Road construction ahead Featured

7:00pm EDT November 25, 2009

While the American Recovery and Reinvestment Act is investing in the nation’s transportation infrastructure, the projects it creates may also disrupt successful existing businesses. Changes to the configuration of roads connecting fully developed real estate sites will often generate significant impacts to adjacent businesses.

“When faced with condemnation, you should be aware of your legal rights and be on the lookout for the long-term interests of your business and real property,” says Ivy Cadle, an associate with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC.

Smart Business learned more from Cadle about various aspects of the condemnation process.

Can you prepare for condemnation?

Yes. An attorney can connect you with specialized land use experts, engineers and real estate appraisers who can best protect your interests because they work in this area on a routine basis. Preparation is especially important for income producing properties where legal formalities are often pivotal.

There is no such thing as a ‘standard condemnation clause’ and the clause’s language may favor different parties in different circumstances. Lessees and lessors should review their condemnation clauses and be aware of their terms.

Owner/operators need to be sure the business owner leases the real property from a distinct corporate owner. If the Department of Transportation takes only a portion of your property and severely disrupts your business, failure to heed this advice may foreclose your right to compensation for business losses.

Like many other aspects of business, a strong fundamental understanding of your rights is important as many factors will influence the outcome of your particular case.

What role will negotiation play in the condemnation process?

In Georgia, condemnors are legally required to negotiate with property owners. At times, condemnation may be avoided and damages mitigated through negotiation. You may be aware of a condemnation through public meetings or notices, but at some point, a right of way acquisition agent will provide you with an offer based on the condemnor’s independent appraisal.

When negotiating, it is important to know your rights. The condemnor must provide you with a written offer. This offer must be equal to or greater than the damages calculated by the condemnor’s independent appraiser. You also have a right to a summary of the basis for that estimate. You even have a right to commission an independent appraisal and use this information as you and your attorney see fit. Qualified experts can communicate your goals to the condemning authority while enhancing your understanding of the nuances of the project.

Good negotiation strategy allows you to explore your position while maximizing the value of your case. While negotiations are not always successful, they often result in a better understanding of the issues by both parties. Through negotiation, you may also be able to maintain critical characteristics of your property or business, like access and parking, that may have been lost to condemnation.

What happens during the actual condemnation process?

Condemnation is imminent when you receive a 10-day letter requiring you accept the offer on the table or face condemnation. To legally condemn property, compensation must be first paid. Georgia requires payment of just and adequate compensation but the standard varies by state. Just and adequate compensation is generally based on the property’s fair market value and includes compensation for consequential damages to any remaining property.

The day the property is condemned, the condemnor must pay money into the court’s registry. This payment is based on the condemnor’s estimate of just and adequate compensation. Payment of the funds and filing of the petition transfers title to the condemning authority so you no longer own the property, but you don’t know that until you are served with the lawsuit. After service, you must respond in 30 days or you will forfeit your right to dispute the valuation to the property that was, just a few days ago, under your ownership.

One element of damage that may be forfeited is business damages. This element of compensation is not typically included in the condemnor’s independent appraisal and is rarely included in an initial offer. Business damages may only be recovered in certain circumstances and a thorough knowledge of condemnation law is required to accurately assess recoverable business losses. One method includes comparing the business’s fair market value before and after the taking while considering lost profits or lost earning ability.

What do I need to know if I have been served with a condemnation petition?

If you are dissatisfied with the estimate of just and adequate compensation paid into court, you need to act quickly. Your property has been taken and you need to respond immediately. You should also know that each named condemnee has the right to prove his or her entitlement to any portion of the deposited compensation.

You may choose to fight the taking but it is rare that a property owner keeps his or her property. A rejected petition is often quickly cured and refiled. Rather than fighting the right to condemn, most trials focus on issues of value. Georgia property owners are entitled to a jury trial on the issue of compensation. Qualified attorneys and experts will allow you to assess the risks and rewards associated with litigation and they will help you proceed in a way that is adapted to your individual circumstances.

Ivy Cadle is an associate with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. Reach him at icadle@bakerdonelson.com or (404) 589-0009.