One critical aspect of any eminent domain case is selecting the right valuation expert. Recently, the Commonwealth Court of Pennsylvania ruled that real estate brokers can serve as valuation experts in eminent domain cases even if they do not have a real estate appraiser license.
In King v. West Penn Power Company, a power company acquired a portion of a privately-owned airport for an electronic transmission line by its power of eminent domain. The property owner in King challenged the amount of “just compensation” that was offered by the power company. The property owner sought to present the testimony of a real estate broker to testify regarding the negative effect of the taking on the fair market value of the property.
The power company filed a motion to preclude the broker’s testimony on the basis that that the broker did not have a real estate appraiser license. The trial court granted the motion and precluded the broker’s testimony. The property owner appealed.
The Commonwealth Court reversed the trial court’s decision and found that the broker did not need a real estate appraiser license to qualify as a valuation expert in a condemnation case. The alleged basis for the motion to preclude the broker’s testimony was the Real Estate Appraiser Certification Act which provides that it is unlawful to perform real estate appraisals “in non-federally related transactions” without a valid certificate from the State Board of Certified Real Estate Appraisers. However, the definition of “federally related transaction” in the State Board of Certified Real Estate Appraisers’ regulations does not include appraisals for condemnation proceedings. In addition, the definition of “condemn” in the Pennsylvania Eminent Domain Code does not include “transactions.” Therefore, the Court held the phrase “nonfederally related transaction” in the Appraisers’ Act does not encompass condemnations of property.
The Court also continued to explain its decision by stating that “it makes no sense to require that qualified valuation experts in condemnation proceedings possess real estate appraiser licenses.”