Value Before and After Taking

Definition

In eminent domain, “Value Before and After Taking” refers to the valuation approach of determining the precise amount of just compensation owed to a property owner whose property has been partially or completely appropriated by the government for public use. The “before” value is the fair market value of the property immediately before the taking, and the “after” value is the fair market value of what remains immediately after the taking.

Examples

Residential Property:
- A residential homeowner owns a property worth $500,000 before a government highway project requisitions 2,000 square feet for an expansion. The remaining property is valued at $450,000 after the taking. The compensation owing to the homeowner would likely be the difference: $50,000.
Commercial Property:
- A store valued at $1,000,000 is partially condemned for the same highway expansion, losing significant roadside frontage, reducing its visibility and customer traffic. The new value of the remaining property stands at $700,000. The compensation here would thus be $300,000, representing the decrease in value.

Frequently Asked Questions

What is “eminent domain”?

Eminent domain is the right of a government to expropriate private property for public use, with due compensation to the owner.

How is “just compensation” defined?

Just compensation is the payment required to be made to a property owner for the fair market value of the property acquired through eminent domain.

What factors impact the computed value of property “after taking”?

Factors influencing the after-taking value include:

Remaining utility of the property.
Accessibility changes.
Impact on property desirability and usability.
Potential income-generating capacity reductions.

Can the value before and after taking result in no compensation?

It is very rare, but if both “before” and “after” values are the same, compensation may not be granted.

Who determines the property values “before and after taking”?

Qualified appraisers or specially appointed condemnation experts usually determine these values, sometimes aided by court rulings.

Condemnation: The legal process of seizing private property under eminent domain.
Fair Market Value: The price at which property would sell in a competitive auction setting.
Severance Damages: Compensation for the decreased value to the remaining portion of property not taken.
Inverse Condemnation: A situation where regulatory action by the government indirectly causes a diminution in property value.

Online Resources

References

“The Law of Eminent Domain: Fifty-State Survey,” by The American Bar Association.
“Eminent Domain Use and Abuse: Kelo in Context” by Dwight H. Merriam and Mary Massaron Ross.

Suggested Books for Further Studies

“Private Property and the Constitution” by Bruce Ackerman.
“Shadow Cities: A Billion Squatters, A New Urban World” by Robert Neuwirth.
“Property Rights: From Magna Carta to the Fourteenth Amendment” by Bernard H. Siegan.

Real Estate Basics: Value Before and After Taking Fundamentals Quiz

### What does value "before" taking refer to? - [x] The fair market value of the property immediately before it is taken. - [ ] The original purchase price of the property. - [ ] The value of the land excluding structures. - [ ] The speculative future value of the property. > **Explanation:** The value "before" taking refers to the fair market value of the property immediately before the government's acquisition or taking for public use. ### In a partial taking for a public project, when might 'severance damages' be awarded? - [x] When the remaining property's value decreases due to the partial taking. - [ ] When no property is actually taken. - [ ] Only when the whole property is taken. - [ ] When the government's action increases the property value. > **Explanation:** Severance damages are awarded in circumstances where the partial taking of property results in a decrease in value or impaired usability of the remaining property. ### What principle justifies the payment of just compensation? - [ ] To punish the property owner. - [ ] To benefit the government. - [x] To ensure fair treatment of the property owner. - [ ] To increase tax revenues. > **Explanation:** The principle behind just compensation is to ensure that the property owner is fairly treated and properly reimbursed for the property taken for public use. ### Who typically carries out the assessment for value before and after taking? - [ ] The property owner. - [x] Qualified appraisers. - [ ] Government officials. - [ ] Real estate agents. > **Explanation:** Qualified appraisers or specifically appointed condemnation experts typically carry out the property valuation assessment for both before and after taking scenarios. ### Eminent domain allows governments to: - [x] Expropriate private property for public use, with compensation to the owner. - [ ] Sell private properties to private individuals. - [ ] Lend private properties to other local governments. - [ ] Expropriate private property without any form of compensation. > **Explanation:** Eminent domain permits the government to expropriate private property for public use, though it mandates compensation to the affected owner. ### In assessing compensation, what denotes "fair market value"? - [x] The price a willing buyer would pay and a willing seller would accept in a competitive market. - [ ] The taxable value of a property. - [ ] The user-defined value by the municipality. - [ ] The lowest price the government believes is appropriate. > **Explanation:** Fair market value is denoted as the price agreed upon by a willing buyer and a willing seller in a competitive, open market environment. ### What happens if there is a dispute about the compensation? - [ ] The higher amount is automatically given. - [x] The matter is taken to court for a resolution. - [ ] The dispute is resolved by the property owner alone. - [ ] Compensation is completely denied. > **Explanation:** If there is a dispute over compensation, the matter can be resolved in court where an impartial decision can be made based on the presented evidence and facts. ### Which of the following tends to affect the property value "after" taking? - [x] Changes in accessibility and usability. - [ ] The color of the property. - [ ] The season during which the taking occurs. - [ ] The age of the owner. > **Explanation:** Changes in accessibility and functionality of the incurred property significantly impact the "after" value, affecting compensation calculations. ### Why are invasive takings evaluated separately from other valuations? - [x] They need precise assessment to ensure fair compensation. - [ ] They happen more frequently. - [ ] They involve multifamily units only. - [ ] They have simpler calculations. > **Explanation:** Since property values before and after takings often differ significantly, a precise and objective assessment is essential to ensure just and fair compensation practices. ### Which case typified the controversies around eminent domain recently? - [x] Kelo v. City of New London. - [ ] Roe v. Wade. - [ ] Miranda v. Arizona. - [ ] Marbury v. Madison. > **Explanation:** The Kelo v. City of New London case brought eminent domain into the public eye, highlighting controversies around this legal practice specifically related to the public use definition and compensation fairness.