Uneconomic Remainder
Definition
An uneconomic remainder is the remaining portion of property after part of it has been taken through eminent domain (condemnation) that holds little or no market value. This can occur due to compromised access, or the irregular shape or size of the remaining property rendering it commercially or practically unusable.
Examples
- Road Expansion: If a roadway project requires a strip of land from a property, the remaining portion might become landlocked or fractionally reduced to an extent where it cannot be developed or sold.
- Infrastructure Development: In cases where a utility company needs to lay pipelines or cables, the segment of land left over may be too narrow or oddly shaped to be useful.
- Commercial Property: A commercial building partially taken for public use might leave behind floor space or sections that can no longer be used effectively for the business operations, thus devaluing the property substantially.
Frequently Asked Questions
Q: What happens to an uneconomic remainder in condemnation processes?
A: Typically, the entity performing the condemnation must compensate the property owner not just for the portion taken, but also for the reduced value or unusability of the uneconomic remainder.
Q: Are property owners forced to sell uneconomic remainders?
A: In some jurisdictions, if the remainder is entirely uneconomic, property owners may have the right to demand that the condemning agency purchase the entire property and not just the takings.
Q: How is compensation calculated for uneconomic remainders?
A: Compensation might include consideration for the reduction in value of the remaining parcel and may require appraisals to determine the before and after values of the property.
Q: Do property owners have the right to contest an uneconomic remainder declaration?
A: Yes, property owners can often contest the classification of their remainder as uneconomic, generally requiring legal action or negotiation.
Related Terms
- Eminent Domain: The power of the government or its agent to take private property for public use, with appropriate compensation.
- Condemnation: The legal process of utilizing eminent domain to take private property.
- Remnant Parcel: The remaining portion of land after a taking by condemnation, which may or may not be of practical utility.
- Severance Damages: Compensation awarded to a property owner for the reduction in value of the remaining property after a partial taking.
- Inverse Condemnation: A situation in which the property owner files a claim against the government, claiming that property was effectively taken and compensation is due.
Online Resources
- National Association of Eminent Domain Professionals (NAEDP)
- Occupational Safety and Health Administration (OSHA) Compliance Guidelines for Property Condemnation
- U.S. Department of Transportation’s Federal Highway Administration on Land Acquisition
References
- Foster, S., & Howell, W. C. (Eds.). (1999). The Condemnation Process: Principles and Practices. Urban Land Institute.
- Strate, S. J. (2014). Land and Property Development in Eminent Domain. McGraw-Hill.
Suggested Books for Further Reading
- Eaton, S. J. D. (2002). Real Estate Law in America: Eminent Domain and the Constitution. Thomson Reuters.
- Nichols, P. S., & Williams, M. (2020). Jurisdictions over Property and Uneconomic Remainders: A Legal Guide. West Academic Publishing.
- Berger, D. (1999). Eminent Domain: A Comparative Study. Oxford Academic Press.
Real Estate Basics: Uneconomic Remainder Fundamentals Quiz
### What is an uneconomic remainder in the context of real estate?
- [x] A portion of property left after a partial taking by condemnation that has little or no market value.
- [ ] An investment in low-value property.
- [ ] A property sold below market value.
- [ ] An underdeveloped piece of land not suitable for construction.
> **Explanation:** An uneconomic remainder is a property left after a partial taking by condemnation, which is rendered unusable due to its compromised utility or access.
### What often causes a property to become an uneconomic remainder?
- [x] The property loses value due to adverse conditions such as limited access or irregular shape.
- [ ] The property was originally appraised incorrectly.
- [ ] A change in zoning laws.
- [ ] A downturn in the real estate market.
> **Explanation:** An uneconomic remainder is caused typically when the property is left with access issues or an irregular shape/small size after a partial taking, making its practical use difficult or impossible.
### Who compensates the owner of an uneconomic remainder?
- [x] The entity performing the condemnation.
- [ ] The real estate agent.
- [ ] Mortgage lenders.
- [ ] Local municipal tax assessors.
> **Explanation:** The entity performing the condemnation must often compensate the property owner for the remaining portion’s loss in value.
### Can an uneconomic remainder be contested by property owners?
- [x] Yes, the classification can be legally contested by property owners.
- [ ] No, once declared it cannot be contested.
- [ ] Only if the value exceeds a threshold.
- [ ] Only before the condemnation process begins.
> **Explanation:** Property owners have the right to contest the declaration of their property as an uneconomic remainder, typically via legal actions or negotiations.
### What might compensation for an uneconomic remainder include?
- [ ] The full market value of the original property.
- [x] Consideration for the reduced value of the remaining parcel.
- [ ] Future income projections.
- [ ] Potential development costs.
> **Explanation:** Compensation is typically calculated to consider the reduction in value of the remainder, usually determined by appraisal.
### What is another name for the remaining portion of land after a taking by condemnation?
- [ ] Easement.
- [ ] Patch property.
- [ ] Utility remainder.
- [x] Remnant parcel.
> **Explanation:** The correct term used is “remnant parcel,” which describes the leftover portion of land.
### What mainly affects the calculation of severance damages?
- [x] The difference in the market value of the property before and after the taking.
- [ ] Property's original purchase price.
- [ ] Current market trends.
- [ ] Tax assessments.
> **Explanation:** Severance damages are calculated mainly by determining the difference in market value attributable to the property's partial taking.
### What is the power called that allows the government to take private property for public use?
- [ ] Zoning laws.
- [ ] Public domain.
- [ ] Property initiatives.
- [x] Eminent domain.
> **Explanation:** The government utilizes the power of eminent domain to take private property for public use.
### In which scenario would severance damages NOT be applicable?
- [ ] When a property is partially taken, reducing value.
- [ ] During highway expansions affecting property access.
- [x] When improving the property's resale value.
- [ ] After modifying the shape or usability negatively of land.
> **Explanation:** Severance damages are not applicable when a taking improves the property's value; they apply in cases of value reduction due to partial taking.
### If a property owner refuses to sell a portion deemed an uneconomic remainder, what might occur?
- [ ] Property taxes are waived.
- [ ] The project is ceased.
- [x] The property owner might force the whole property purchase.
- [ ] Negotiations are mandatory.
> **Explanation:** Many jurisdictions allow property owners to demand that the entity acquire the entire property if the leftover portion is considered uneconomic.
