June 21, 2024


Mad about real estate

Eminent Domain and Severance Damages

Eminent domain is the power of the government to take private property for public use.  The government is obligated to pay the property owner appropriate monetary compensation for their property, in a process called “condemnation.”  When invoked, eminent domain often takes entire properties, but there are some occasions in which only part of the property is taken (condemned).  For many projects, eminent domain is used only to condemn parts of properties.

Reasons include:

  • New road construction
  • Road widening
  • Parks
  • Utilities

In this case, the condemning authority must pay not only the value of the part of the property that is taken, but must also pay for the impact on the rest of the property caused by the loss of the portion.  This is known as severance damages.

Effects of Partial Loss on Property Values

There are many ways in which the loss of a portion of property can affect the value of the remaining property.

Some of these losses are:

  • Loss of frontage road or easement
  • Nonconformity with zoning ordinances after loss
  • Loss of available parking space
  • Loss of architectural and natural beauty

When a road widening or improvement project requires the condemnation of the front of a residential property, there are many ways in which the remaining property may be decreased in value.  Setback from the road (which is likely to be busier following widening) is reduced, which will affect the resale value of the house.  Old-growth trees may have to be removed, along with hedges or fences that blocked the road from the front of the house.

Likewise, the value of a business may also suffer from a partial taking.  It may lose parking spaces, aesthetic arbors, benches, outside dining areas, even part of the building as a result of the partial taking.  All of these may impact the viability of a business, and should be included as part of severance damages.

Partial Loss and Possible Non-Viability

If the property is not considered viable for its current use following the condemnation, then a cure must be part of the eminent domain settlement.  Examples of non-viable properties are businesses with too few parking spaces, or structures where part of the building must be torn down as part of the condemnation.  In these cases, the condemning authority and the property owner can both present cures to make the property viable again after the condemnation, such as rebuilding or modifying a house, rearranging parking spaces, creating a patio area on top of a restaurant to compensate for one lost out front, etc.

In some cases, once the partial taking is affected, the remaining property may violate zoning ordinances.  For example, a house may no longer have a legal setback from the widened road.  This will depreciate the remaining property further, increasing compensation, and in some cases it may mean that the condemning authority must compensate the property owner for the full property.  In other cases, the zoning authority may grant a variance for that property which may restore some of the value.