Eminent Domain Process

Eminent domain is the power of the government, and certain private entities such as utility companies or common carrier pipeline, to take private property for public use. Condemnation is the action by an authority with eminent domain power, known as condemning entities, to take private property and transfer ownership by virtue of a condemnation lawsuit. When a condemnation occurs, Article 1, Section 17 of the Texas Constitution guarantees property owners “adequate compensation” when their property is “taken, damaged, or destroyed” for public use.

The Federal Government, State of Texas, counties, and cities all have eminent domain authority as do many pipeline companies, power line companies, railroads, municipal utility districts, water authorities, telephone companies, school districts, universities, hospital districts, housing authorities, and economic development districts. In 2012, Senate Bill 18 required public and private entities in Texas claiming eminent domain authority to submit a letter to the Comptroller’s office indicating their claimed authority. A searchable list of those entities claiming condemnation authority may be found here: http://www.trackingtx.org/index.php/sb18report/

Successful challenges to a condemning entity’s right to take are rare. A taking may be challenged because the condemning entity lacks eminent domain authority, the taking lacks a public purpose, or the taking of a particular property is arbitrary and capricious. Takings for freeways and roads by the State of Texas or local government normally meet these requirements. However, certain condemning entities, such as pipeline companies, may have difficulty establishing their eminent domain authority. Likewise, takings for projects like parks or special purpose facilities may be more susceptible to challenges for lacking a public purpose. In most cases, the fight is about how much a landowner should be paid.

In most instances, a condemning entity will hire a right of way acquisition firm to attempt to acquire your property voluntarily or perform the procedural steps that are necessary before a condemnation lawsuit may be filed. The right of way firm will assign one of its right of way agents or landmen with the task of attempting to acquire your property. The first contact you receive will often be in the form of an introductory letter from the right of way agent identifying your property as being necessary for a project involving condemnation. The right of way agent may ask you to sign a right of entry permitting the condemning entity to survey your property, conduct environmental testing, and perform an appraisal. Many right of entry agreements are overbroad, and should be negotiated by the landowner’s attorney to limit their scope and duration.

Prior to filing a condemnation suit, a condemning entity has the right to enter private property for the limited purpose of surveying the property to be taken and conducting limited environmental assessments. Refusal to allow a condemning entity any access to your property may result in the condemning entity seeking a Temporary Restraining Order against a landowner who refuses to grant access for surveying. In most cases, it is not advisable to refuse to permit a condemning entity to survey your property. However, where a condemning entity seeks to conduct invasive environmental assessments or lacks condemning authority or public use, you may have a right to limit such activities. Prior to entering a right of entry agreement, it is advisable to consult a qualified eminent domain attorney.

You are not required to share any information with a condemning entity’s negotiator or appraiser. Prior to the Special Commissioners’ Hearing, you may be obligated to disclose certain appraisals of the property. It is advisable to consult with a qualified condemnation attorney before sharing information such as appraisals, leases, income statements, or similar documents with a condemning entity or its representatives.

No. If you don’t respond to the condemning entity’s final offer, a condemnation suit will likely be filed to take the condemned portion of your property. However, you are not obligated to respond to the final offer or make a counteroffer. It is also important to consider that if your counteroffer is not accepted, the information provided in your counteroffer may prejudice your case at trial.

Prior to suing a landowner to condemn that landowner’s property, a condemning entity must send an initial offer letter and a final offer letter. After the initial offer letter is mailed, the condemning entity must wait at least 30 days before making the final offer. After the final offer letter is mailed, the condemning entity must wait at least 14 days prior to filing suit to condemn the property it seeks to acquire. After the expiration of the 14 days, the condemning entity may file its condemnation lawsuit. After the lawsuit is filed with the court, the judge will appoint three Special Commissioners. The Special Commissioners will then set a Special Commissioners’ Hearing. You must be served with notice of the Special Commissioners’ Hearing at least 20 days prior to the date of the hearing.

At the Special Commissioners’ Hearing, the three Special Commissioners will hear evidence presented by the condemning entity’s attorney, appraiser, and witness. Likewise, the landowner and the landowner’s attorney, appraiser, and any other witness are also permitted to put on evidence. After hearing the evidence, the Special Commissioners will enter the Award of the Special Commissioners, which is the amount of money they determined the landowner is entitled as a result of the condemnation. Once the condemning entity deposits the amount of the Award of the Special Commissioners with the court, the condemning entity may take possession of the property and begin construction of its project. Either party may object to the Award of the Special Commissioners on or before the first Monday following 20 days after the Special Commissioners’ Hearing.

If an objection is filed by either party, the condemnation will be set for trial in the court where the condemnation petition was filed. Even if an objection is filed, the condemning entity will still have the right to construct its project on the condemned property pending trial. The trial is a trial de novo, which means that the jury will not hear about the outcome of the Special Commissioners’ Hearing. The Final Judgment in the trial court may be more or less than the Award of the Special Commissioners.

The minimum possible notice would be 64 days from the date of the initial offer letter to the date of the Special Commissioners’ Hearing. Once the Award of the Special Commissioners is deposited into the Court’s registry, the condemning entity may take possession of your property and begin construction of its project.

In Texas, a landowner is entitled to compensation for the part taken as well as damages to the remainder. However, certain types of damages that affect market value are not compensable in Texas. Business damages are generally not recoverable in Texas except in narrow circumstances involving certain types of denial of access.

Potentially. Texas utilizes the undivided fee rule. Under the undivided fee rule, the condemning entity includes landowners, tenants, lenders, easements holders, and other property interests in a single lawsuit. All parties included in the condemnation suit are then left to fight for their portion of the proceeds. Generally, the lease will control whether a tenant is entitled to any portion of the condemnation proceeds.

If your lender has a recorded lien against your property, that lender will likely be a party to any condemnation suit involving your property. Your lender may also have the right to keep any condemnation proceeds that are received until its lien is satisfied. A landowner may also have a duty to notify its lender pursuant to the deed of trust, once the landowner learns of the condemnation.

In some instances, damages to the remainder are obvious. For instance, the condemning entity may bisect your building, or leave you with remaining land that is too small to be used or developed. However, not all types of damages are immediately obvious to the landowner. Will the property have access after the taking? Will the property have adequate parking? Will the property continue to meet zoning or municipal ordinance requirements? Will the property remain in compliance with fire access requirements? Will the remainder violate any restrictive covenants or property owner’s association restrictions? Answering the above questions requires a careful, individualized review of your case by a qualified condemnation attorney.

Warren & Baker LLP does not charge a fee to evaluate your condemnation case.

Some condemnations cases may be resolved without the need to retain any experts. Most cases will require the landowner to hire an appraiser. Land planners and cost estimators are also commonly hired as expert witnesses in condemnation cases. Certain complex cases may also require industry specific experts.

It is generally advisable to hire an attorney prior to hiring an appraiser or other experts. An experienced condemnation attorney can assist you in hiring the right types of experts for your case and making sure your team works well together. Hiring experts too early, or hiring the wrong experts may harm your case.

No, a condemning entity cannot recover its attorneys’ fees from a landowner in a condemnation case. If a condemning entity dismisses its condemnation suit, the landowner may recover his or her attorneys’ fees. Otherwise, attorneys’ fees are never recoverable by either party in a condemnation lawsuit.

Because attorneys’ fees are not recoverable in a condemnation suit, most experienced condemnation attorneys are paid based on a percentage of the amount recovered in excess of the condemnor’s first offer. For example, if the contingency fee is 1/3 of all amounts in excess of the condemnor’s first offer, the condemnor offered $200,000, and $350,000 was recovered by trial or settlement, then the contingency fee would be $50,000, calculated as 1/3 of the $150,000 increase. The net recovery to the landowner would be $300,000.

Any information you share with the condemning entity’s right of way negotiator, your tenants, your lender, or your expert witnesses is potentially discoverable by the condemning entity. Seemingly innocent statements (e.g. we don’t currently use these parking spaces) can be used against you to reduce the compensation that is owed to you. Condemnation is an adversarial process, and the condemning entity’s agents likely have more experience with the process than the landowner does.

Many lawyers will accept a condemnation case and hope for the best, but few attorneys devote their entire practice to representing landowners. An experienced condemnation lawyer should be able to provide satisfactory answers to the following questions.

• What percentage of your practice is devoted to condemnation work?
• What types of clients do your represent?
• Do you represent condemning entities?
• Does your representation of condemning entities cause you to take positions that are contrary to the interests of your landowner clients?
• Have you handled cases involving properties like mine?
• Have you prevailed in a jury trial against a condemning entity?
• What type of expenses will I pay in addition to your contingency fee?
• Will I pay a greater contingency fee is my case is appealed?
• Which lawyer(s) will handle my case?
• Are the lawyers who achieved your results still with your firm?

It’s never too early to hire a condemnation attorney, but it can be too late. Certain strategies require that you act before a condemnation lawsuit is filed against you by the condemning entity. When hiring a condemnation attorney on a contingency fee basis, there is no extra cost associated with hiring your attorney before receiving your offer. In certain cases, significant value may be added to your by pre-condemnation planning.