Severance damages play an important role in the valuation process because they are not always obvious and they can produce a significant amount of just compensation for a property owner. As a reminder, severance damages relate to the loss of value to the remainder (portion of property left after the taking) above and beyond the value of the land and structures taken by the government.
Another area of severance damages that I would like to address is proximity damages, which are easily explained through use of an example. Imagine that you own a large piece of residential property situated in a pristine countryside overlooking rolling fields, a glistening stream and patches of shade trees. The highway department decides to take the front portion of your property in order to build a new four-lane freeway. After the taking occurs and the road is constructed, you will have a four-lane highway outside your front door disrupting your pristine quiet countryside, thus making your property significantly less desirable for a residential building site. Consequently, even though very little of your property has been taken, the land that you have left will likely be significantly less valuable than it was before the highway was constructed.
That difference of value before the taking and after falls under the general definition of severance damages, but it is more specifically identified as proximity damages. If you can think of proximity as being close to, you’re being proximate to the taking or the project that is causing the damages to the remainder property. This is exactly what happened in the example I’ve just given you. Before, you had property in a quiet countryside, and after the highway is constructed, the property you have left is reduced in value. This reduction in value allows for the recovery of severance damages.
**In response to the inquires we receive about this concept, I’d like to note that If the new highway is constructed near your property but does not actually require the acquisition of a portion of your property, then you are not entitled to compensation for the loss of value under eminent domain law. A physical taking of a portion of your property must occur in order to receive compensation for proximity damages.
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