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Special Benefits in Eminent Domain

Special Benefits in Eminent Domain

When we talk about partial takings with regards to eminent domain, the discussion revolves around the concept of just compensation, or the damages that are paid to the property owner because of the adverse impacts of the project on the property being acquired.  In rare occasions however, a project will actually create a benefit for a particular property.  In this situation, the benefit will enhance and make the property more valuable.

The easiest way to illustrate this concept is through an example.  Let’s say that a commercial parcel only has limited access to a major road by way of a narrow easement across another property.  Unfortunately for this property owner, development of the parcel to its commercial highest and best use is unrealistic because of the limited access. However, the state highway department decides to build a new road along the other side of this particular parcel, thus impacting it in several ways.  First, a portion of the property must be acquired in order to build the road; and second, the property now has direct commercial access onto a major road.  The question remains, how is just compensation determined for the eminent domain taking when the project creates a benefit?  The benefit in this example is of course access for the parcel onto a major frontage road.

Just compensation for many partial takings is determined by using the before and after analysis, which considers the value of the property before the project comes along (highest and best use) and compares that to the value of the property after the government has acquired whatever land that they need for their project.  The difference in these two figures is the proper calculation for just compensation. Typically, the value of the before parcel is higher than the value of the parcel after the taking.

However, in our current example, the situation is reversed.  The before parcel is relatively undesirable and invaluable.  The after value of the parcel is much higher because of the property’s commercial development potential that arose from the new access onto a major road.   This is a classic example of what’s called a special benefit.  It doesn’t happen very often, but when it does, any loss in value that the property owner may have recognized because of the acquisition across the back of the property will be offset by any increase in value resulting from the new access that has been given to this particular property. As a general rule in most states, the special benefit will only be used as an offset against the damages that you would otherwise receive.  However, this rule does vary from state to state, so you must be careful if you’re faced with this situation.  Make sure you discuss this concept in greater depth with a knowledgeable professional to make sure that the proper rule is correctly applied for your particular state.

As a second consideration, just because your remainder parcel may increase in value because of the circumstances caused by the project to the neighborhood generally, that will not give rise to a special benefit to your remainder parcel.  The rule is any increase in value that is enjoyed by the neighborhood or the area generally is called a general benefit, and general benefits are not offset against the damages that you would otherwise be entitled to receive because of an eminent domain taking.  The only offsets apply to special benefits, and special benefits generally are benefits that are enjoyed only by one particular property and not by the neighborhood as a whole.


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