If you have received a notice from the state of Texas, a county, or your municipality that says your land is being taken through eminent domain or condemnation, you may wonder what is happening and what your rights are.
Eminent domain, often called condemnation, is a power the government has over land. When the government sees the potential for the land to be used for a public project, it may have the right to force you to sell or to provide limited property rights to itself or even another party. If it does force you to sell, however, it must provide you with “just compensation.”
Here in Texas, we’re seeing this a lot when people in the energy industry decide to locate pipelines, wind farms, solar arrays or other energy infrastructure. Your home, farm or ranch could be situated just where they need to build that infrastructure. If it is, you could be entitled to substantial compensation.
The U.S. and Texas constitutions require the government to pay you compensation for any loss in value you experience as the result of an eminent domain action. For example, your farm might be in the path of an oil or gas pipeline. The government may use eminent domain to force you to accept the pipeline onto your land without actually taking the land itself. This might be done by forcing what is called an “easement.” If that happens, the government must pay you adequate compensation for the easement on your land.
How is just or adequate compensation determined?
For your compensation to be just or adequate, it generally must represent the fair market value of the property. That fair value includes potential uses of the property. That’s important, because it wouldn’t be fair to give you existing market value for a property that is about to grow substantially in value due to an emerging use.
Other factors that are often taken into account in valuing your property include:
- Its size and location
- Its zoning
- Level of development
- Any unique characteristics
- Its current and potential uses
There are three main methods used for determining a property’s value. The market approach considers recent sales of similar properties. This works only as long as there have been reasonably comparable properties sold in the near past.
The income approach determines property value by determining its current income production and projected future income. This is most appropriate for income-producing properties rather than residential ones.
The cost approach looks at properties that cannot easily be replaced but instead would have to be duplicated. These are properties that have specialty structures or other unique features. The cost approach considers the cost of replacing those features, minus any value lost to depreciation, plus the value of the land itself.
How do I ensure I get just compensation for my property?
Eminent domain is not optional. Generally, it’s very hard to stop the government from taking your property at all, but you do have bargaining power. You should work with an attorney or law firm that has substantial experience comparing how the various approaches apply to individual properties and negotiating with utilities and government entities.