Valuation

Real Estate Property Values During Condemnation

There are a variety of factors to consider when appraising a property that is subject of a Texas condemnation action. Not all of these factors can be addressed on this site, and some may be unique to a particular property.

Key Component of a Condemnation Appraisal Include:

• The Date of Valuation – or Date of Taking: Recognizing that real estate value may go up or down over time, this is an arbitrary date that all valuation witnesses must use, regardless of when they actually complete an appraisal.
• Highest and Best Use in light of the reasonably foreseeable use to which the property could be expected to be put, in light of the applicable restrictions and amenities.
• The characteristics of the property affecting its marketability, including its unique features, location, supply of competing property with such characteristics, demand, and development trends.

In partial taking cases, a second value determination is made, and compensation for remainder damage may be awarded. The remainder property should be separately evaluated in light of each of the appropriate marketability factors, subject to the impact of the taking and/or construction project upon its economic utility, and exclusion of certain factors that have been ruled non-compensable as a matter of law. Diminution in value may be due to factors that have been determined to be non-compensable, in which case the owner will not receive compensation for the loss. (Factors such as loss of visibility from traffic, conversion from a two-way road to a one-way road, and “circuity of travel” have been determined to be real, but non-compensable.) If the diminution is due to factors that are historically compensable, the owner may be compensated for that “damage”.

Real estate appraisers that are experienced in condemnation litigation may recognize the relevant factors, if they are provided sufficient information. We recommend that Condemnees consult an experienced Eminent Domain attorney with whom they feel comfortable, upon learning that their property is in harm's way.

One of the first steps in a condemnation proceeding is when the Condemnor’s appraiser requests permission to inspect the property.

An appraisal is a supported opinion of value. Property valuation in the condemnation process must be performed in light of a body of condemnation law developed in the Appellate Courts over a period of several decades. A condemnation appraisal often must be substantially different from a typical appraisal for marketing or financing.

The government's power of Eminent Domain has also been granted (by the Texas Legislature) to certain corporations and “authorities” who now have the power to compel Texas Courts to award them your property.

Eminent Domain describes the power to condemn land for a public purpose while providing the owner with adequate compensation.

An experienced condemnation attorney may be able to anticipate problematic evidentiary issues raised by a particular case.

Two areas that are often misunderstood are:

• Project Influence: This is a theoretical increase in property values in the surrounding area because of the new project. Although it is not clear when the term was invented, its scientific validity and application in specific condemnation cases is debatable. The trial Court may decide to exclude or to allow evidence on this controversial concept on a case by case basis.
• Condemnation Blight: This is one of the terms used to describe the negative impact that a project has upon property uses and marketability, due to threat of eviction of tenants, the impact of vacancy and vandalism of partly demolished properties along a project, or other factors, such as whether the maintenance is neglected due to pending demolition, or whether the Condemnor allows detrimental uses of surrounding property.