Eminent Domain

Although there are exceptions, generally, a condemnor must do the following:

1. The condemnor must have the authority to use eminent domain granted to it by the legislature.
2. The condemnor must conform its exercise of power to the occasions, modes, and agencies as specified in the enabling statute.
3. May only take for public use (with some exceptions).
4. The decision to condemn and/or the extent of the taking may not be the result of fraud, bad faith, an abuse of discretion, was arbitrary, or capricious.
5. The condemnor must file a declaration of taking in the Court of Common Pleas for the county in which the property is located and record notice of the taking with the county recorder of deeds.
6. The condemnor must serve the condemnee with a Notice of Condemnation which, among other things, notifies the condemnee of their right to file preliminary objections within 30 days.
7. The condemnor must post a bond or other sufficient security with the court.
8. The condemnor must pay estimated just compensation before taking possession of the condemned property. Note that a condemnee is entitled to receive estimated just compensation without prejudicing his/her right to seek full and final just compensation from the courts.

The exclusive remedy for challenging a condemnation is by the filing of preliminary objections to the declaration of taking. A property owner has 30 days to file preliminary objections. Objections cannot be raised at other stages of the condemnation proceedings. Furthermore, preliminary objections are limited to the following challenges: (1) The power or right of the condemnor to appropriate the property unless it has been previously adjudicated; (2) The sufficiency of the security; (3) The declaration of taking; (4) Any other procedure followed by the condemnor.

The primary objection usually relates to the condemnor’s “power or right” to condemn and it may take several forms. Here are the most common:

Enabling Statutes: This objection focuses upon the condemning authority’s grant of power from the legislature through appropriate enabling statutes. This type of defense typically alleges that the condemnor failed to comply with the enabling statute’s requirements. These requirements dictate the occasions, modes, and agencies by which the condemnor may exercise its eminent domain authority.

Public Purpose: This objection alleges that the condemnation is not “for public use” as required by the state and federal constitutions. Pa. Const. art. I § 10; U.S. Const. Amendment V.

Due Process: This objection alleges that the decision to condemn and/or that the extent of the taking is the result of fraud, bad faith, an abuse of discretion, was arbitrary, or capricious.

Typical public purposes include road projects, installation of electric transmission lines, schools, parks, public buildings etc. After the United States Supreme Court sanctioned the broad use of eminent domain for uses which primarily benefited private enterprise, the Pennsylvania legislature (along with many other states) passed The Property Rights Protection Act which prohibits “the exercise by any condemnor of the power of eminent domain to take private property in order to use it for private enterprise.” 26 Pa. C.S.A. § 204. However, the Pennsylvania legislature created exceptions for non-profits, public utilities, railroads, common carriers, blight, urban redevelopment, low-income development projects etc.

Just compensation is determined by a Board of Viewers appointed by the Court of Common Pleas in the county where the property is located. The Board of Viewers consists of three community members, one of which must be an attorney. Either party may appeal a board decision to the trial court. Just compensation is the difference between the fair market value of the condemnee’s entire property interest immediately before the condemnation and as unaffected by the condemnation and the fair market value of the property interest remaining immediately after the condemnation and as affected by the condemnation. This is sometimes referred to as the “before and after'' rule. Just Compensation typically requires the testimony of an expert appraiser who has experience drafting eminent domain appraisals. It is highly advisable that a property owner consult with an experienced eminent domain attorney before hiring an appraiser so that the attorney can ensure that the appraisal will be legally admissible in court. Note that the Pennsylvania Eminent Domain Code provides a condemnee property owner with a $4,000 reimbursement to use for incurred professional fees including appraiser fees.

Fair market value is the price which would be agreed to by a willing and informed seller and buyer, taking into consideration, but not limited to, the following factors:

1. The present use of the property.
2. The highest and best reasonably available use of the property and its value for that use.
3. The machinery, equipment and fixtures forming part of the real estate taken.
4. Other facts as to which evidence may be offered as provided by Chapter 11 (relating to evidence).

26 Pa. C.S. § 703. “Willing” seller and buyer means that neither is under abnormal pressure or compulsion, and both have a reasonable time within which to act. “Informed” buyer and seller means that both are in possession of all the facts necessary to make an intelligent judgment.

A partial taking occurs when your entire parcel of land is not taken but instead the condemning authority takes only part of it, leaving some land remaining. In this scenario, the before and after rule still applies. i.e. just compensation is the difference between the value of the property before and after the taking. This principal is codified in the Code which states “In determining the fair market value of the remaining property after a partial taking, consideration shall be given to the use which the property condemned is to be put and the damages or benefits especially affecting the remaining property due to its proximity to the improvements for which the property was taken.” 26 Pa. C.S.A. § 706(a).

In addition to just compensation the Eminent Domain Code grants condemnees additional compensation as follows:

1. Expenses related to transfer of title such as recording fees, transfer taxes, penalty costs for prepayment of a mortgage, pro rata portion of real property taxes paid, pro rata portion of water and sewer charges paid.
2. Professional fees incurred by a condemnee for appraisal, attorney and engineering fees are reimbursable up to $4,000.
3. Increased financing costs caused by increased interest and other debt services costs incurred in connection with financing the acquisition of a replacement property.
4. Pre-condemnation losses from reduction in rental income prior to the taking which the property owner proves was substantially due to the general knowledge of the imminence of condemnation, other than due to physical deterioration of the property within the reasonable control of the property owner.

Under certain circumstances the $4,000 limit on professional fees does not apply. Instead the Eminent Domain Code provides that the condemnor must pay all reasonable appraisal, attorney, and engineering fees and other costs and expenses actually incurred because of the condemnation proceedings. This may occur if a condemnee prevails on preliminary objections where the effect is to terminate the condemnation. Lastly, it may occur if the condemnor takes property without filing a declaration of taking. This is known as a “de facto'' taking or “inverse condemnation.”

Yes, when a condemnor takes your property they are required to pay you what is called “estimated just compensation” (“EJC”). EJC is paid without prejudice to the rights of either the condemnor or the condemnee to proceed to a final determination of the just compensation, and any payments made, shall be considered only as payments pro tanto of the just compensation as finally determined. Following the rendition of the verdict, the court will mold the verdict to deduct the EJC previously paid by the condemnor. i.e. the condemnor is given a credit. However, in no event shall the condemnee be compelled to pay back to the condemnor the EJC even if the amount of just compensation, as finally determined, is less than the compensation paid. Practically speaking, it is rare for a verdict to be less than the EJC paid. The reality is that condemnor are defendants and therefore they have no incentive to voluntarily pay condemnees full and fair just compensation. Without the ability to access the courts through the help of an experienced eminent domain attorney, condemnees may not otherwise receive full and fair just compensation.