When homeowners face eminent domain claims, they generally have few options available to them. Eminent domain laws in California allow government entities and organizations approved for public projects to acquire real property that previously belonged to individuals or businesses.
In some scenarios, property owners can fight back against eminent domain purchases by contesting the claim that the project is truly for public benefit. Other times, they may not be able to prevent the sale of the property. However, they can question whether the condemning authority offered fair market value for the property.
Particularly in scenarios involving residential real estate, the amount initially offered might be far below what the owner would receive if they sold the property on the open market. Certain factors often increase the likelihood of value conflicts in an eminent domain case. What circumstances may result in a condemning authority offering an unreasonably low amount?
1. Significant property improvements
The property may look the same on the outside but may have undergone major renovations inside. Condemning authorities may rely on publicly-available records to determine how much to offer.
They may not know that the current owner has completely remodeled the kitchen and bathrooms, for example. Significant property investments and renovations can alter what the property is worth on the open market. Owners may be able to counter a low offer by showing what they have invested and how those investments may have altered the property’s value.
2. Mineral rights
In some cases, property owners do not have mineral rights to their parcels. Other times, they do. Depending on the location of the property, there could be valuable mineral resources that the owner might be able to leverage as a secondary stream of income.
The value of those rights can influence the overall fair market value of the property. The condemning authority may have little information about mineral rights and their impact on the value of a particular property.
3. Recent market changes
Fair market value depends in part on the condition of a property and also on current market circumstances. Significant fluctuations in the real estate market may follow natural disasters, notorious crimes or reviews of the local school system that show it outperforms many others.
The information used to calculate the fair market value of a property may not adequately integrate changes in local market conditions recently. Especially in scenarios where market conditions are favorable for sellers, homeowners may be able to push back against low valuations in an eminent domain scenario.
Property owners hoping to avoid condemnation, secure fair compensation or sell their homes often need help during eminent domain disputes. Countering low initial offers is one of the ways that homeowners can assert themselves in an eminent domain scenario.