially equal to the prime rate. In the last few years, the prime rate has been in the range of 3.25% to 4.25%.
Generalities about anything are fraught with error; however, any eminent domain starts with a rejected low-ball offer from the condemning authority, a Complaint, an Order to Show Cause, a deposit, expert reports, mediation, and then trial if mediation fails. For owners with questions about their particular property, we are always ready to respond and to offer a no-cost consultation.
Call us at (602) 230-0030 or send us an e-mail.
