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Eminent Domain and Real Estate Valuation Blog

Condemnation and Real Estate Litigation

Eminent Domain Topic For Jon Stewart

Posted in Eminent Domain

Jon Stewart used eminent domain debates to criticize Republicans over their support of the Keystone Pipeline in a recent Daily Show.  In his usual method, he juxtaposed statements by Republicans decrying the use of the power of eminent domain and supporting its use for the Keystone Pipeline project. 

The Show’s use of this topic shows two things.  First, eminent domain remains a very controversial topic and a hot button issue.  Second, when and how this power should be used is very complicated.  Permitting utilities – including privately owned utilities – to use the power of eminent domain is hardly a new concept.  However, it is rarely the focus of debate.  Controversial projects often draw attention to this issue which was the case with Jon Stewart.  

The clip can be found at little-seizers

Mortgage Fraud Risk Is Unchanged And Valuation Risk Increased

Posted in Uncategorized

Mortgage Daily has reported that there was no quarterly change in the risk of mortgage fraud, according to the 2Q 2014 National Mortgage Fraud Risk Index published by analytics firm Interthinx.  However, the risk of Valuation fraud was up for the quarter.

The mortgage fraud risk index, which is based on an analysis of loans processed through the FraudGUARD system. California has the highest fraud index. Florida and New Jersey are tied at second place for highest overall risk.  The national Property Valuation Fraud Index was higher than the first quarter and the same point last year.

NJ Supreme Court Hears Hackensack Eminent Domain Apeal

Posted in Uncategorized

The city of Hackensack, N.J., has asked the NJ Supreme Court to determine whether a municipality seeking to condemn property must expressly find that the property is “blighted” in order to meet the constitutional eminent domain standard.  It seeks to overturn an Appellate Division ruling that rejected the city’s plan to condemn two properties on the grounds that the ordinance passed by the city did not contain a finding of blight.  The ordinance stated that the buildings were deteriorated to the point of being boarded up, their use was untenable, the parking lots were unusable and badly designed and that the properties were having a negative effect on surrounding properties.

The Appellate Division ruled that a finding of blight was mandated by prior court rulings.  The city maintains that those ruling do not require an express finding of blight in every case.  Hopefully, the NJ Supreme Court will provide more concrete guidance for future condemnations.

PA Supreme Court Declines Eminent Domain Appeal

Posted in Eminent Domain

The PA Supreme Court on Tuesday declined to hear an appeal in a Mercer County eminent domain case.  The case involves Mercer Area School District’s attempt to condemn property that borders school grounds to extend a parking lot and build an emergency access point.  The School Board first attempted to condemn land in 2010.  However, after the property owners challenged the taking, a trial court found that the taking was excessive, was done in bad faith and was an abuse of discretion.  The School District tried again in 2012 and, after the property owners again objected, the same judge found that his first ruling precluded the second action by the school board based on the doctrine of “res judicata.”

The Schools District appealed and the PA Commonwealth Court on March 17 reversed the decision holding that the trial court reserved for the School District the right to file a second action by saying that if it wanted to do so it would have to correct certain deficiencies from the original filing.  The Commonwealth Court did note, however, that “[a]s a general principle, the doctrine of res judicata (otherwise known as claim preclusion) can operate to bar a condemnor from filing successive eminent domain actions.”  The doctrine did not apply in that case, the Court held, because “even if all the elements of res judicata are met, res judicata will not prohibit a second action where a trial court’s order or opinion dismissing the first action indicates the court’s intent to permit the plaintiff to bring a second action.” 

 The Commonwealth Court reversed the trial court’s decision and the property owners attempted to appeal to the PA Supreme Court.  In contrast to appeals to the PA Superior and Commonwealth Courts, appeals to the PA Supreme Court are not guaranteed and only a small percentage of petitions for appeals are granted.  The PA Supreme Court entered an order this week denying the property owners’ appeal request.  The case will now be remanded back to the trial court to address the merits of the taking.


Hoboken Found To Have Misapplied Property Rehabilitation Law

Posted in Redevelopment

The New Jersey Appellate Division recently held that Hoboken cannot designate an 11.5-acre site in the city as an “area in need of rehabilitation,” which had allowed it to implement a redevelopment plan.  It found that the Hoboken City council misinterpreted the appropriate statute.  The Appellate Division held that it was unclear whether the council properly applied the relevant statutory criteria because the city’s resolution misstated the statute upon which it relied. The suit, brought by leather goods manufacturer R. Neumann & Co. against the city of Hoboken, its mayor, and several other defendants, claimed that the resolution wasn’t supported by adequate evidence, was motivated by an ulterior purpose and was inconsistent with the state’s Local Redevelopment and Housing Law, according to the opinion.

The panel also rejected the company’s argument that the delineation of an “area in need of rehabilitation” gives municipalities the right to exercise eminent domain, finding that the designation only allows them to adopt a redevelopment plan. Those plans don’t provide for the taking or acquisition of property within such an area, according to the opinion.   According to state law cited in the panel’s opinion, the area would need to be designated as an “area in need of redevelopment” before a municipality would have the power to take or acquire private property by condemnation.

Ga. Supreme Court Prohibits Abandonment of Condemnation After Award By Special Master

Posted in Eminent Domain

The Georgia Supreme Court recently ruled that a condemning authority cannot unilaterally dismiss a condemnation action after the special master has rendered an award. In Dillard Land Investments LLC v. Fulton County, 2014 Ga. LEXIS 583 (Case No. S13G1582, decided July 11, 2014), Fulton County filed a petition for condemnation for a library development project. The county elected to proceed under the “special master” method codified at O.C.G.A. §§22-2-100 to 22-2-114.  Following a hearing, the special master entered a just compensation award in the amount of $5,187,500.

Apparently unhappy with the award, the County filed a voluntary dismissal of the condemnation action without prejudice. However, the Georgia Supreme Court unanimously held that “a condemnor is not entitled to voluntarily dismiss a condemnation action unilaterally once the special master renders his award.”

VT Governor Advocates Hiring Independent Appraiser For Pipeline Cases

Posted in Appraisers, Eminent Domain

Vermont Gov. Peter Shumlin wants the VT Department of Public Service to hire an independent property appraiser to participate in eminent domain proceedings for the Addison-Rutland Natural Gas Project. “I am concerned at the transparency and equity issues that have been raised by Vermont Gas’s negotiations with landowners,” Shumlin wrote in a letter Monday. “I want to ensure consistent third-party valuations for property subject to condemnation in the event eminent domain proceedings occur.” Public Service Commissioner Chris Recchia said the department has had many complaints from landowners who are in negotiations. He said the complaints center on how Vermont Gas has been handling the land use discussions.

In his letter Monday, Shumlin said: “While landowners still may choose to retain their own valuation expert, as well as their own representation, in these proceedings, a natural valuation expert retained for all such proceedings seems appropriate and necessary in these circumstances.”

NJ Supreme Court OK Bypassing Mortgagee In Eminent Domain Grab

Posted in Eminent Domain

The NJ Supreme Court has ruled that a borough was not required to negotiate with the holder of the final foreclosure judgment prior to condemnation of the encumbered property.  In Merchantville v. Malik & Son LLC, the Court held that the borough’s effort to negotiate directly with the record titleholder was legally sufficient.  Condemnors in NJ are required to engage in good faith negotiations with property owners prior to condemnation.  In that case, a party obtained a foreclosure order regarding the condemned property and was set to acquire it through a sheriff’s sale.

In a unanimous decision, the NJ Supreme Court held the condemnor was not required to negotiate with the holder of the final foreclosure and that the borough’s negotiations with property owner Malik & Son LLC was sufficient.  It explained,

 “We hold that a condemning authority has an obligation to present an offer to acquire property and to engage in bona fide negotiations with no party other than the individual or entity that holds title to the property or the holder of the interest sought to be condemned,” the opinion said. “In addition, we determine that the offer presented in this case and the reply by the property owner satisfied the statutory requirement of bona fide negotiations with the property owner before initiating condemnation proceedings.”

US House Committee Passes USPAP Exemption Bill

Posted in Valuation

The US House Financial Services Committee approved H.R. 5148 which would grant certain “high-risk” mortgages an exemption from having an appraisal performed in accordance with the Uniform Standards of Professional Appraisal Practice (“USPAP”).  USPAP – the Uniform Standards of Professional Appraisal Practice – is provided by the Appraisal Foundation and is described as “the generally accepted standards for professional appraisal practice in North America. USPAP contains standards for all types of appraisal services.”

Supporters of the bill, including the Appraisal Institute, argue that it could open up a range of valuation services and create flexibility for lenders to order an appraisal when the development and reporting requirements suit the needs of the assignment.  AI has stated that, “While Section 2 in the legislation would provide an exemption from evaluations in cases where the value of loans classified as ‘high-risk’ is below $250,000 and kept on the creditor’s balance sheet for at least three years, the number of loans that fit this criteria is expected to be very small. And despite the exemption . . .  many banks [are expected] to still obtain an appraisal because it’s good business practice.”

Orlando Drops Taking Of Church Property.

Posted in Eminent Domain

The City of Orlando on Monday dropped its attempt to condemn a family-owned church to build a new Major League Soccer stadium.  The Church was the last holdout for the project.  Orlando will move the new stadium about a block west using property the city bought for $2 million.

Orlando and the Church have had been in negotiations since last year.  Orlando offered the Church $1.5 million for the property representing over twice the value in the City’s appraisals. The Church felt this was much lower than the value and the parties were far apart.