Hello everyone! I normally don’t post more than one article per week. This week I have a bonus article for my appraisal colleagues who are interested in becoming expert appraisal witnesses in eminent domain cases.
This article was written by Leslie Fields, the Executive Director, Owner’s Counsel of America. I hope you enjoy her article!
Appraising property in an eminent domain case requires unique expertise and skills. But once these qualities are developed, many appraisers find eminent domain work to be interesting, challenging but worthwhile, and financially rewarding.
Eminent domain or the power of the government to take private property for a public use without the landowner’s consent is embedded in the Fifth Amendment to the U.S. Constitution, a clause which requires that just compensation be paid. As a result, eminent domain cases are often about how much the subject property is worth—an issue that appraisers are uniquely qualified to address and answer.
Becoming an expert appraisal witness in an eminent domain case starts with developing a comprehensive understanding of how value is determined in this special proceeding. While most states allow fair market value to be established using traditional appraisal approaches (e.g. comparable sales, income, and cost), there are many other elements that may apply based on the statutes, case law, and procedural rules in a given state. Knowing what these additional components are is critical in making sure that the appraisal and ultimate value conclusion is appropriately documented, competent, non-speculative, and (most importantly) admissible to establish value and the just compensation to be paid.
There are many special terms and concepts in an eminent domain case that must be mastered by the appraiser as they can play a significant role in determining value. While some of these terms may be familiar (such as highest and best use, reasonable probability of rezoning, special purpose property, larger parcel, etc.) in an eminent domain proceeding they may have special meaning and application. Still, other terms, such as the project influence rule, the undivided basis rule, and general and special benefits may not be familiar to most appraisers, but can nonetheless be important to know should the unique facts of the case require their application. This is why eminent domain appraisers often work closely with eminent domain attorneys to insure that these important concepts are fully understood and applied properly.
Just compensation in an eminent domain case does not only involve the value of the property being taken but may also require that the appraiser develop an opinion of damages to an owner’s remaining property. Indeed, in many cases, the issue of damages drives the litigation, as one side may determine that no damages or minimal damages exist while the other side contends that the damages are significant. Because the issue of damages can play such a critical role in an eminent domain case, it is important that an appraiser have a complete understanding of how damages are determined in a given jurisdiction and what elements can and cannot be considered in ascertaining damages.
Becoming an expert appraiser in an eminent domain case requires the appraiser to understand how the litigation process works and also to develop experience as a testifying expert witness. For instance, an appraiser may be required to appear at a deposition, where the opposing lawyer will question the appraiser in an effort to uncover any flaws or errors in the appraiser’s logic, underlying analysis, or value conclusions. Furthermore, while many eminent domain cases settle, it is not unusual that others go the distance—meaning that the appraiser may be called to testify in a court of law or other judicial proceeding. In high-stakes eminent domain cases, where valuation opinions diverge to a significant degree, an appraiser must be prepared to zealously defend the opinion being given under what can sometimes be grueling cross-examination by the other side’s lawyer.
Becoming an expert appraiser in an eminent domain case clearly requires time, attention to detail, and unique expertise. As a result, appraisers who have this kind of specialized training can often command hourly rates significantly above those who do not. Moreover, for those appraisers who specialize in appraising special purpose or unique properties in eminent domain proceedings, the hourly fees can be even greater.
About the Author
Leslie Fields is the Executive Director of Owners’ Counsel of America. Before retirement in 2014, Leslie practiced law for 33 years, mostly with Faegre Baker Daniels (now Faegre Drinker), a law firm with national and international offices. While at Faegre, Leslie served on the firm’s Management Board and became a renowned legal expert on eminent domain and property rights issues, co-chairing for many years the national ALI-CLE Eminent Domain and Land Valuation and Litigation Conference, and presenting on the subject of eminent domain in locales as distant as Tsinghua University in Beijing China as part of the Brigham Kanner Property Rights conference sponsored by William & Mary Law School. During much of this time, Leslie served as the Colorado member of OCA and wrote the definitive textbook on Eminent Domain Law in Colorado. Leslie came out of retirement in 2017, specifically to help lead OCA in its mission of helping private landowners in eminent domain and takings situations across the country.
For those of us who are looking to expand our work horizons, this area of practice might be a good area to look into. A big thank you to Leslie for writing this article for the Cleveland Appraisal Blog!
If you’re an appraiser and you are looking to sharpen your skills in analyzing the market, check out George Dell’s Stats, Graphs, and Data Science 1 which will be starting next week! Click below to sign up or learn more.
Have a great weekend!
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Here are some links to other articles I’ve enjoyed recently! I hope you will also…
The Housing Market Is Spiraling Downward With Dogged Determination – Housing Notes by Jonathan Miller
Just What is a COMPARABLE Sale? – Tim Andersen The Appraiser’s Advocate Podcast
Recession-Proof Your Business Part 1 – The Real Value Podcast with Blain Feyen
June Newsletter-Easing Off the Pedal – DW Slater Company Blog
Do I Need A Probate Appraisal? – Birmingham Appraisal Blog
Recession-Proof Your Money Part 1 – It’s a Good Life Podcast with Brian Buffini
Recession-Proof Your Money Part 2 – It’s a Good Life Podcast with Brian Buffini
Buyers gaining power & farewell real estate honeymoon – Sacramento Appraisal Blog
USPAP and the Contract – Tim Andersen, The Appraiser’s Advocate Podcast
Top Reason For House Rules – The Folson Group Blog
Too many appraisers? – APPRAISAL TODAY
No Judgement Needed? – George Dell’s Analog Blog
For my readers in the CLE area… here are some articles related to news in our local area. I hope you enjoy these also…
Laid off: enjoying summer pleasures while contemplating the future – Brittany Hooper of Fresh Water Cleveland
Superior Arts District’s new tenant brings jobs, art to in renovated warehouse – Marc Lefkowitz of Cleveland Fresh Water
Great article. It is very important for an eminent domain appraiser to be aware of relevant eminent domain case law in the jurisdiction that they are working. It is my understanding that the failure to be aware of and follow “court-made law” can be a violation of the Competency Rule of USPAP. Especially in the area of what is legally compensable severance damage items, parent tract determinations, and many, many other issues.
Thank you for writing in! Great point!