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In most states, eminent domain will not compensate for business value (net profits) or the loss of business value.  Typically in eminent domain, a property owner is only entitled to compensation for the land taken, damages to the remainder (severance damages), and relocation benefits where necessary and applicable.

There are of course exceptions to this rule, and in a previous article we discussed MN statute 117.86, which compensates business owners for loss of going concern when a business or trade is destroyed by an eminent domain taking.  Additionally, Florida Statute 73.071(3)(b) recognizes that a business has value apart from its real estate and, in certain circumstances, provides compensation for businesses in connection with eminent domain takings.

Generally, to qualify for business damages under Florida law, the following requirements must be met:

Business damages are not defined specifically or limited to F.S. 73.071 and may be awarded by the court for (a) loss of value due to an altered capital structure (i.e., increased debt), (b) moving expenses and rent, (c) costs associated with obtaining a replacement property, (d) costs associated with constructing a replacement facility, and (e) down-time productivity losses, etc.

It’s important to understand that business damages must be separate from severance damages to avoid double recovery.  Severance damages are part of the constitutional guarantee of “full compensation” and reimburse the owner for the reduction in value the taking causes to any remaining land, while business damages are a creature of statute and compensate the owner for “probable” reductions in business value, business losses, or increased business expenses “reasonably cause[d]” by the taking. Sys. Components Corp. v. Florida Dept. of Transp., 14 So. 3d 967, 978 (Fla. 2009)

If a business owner leases the property from which it operates its business, then they are generally entitled to compensation for the value of the lease under Florida eminent domain law (provided a condemnation clause does not exist in the lease), in addition to fixtures it has installed on the premise and any loss of value in the business as a result of the taking.

Making an offer for business damages is a time sensitive matter.  Under Florida law, the condemning authority must send business owners a written notice prior to filing an eminent domain law suit.  The business owner has 180 days from receipt of this written notice to make an initial offer for business damages.

Business damages are governed by statutes that are further defined through case law; they vary on a case by case basis, and must be calculated by experts.  Please contact a professional for information regarding your rights in this matter.