Michigan's Website For Condemning Agencies

Gary David Strauss
Strauss & Strauss, PLLC
306 S. Washington Ave, Ste 217
Royal Oak, MI  48067-3845
(248) 584-0100  (248) 584-0101 (fax)
248) 709-1689 (mobile)
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The Condemnation Process

I. Pre-Acquisition Activities

The decision as to what property is necessary for the project has legal and financial significance. Although this decision might appear to be relegated to engineering, it is important that the agency only seek to acquire what is reasonably necessary for the project. Various appellate decisions provide a general lay of the land. The last thing a condemning agency wants to do is to provide room for a property owner’s attorney to be able to create a credible argument that the proposed acquisition does not meet legal standards for necessity. The resulting expense and delay can be substantial.

After the decision has been made as to what land is necessary, the condemning agency is required to make a good faith offer to the owner(s) of the property. The good faith offer must be based upon an appraisal of the property by a licensed real estate appraiser. It is important to choose an appraiser that is very knowledgeable about condemnation appraisals. For reasons beyond the scope of this article, a condemnation appraisal is a distant cousin of the traditional real estate appraisal. A poorly supported apprisal, or an appraisal that is unrealistically low, often results in increased expenses throughout the process.

During the time that the appraisal is being completed, there are legal remedies through which the appraiser can obtain necessary financial information and access to the property. A good appraiser should want all of the information he or she needs to develop a strong basis for an opinion of value. The condemning agency should do everything in its power to obtain that information.

When the appraisal is completed, the good faith offer and appraisal are provided to the owner and/or the owner’s attorney. A certain period of time is allotted during which the owner will consider the appraisal and decide if he or she will sell the property for that amount. If the price is not acceptable, the parties will attempt to negotiate. If a price is agreed upon, a “voluntary” sale occurs and the matter is resolved.

II. The Complaint

If it does not appear that a price will be negotiated in short order, it generally is advisable to file suit. Just compensation (the amount of money that a jury ultimately determines compensates the owner for his or her loss) is determined according to the value of the property on the date the complaint is filed. Generally, a long period between the good faith offer and the filing of the complaint results in a needless expenditure of money. The condemning agency generally is liable for the owner’s attorney fees, equal to 1/3 of the difference between the good faith offer and the ultimate award. Therefore, a third of the difference between the initial good faith offer and the

value on the date of the filing of the complaint is the price of waiting.

When the condemning agency takes possession of the property, it must pay the owner the amount of the good faith offer. That is the quid pro quo for taking possession. Thus, if it doesn’t look like a settlement will occur fairly quickly, it usually will not happen because there is little incentive for the owner to accept less than he or she thinks could be obtained at trial.

Once the complaint is filed, the owners have 21 days (28 days if out of state) to decide if they want to challenge the necessity of the project. After this period has passed the condemning agency can request that the court enter an order transferring possession and payment of the estimated just compensation.

If the owner challenges necessity, the process can be time consuming and can threaten to delay the start of the project, because possession will not be ordered during this time.

III. The “Litigation” Stage

If necessity is not challenged or the court confirms necessity, the owner is required to file a statement setting forth damage claims it believes the condemning agency overlooked in the appraisal supporting the good faith offer. The condemning agency than has an opportunity to revise its good faith offer and place a value on any of these claims the agency’s appraiser believes has merit. Any amounts attributed to these claims is added to the good faith offer for purposes of calculating the reimbursable owner’s attorney fees. If additional damages are not included in the statement, the owner is barred from including them at a later day. This area of the law is very new and there is only one appellate opinion that deals with the issue. Thus, there are many disputes over how much information must be given by the owners and

when a claim will be barred. Circuit courts across the state have produced very different rulings.

An order will be issued early in the proceedings setting a date for simultaneous exchange of appraisals. The condemning agency must “update” its appraisal, consistent with values on the date the complaint was filed. The owner also will produce an appraisal consistent with the date of taking.

After the appraisals are exchanged, they will be analyzed by each party. The appraisers usually a deposed within a few months of the exchange. During the deposition, the attorneys attempt to discover the basis for the appraiser’s opinion and weaknesses that can be used during trial. Although the attorneys generally do not reveal everything they might use to attack the opposing appraiser’s credibility, there often is a viable opportunity to settle a case after depositions are taken.

Case evaluation also is scheduled early on in the proceedings and occurs after depositions and other “discovery” ( processes for obtaining information and documents from the opposing party). During case evaluation, the parties will submit summaries demonstrating the strength of their appraiser’s opinion and the weaknesses of the opposing side. A panel of three case evaluators will arrive at an “award,” a value they believe will settle a case. If both parties accept the award, the just compensation phase is over. Generally, a case evaluation award does not include the owner’s attorney fee, the owner’s appraisal fee and some other costs. These items, which the condemning agency must reimburse in full or in part, will be decided in separate proceeding or by agreement.

The period after case evaluation also provides a viable opportunity to settle the matter. As the trial date nears, both parties seriously consider the time and expense of going to trial, as well as the likelihood that the party can improve its position relative to the case evaluation award. In cases where the spread is not that great, the expense of trial may not warrant going to trial.

Prior to and after case evaluation, the parties engage in “motion practice.” A motion is merely a formal request that the court grant relief of some kind. Common motions might seek to exclude certain evidence or have the opposing party’s appraisal tossed out of court for a violation of condemnation law. The results of motions further shape the case for trial and/or settlement.

IV. Trial

If no settlement is reached, the case will go to trial. Generally a jury is selected to determine just compensation. On some occasions, if the parties do not demand a jury trial, the judge will decide the case.

Prior to trial, the parties might file more motions, to exclude certain evidence. Such motions often are necessary to preserve issues for appeal, if the need arises after the verdict.

As in most things, preparation is of key importance.

The attorney and appraiser work on a presentation of the appraisal opinion that is designed to relate to a jury of people who have little or no knowledge of the valuation process. Attractive and engaging exhibits are indispensable. The appraiser should be prepared to deal with weaknesses in his or her position on cross examination. While every point of attack cannot be anticipated, thorough substantiation for all aspects of the appraisal is advisable.

V. Post Trial Matters 

As mentioned, the condemning agency must reimburse the owner for attorney fees, expert fees and some costs of litigation. At this stage, it is important to know the relevant case law that has defined what expenses and fees may be recovered.

VI. Appeal

Perhaps because most courts do not have a lot of experience with condemnation cases, many cases involve issues that provide a basis for appeal. The condemning agency must consider the costs and benefits of pursuing an appeal, which vary widely from case to case.

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