5/9/2016
Taking: A Quick Look at Eminent Domain
Kandice K. Hull, Esquire
[email protected]
© 2016 McNees Wallace & Nurick LLC
Dana W. Chilson, Esquire
[email protected]
www.mcneeslaw.com
What is Eminent Domain?
 Eminent Domain is the government's taking of private property for a public purpose
 Both the United States and Pennsylvania Constitutions require that the government fairly compensate the landowner for the lost property
 U.S. Const., Amend. 5
 Pa. Const. art. 10, § 4
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Two Basic Requirements
 A Public Purpose
 Just Compensation
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How is a Taking Accomplished?
 Prior to the taking, several items need to be in place
 There needs to be a valid proposed use for the property, i.e. a public purpose  There needs to be a physical plan for the property
 An appraisal of the property should be completed
 The condemning authority should be prepared to post security
o Bond, letter of credit,
o Not needed if a taxing authority
o 26 Pa.C.S. § 303
 The condemning authority must pass a resolution authorizing the taking
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Two Ways A Taking Is Accomplished
1. Declaration of Taking
 A Declaration of Taking is filed
 A physical plan for the property is filed in the Recorder of Deeds Office
 Transfer of ownership occurs when the Declaration of Taking is filed
 26 Pa.C.S. § 302
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Two Ways a Is Taking Accomplished
2. Petition for Approval of Bond
 15 Pa.C.S. § 1511 creates a separate procedure available only to public utilities
 A petition for approval of a bond is filed with the Prothonotary
 The taking is complete when the Court approves the bond
 Only available when condemning less than a fee interest
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What is A Proper Public Purpose?
 Must look to the enabling statute passed by the Legislature for each particular condemning authority
 Examples include: Laying of streets; construction of bridges, sewer and water systems, docks, public buildings, public auditoriums, memorials, monuments, public works, filtration plants, sewerage systems, sewage treatment works, refuse disposal or incineration plants, sanitary landfills, gas plants, libraries, playgrounds
 8 Pa.C.S. § 1501 (Borough Code)
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 53 Pa.C.S. § 5607 (Municipal Code)
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What is A Proper Public Purpose?
 BlightThe Urban Redevelopment Law; 35 P.S. § 1701 et seq.; Pa. C.S. § 305
 Authorizes the creation of city and county redevelopment authorities
 Grants the power of eminent domain to address blight to redevelopment authorities
 Condemning a property to address blight 8
may be a valid public purpose, if the proper procedures to designate a property as blighted are followed before the property is condemned
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What Is A Proper Public Purpose?
 Not a proper purpose
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Code violations
The benefit of private business
A higher economic use for the property
Anything not authorized by the relevant enabling statute
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How To Challenge a Condemnation
 The dispute over the taking itself, which generally must be commenced within 30 days of the taking
 The law favors the condemnor in these proceedings
 The dispute over compensation, which must be commenced within 6 years of the taking
 The law is more favorable to the landowner in the compensation proceeding
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When and How A Landowner May Dispute The Validity Of The Taking
 Preliminary Objections must be filed within 30 days of the receipt of notice of the Declaration of Taking
 The Preliminary Objections are subject to an expedited court process for hearing
 Any objection not asserted in the Preliminary Objections is waived
 If successful, the condemnee is entitled to reasonable appraisal, attorney, and engineering fees, and other costs and expenses actually incurred
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When and How A Landowner May Dispute The Validity Of The Taking
 Preliminary Objections in Eminent Domain context are different than under Rules of Civil Procedure
 Can only challenge:
 (i) The power or right of the condemnor to appropriate the condemned property unless it has been previously adjudicated.
 (ii) The sufficiency of the security.
 (iii) The declaration of taking.
 (iv) Any other procedure followed by the condemnor
 26 Pa.C.S. 306
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Appealing Eminent Domain Preliminary Objections
 The is a right to an immediate appeal
 It’s an interlocutory appeal as of right. Pa.R.A.P. 311(e)
 A party may ask for expedited consideration
 42 Pa.C.S. § 702.1 – allows the Court to include language in the order deciding preliminary objections to the effect that an expedited appeal is appropriate
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When Can the Condemnor Take Possession?
 To have a writ of possession issued, the condemnor has to deposit with the Court an amount that it believes to be the fair value of the land interest acquired from the property owner. This amount is called the estimated just compensation (EJC)
 The condemnor may also pay the EJC directly to the landowner, if the landowner will accept it
 Either way, the EJC must be made available to the landowner before transfer of possession
 26 Pa.C.S. § 307
 In some circumstances, the condemnor may obtain possession while an appeal of preliminary objections is pending
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How Are Damages Measured?
 Damages are the difference between the value of the property before the taking, as unaffected thereby, and the value of the property after the taking, as effected thereby
 The effect is on the value of the real estate, not the business
 The property appraisal is extremely important
 26 Pa.C.S. § 702
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How Are Damages Measured?
 Different persons/entities may have different damage considerations, e.g., landlord/tenant
 Automatic $4,000 for appraisal, engineering, and attorneys' fees (26 Pa.C.S. § 710)
 Delay Compensation (prime rate + 1%)
 26 Pa.C.S., Chapter 9 – Other Damages
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Challenging Compensation
 A landowner can accept the EJC, either directly or from the Court, while reserving his right to seek additional compensation
 Once the landowner has the EJC, it can't be taken back or reduced
 The landowner may ultimately file a claim for additional compensation
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Challenging Compensation
 If compensation is in dispute, either party may seek a Board of View to determine the value of the claim
 The Board of View is essentially an arbitration panel
 Three individuals appointed by the Court. Typically, they are an appraiser, an engineer, and a lawyer
 Review Local Rules
 26 Pa.C.S., Chapter 5
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Challenging Compensation
 View of the property
 Hearing
 Landowner may testify as to value
 Condemnor must have an appraiser testify
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Right to de novo appeal to Court of Common Pleas
Entitled to a jury trial 26 Pa.C.S. §§ 516, 517
Certain fees and costs automatically paid to the condemnee
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HOW TO RECOGNIZE A HIGH VALUE CLAIM
 Think about the taking’s effect on the site’s utility
 Think about the effect on the business
 Think about the effect on future development
 Think about temporary impacts
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WORKING WITH AN EXPERT APPRAISER
 Choose carefully and get someone with the right experience
 Consider supporting information, potentially from other experts, that the appraiser may need
 Review the details of the report
 Maximize your damages figure
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OTHER EXPERTS WHO MAY BE HELPFUL
 Engineers
 Land Development Experts
 Environmental Consultants
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TENANT DAMAGES
 A tenant has a claim for damages if its leasehold interest is affected
 Commercial leases often spell out the remedies for both landlord and tenant in the event of a condemnation
 The remedy at law is the loss in the “bonus value” of the lease
 Business losses per se are not recoverable
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To Sum It Up
 Eminent Domain is a powerful tool
 Significant planning must be done beforehand to use it properly
 There are limited circumstances in which a landowner may challenge the condemnation itself
 The real dispute is usually over compensation
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Questions
Kandice K. Hull, Esquire
McNees Wallace & Nurick LLC
100 Pine Street
Harrisburg, PA 17108‐1166
Tel: 717.237.5452
[email protected]
Dana W. Chilson, Esquire
McNees Wallace & Nurick LLC
100 Pine Street
Harrisburg, PA 17108‐1166
Tel: 717.237.5457
[email protected]
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