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Contaminated Property: Determining Just Compensation in Eminent Domain Law

Whether or not the presence or threat of contaminates on a property should be admissible as evidence in court when determining the amount of just compensation is largely undetermined in most states and is therefore a cutting edge issue in eminent domain law.  The situation arises when a condemning authority acquires property that either has environmental contamination present on it or present on a neighboring property. In the latter, the fear of the flow of contaminants from one property to another exists.

The question that arises in eminent domain law is whether or not the discount that might be applied to your property because of the contamination is in fact the proper discount that should be incorporated into the determination of just compensation.  Right now the decisions around the country are split on this issue.  I believe there have only been seven jurisdictions in the entire country that have actually addressed this issue.  Our firm is currently appealing a  case in Wisconsin courts that pertains to contaminated property (260 North 12th Street, LLC v. State Dept. of Trans., 329 Wis.2d 748, 792 N.W.2d 572, 2010 WI App 138).  We have also received beneficial rulings for property owners in contamination cases in both New York and Minnesota, where the MN case was taken to the state Supreme Court.  Since our firm only represents property owners, we believe that the affects of contamination and related remediation costs should not be considered when determining just compensation in an eminent domain taking.  We believe that the property should be valued as if it has been cleaned, thus allowing a greater amount of just compensation for a property owner.

By considering contamination in valuation and therefore discounting the property, you are exposing the property owner to double liability.  First, the property owner is penalized by a lower amount of just compensation.  Second, when the condemning authority acquires the property, they also acquire the right to pursue damages against the party responsible for causing the contamination, which could be against the property owner.  Therefore, the property owner could be penalized twice for the contamination.    Valuing the property as if it has been cleaned of contaminates will provide the property owner with the proper level of compensation while giving the condemning authority the right to pursue damages against the party responsibility for causing the contamination, which is the proper legal method of cleaning up a property such as this.

It’s important for you as a property owner to realize that this area of value determination is largely undetermined in most states.  However, there are jurisdictions that do recognize that the existence of contamination should not be considered when determining just compensation.  If you have contaminates on your property and that property is threatened with eminent domain, then you will want to consider hiring an attorney who has experience with handling these types of claims.


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