Eminent Domain: What Is It?

“Eminent domain” is the power of a federal or state government to take private property for a public use. The 5th Amendment to the U.S. Constitution and Article 1, Section 21 of the Indiana Constitution require that when the federal or state government exercises their power of eminent domain to take part or all of a property owner’s property, the government is required to pay the property owner what is known as “total just compensation.” The eminent domain process is typically a three-phase process.

 

PHASE ONE: THE OFFER PHASE

The government usually hires land agents for the purpose of acquiring properties necessary for their project. These land agents have kitchen table meetings with the property owners to discuss the taking, for the purpose of inspection and preparing an appraisal. Sometimes these kitchen table meetings can be helpful to learn information about the proposed taking and to seek damages related to the taking. However, in my experience, most complaints made to the land agents in these kitchen table meetings fall on deaf ears. In the Offer Phase, the government is required to provide the property owner with a “good-faith offer” based upon an appraisal. The property owner typically has 30 days from the date of this offer to either accept or reject the government’s offer. If the property owner either rejects the government offer or fails to respond within the 30-day response period, then the government will proceed to file suit to condemn the property owner’s property. This is known as condemnation.

 

PHASE TWO: THE OBJECTION PHASE

In the Objection Phase, the government will file a complaint to appropriate part or all of the property owner’s property. Unless an extension of time is obtained, the property owner is required to appear and file objections with 30 days of receipt of the complaint. Objections are rare, but common objections include: (1) court does not have jurisdiction either of the subject matter or of the person, (2) government does not have the right to exercise the power of eminent domain for the use sought (i.e., government is taking property for a private purpose, rather than a public purpose), or (3) for any other reason disclosed in the complaint or set up in the objections. If the property owner does not file objections prior to the 30-day deadline, then the court will proceed with the case. Three court-appointed appraisers will review the taking and determine what the “total just compensation” is owed to the property owner as a direct result of the government’s taking.

Unless an extension is granted by the court, the court-appointed appraisers have 30 days from their appointment to file a “Report of Appraisers” with the court providing their determination of the “total just compensation” owed to the property owner as a direct result of the government’s taking. Thereafter, the property owner has 45 days from the day the Court Clerk mails the Report of Appraisers to the property owner to file what are called “Exceptions.” Essentially, these Exceptions are the property owner’s disagreement with the “total just compensation” determined by the court-appointed appraisers in the Report of Appraisers. By filing Exceptions, the property owner is entitled to a trial on the issues of damages for the government’s taking. If either the property owner or government fail to timely file Exceptions, then the court-appointed appraisers’ determination of “total just compensation” will be reduced to a judgment. A request for a jury trial pursuant to Trial Rule 38 should also be filed along with the Exceptions to preserve the right to a jury trial.

PHASE THREE: THE DAMAGES PHASE

Although the property owner is named as the defendant in theses proceedings, the property owner has the burden of proof at a trial on the “total just compensation” owed as a direct result of the government’s taking. The damages phase can be resolved through mediation, settlement, or after a trial. In most cases, if not all, an appraiser familiar with condemnation proceedings is necessary for the property owner to prove its damages. Damages typically fall into four, and only four, categories: (1) fair market value of the land taken, (2) fair market value of the land improvements taken, (3) fair market value of the residue damages, or (4) other damages. With partial takings cases, there are opportunities to recover either set-back damages for the decrease in value of the property owner’s property after the taking or cost-to-cure damages for loss of privacy (e.g., tree screen, fence, etc.).

At least 45 days prior to a trial, the government is required to make what is generally referred to as a “45-day offer.” This 45-day offer is the government’s last best offer before a trial and is important for a couple of reasons. First, if after a trial of the property owner’s exceptions the property owner proves damages in excess of this 45-day offer, then the Ind. Code §32-24-1-14 provides that the property owner may recover up to $25,000.00 of attorney fees and litigation expenses from the government to defray its costs and expenses necessary to prove its case at trial. Second, if after a trial on the property owner’s Exceptions the property owner proves damages in excess of this 45-day offer, then Ind. Code § 32-24-1-11 provides for the recovery of interest on the excess amount recovered at the annual rate of 8% on the amount of the property owner’s damages from the date government takes possession of the property’s owner’s property (e.g., government 45-day offer is $25,000 and jury verdict is $100,000, then property owner shall recover 8% interest on the $75,000 from the date the government took possession of its property).

Finally, the property owner is entitled to post-judgment interest on any judgment (i.e., agreed judgment or jury verdict) from the date of the judgment until the property owner is paid in full. 


Thomas R. Malapit, Jr. has more than 20 years of experience in practicing law. He is a member of the Muncie Bar Association and serves on the Alumni Board for IU Robert McKinney School of Law. Previously, he served as a board member for the Indiana Supreme Court Commission on Race and Gender Fairness.

McKinney & Malapit Law is a general practice firm serving all of Indiana out of its Fishers and Muncie offices.


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