Damages in Eminent Domain Law: Before and After Rule

In this series of blog posts, we’re discussing damages in eminent domain law.  In our first post, highest and best use, we discussed how property taken by the government through eminent domain must be valued at its highest and best use.  As a reminder, highest and best use is the use of a given parcel that produces the highest value for that property in the marketplace. The highest and best use valuation method is applied in eminent domain law when determining direct damages either in a total or partial taking.  Direct damages refer to the value of the land and any improvements to the land which are actually taken by a governmental entity in an eminent domain proceeding.

In the example given in our last post, the condemning authority was taking your entire property and home.   Let’s say for example that the condemning authority only wants to acquire half of your property.  How are damages and just compensation determined under eminent domain law when only a portion of your property is being acquired?  A standard method of determination is called the before and after analysis.   The before and after analysis considers the value of your property before the project comes along (highest and best use) and compares that to the value of your property after the government has acquired whatever land that they need from you for their project.

In the example I gave earlier with regards to the residential home, if the condemning authority was only taking the front 40 or 50 feet of your property and you are left with the remaining land, then an appraiser would need to determine the value of your full lot before the project comes along (utilizing the rules of highest and best use), and then determine the value of the remainder after the taking.  The difference between those two numbers is the proper calculation for just compensation.

A handful of states allow for a methodology in some circumstances whereby an appraiser would simply determine the value of the land being taken, and if that number is larger than the value determined by the before and after valuation, then the property owner is entitled to the value of the former because that valuation produces a higher amount.

In our next blog, I’m going to discuss how you can ruin your chances at receiving just compensation by not properly utilizing the before and after analysis.   To be continued….

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