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Friday, February 17, 2017

Why is My Easement Not Worth a Fee?

 Affected property owners naturally have a lot of questions about eminent domain. The most common is usually: “How much is my condemnation worth?” In a related post that can be found here,  Attorney Will White covers the basics related to how that question can be answered.

The most common follow-up questions I receive are related to the meaning of certain words that can be foreign to someone unfamiliar with the process. For example, terms of art like “right-of-way or fee,” and “temporary or permanent easement” carry significant meanings in eminent domain proceedings. But, a property owner may not know what those terms mean, or the significance that they carry, because such terms are not used in everyday contexts. In the paragraphs that follow, I will explain the difference between the most common ownership interests acquired by condemning authorities through eminent domain.

 First, “right-of-way” is normally the nomenclature used to describe that portion of land, which will be acquired in “fee simple absolute.” That phrase denotes the broadest level of ownership interest in the property that is being acquired. In other words, the land acquired in “right-of-way” or “fee” will belong to the condemning authority outright after the taking. The former property owner will retain no ownership interest to it whatsoever. For this reason, the compensation required for land acquired in “right-of-way” or “fee” is its fair market value as of the date it was, or is to be, acquired by the condemning authority. The phrase “fair market value” also means the price a willing buyer would pay, and, perhaps, more importantly, a willing seller would accept for the property in a situation where neither party is obligated to enter into the transaction.

Second, condemning authorities will also acquire easement rights in certain circumstances. The purposes for which an easement may be acquired can vary. But, the types of easement interests normally fall into one of two categories: permanent or temporary.

Permanent easement means that the condemning authority acquires certain rights to the property, but the property owner retains other rights. For example, the property owner still has the right (or obligation) to maintain the property acquired in permanent easement through such tasks as mowing the grass. The property owner also has to pay the taxes on the portion of property acquired in permanent easement. The condemning authority, however, has the right to use that portion of the property for the purposes it has acquired the easement for into perpetuity. For example, the easement may have been acquired for the purpose of installing drainage or utility infrastructure. As a result, the condemning authority has the right to make improvements to that infrastructure at any point. Normally, that means the property owner is prevented from placing any permanent improvements in the easement area that might interfere with this use, unless the condemning authority gives the property owner permission.

The effect of a permanent easement can vary. But, the compensation offered for the portion of land acquired in permanent easement is typically less than what is offered by the condemning authority for land acquired in right-of-way of fee. This is why the explanation of the initial offer package may specify that a discount rate of twenty-five to fifty percent is applied to the unit value of the land acquired in easement. For example, the compensation offered for 1,000 square feet of easement may be half of what the offered compensation was for 1,000 square feet of fee. In many circumstances, however, the practical effect of an easement acquisition is essentially the same as though the land were acquired in fee from the property owner’s perspective.

Easements can also be acquired temporarily. The most common scenario for this is when a driveway easement is taken so that the existing driveway can be replaced. Condemning authorities commonly do not want to pay for this type of property interest because, in their view, the value for the easement is compensated by the benefit of receiving a new entry point. But, there are other circumstances where temporary easement involves the exchange of a benefit exclusively to the condemning authority, which correspondingly means that the property owner must be paid for that type of acquisition. Since the property interest is acquired only temporarily, however, the discount rate applied to temporary easements can be as much as seventy-five percent of the fee value for the property.

The distinction between these types of property interests can be critical to understanding the offer made by a condemning authority. It can also be critical in understanding the effect such an acquisition can have on the remaining property that is not taken from the property owner. These distinctions can play an important role in the value of the compensation to which a property owner is entitled. For these reasons, it is important to understand them and to talk with an experienced eminent domain attorney about the implications of a proposed acquisition as soon as possible.

If you have been contacted by a condemning authority related to a proposed or pending acquisition of your property, I would be happy to speak with you about it. My contact information is 770-957-3937, or wtillery@smithwelchlaw.com.

Smith, Welch, Webb & White, LLC., is recognized as a premier law firm throughout the state of Georgia with expertise in this area of law. We have an uncompromising commitment to serving our clients and community. Our team of experts routinely handles a wide range of legal matters beyond just eminent domain, and will be happy to provide outstanding service for you, your family, or business.  

 

Any representations regarding the law in this Blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


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