Gary David Strauss
Michigan's Website For Condemning Agencies
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)
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
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
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.
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
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.
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.
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
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.