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Legislation potentially increases eminent domain activity

On Behalf of | Mar 18, 2022 | Eminent Domain

President Biden signed the $1.2 Trillion Infrastructure Investment and Jobs Act into law in November 2021. The act has $550 billion set for new federal infrastructure spending. New money for infrastructure is good, but unprepared businesses could get hurt in California if the act leads to significant eminent domain activity.

The problem of unprepared businesses

Many businesses aren’t prepared for eminent domain claims from new infrastructure projects. Businesses don’t devote many resources to eminent domain because they’re running the business; their in-house legal advisors don’t pay attention to it either because it’s rare for eminent domain to impact a business.

Businesses usually see eminent domain as found money instead of a cost to the business. Businesses know they’ll recover something because the authority offers compensation for the property. Most companies would rather have higher monetary recovery from the authority’s initial offer, but they often forget about issues from the loss of property and focus on the extra money.

Solutions for unprepared businesses

Businesses should start thinking about eminent domain since real estate is an important asset to business owners. Taking part or all of the business’s real estate will affect the business long-term. A business owner shouldn’t rely on the condemnor’s appraisal because the estimates are usually lower than what the property is worth. The business should have their appraisal include loss of parking or impaired access to the building. The condemnors won’t take a counteroffer without the property owner’s appraisal.

Eminent domain from the sweeping infrastructure could affect large brick-and-mortar retailers more. The businesses owners should audit how the chain of command handles eminent domain. Smaller businesses should choose a person to start the process. Many states allow the authority to file a lawsuit shortly after written notice, which gives business owners less time for legal counsel.