Eminent Domain Attorney Review
How Does an Eminent Domain Attorney Critique and Review An Appraisal Upon Which His Client’s Just Compensation Is Based?
Attorneys representing property owners and appraisers responsible for documenting the value of the property being taken often work together in an eminent domain case. The appraiser develops an independent opinion of value for the property through an appraisal, and the attorney ensures that the appraisal is sufficient to support a just compensation determination in what is essentially a legal proceeding.
The stakes can be high when a client’s valuation conclusion rests on a weak or improper appraisal. If the property owner’s appraisal does not meet certain pre-conditions, it is entirely possible that the owner will be precluded from presenting a valuation conclusion in the eminent domain case. As a result, the owner’s attorney must review the appraisal with a practiced and critical eye.
Below are some of the things an eminent domain attorney might look at when reviewing and critiquing the appraisal:
Is the opinion well founded and supportable? An opinion upon which just compensation may be based must be competent and credible. This means that the appraiser’s valuation conclusion should have a sound basis, with the logic and reasoning supporting the conclusion relatively easy to follow and understand.
An important component of the attorney’s review will be how well the appraiser documents moving from Point A (the assignment) to Point B (the analysis) to Point C (the final conclusion).
Are there any flaws or errors in the appraisal? There are many areas in an eminent domain appraisal where mistakes can be made. The most obvious being a mathematical error. But a knowledgeable eminent domain attorney will also look for less obvious mistakes, such as:
— incorrect facts or false assumptions being considered by the appraiser,
— gaps in the appraiser’s valuation analysis or logic
— or even if a particular appraisal methodology (e.g. the comparable sales, income and cost approaches) appears to be misapplied by the appraiser in some fashion.
Catching mistakes and bringing them to the attention of the appraiser so they can be addressed (and, if necessary, corrected) will avoid such issues coming up later on, when the credibility of the appraiser and appraisal itself may be on the line.
Does the appraisal appropriately take into account relevant eminent domain concepts and terms? Concepts like the undivided basis rule, scope of the project rule, the reasonable probability rule, general vs. specific benefits, and even the term “fair market value” have special meaning in an eminent domain case.
Mastering these special terms and how they apply when property is being valued for condemnation purposes is critically important, as they can play a significant role in an appraiser’s final valuation conclusion. As a result, an attorney reviewing an eminent domain appraisal will look carefully to see how the appraiser addressed any unusual valuation principles that may be applicable based on the facts of the case.
Does the appraisal comply with all of the special rules and legal standards applicable in an eminent domain case? In addition to special terms, eminent domain proceedings are also unique in the application of special rules and legal principles that have evolved over time based on statutes and case law in a given jurisdiction. As a result, the attorney will review the appraisal with these additional standards in mind to make sure that they have been adhered to:
Here are but a few examples:
- In many jurisdictions offers to purchase and listings of property cannot be used to determine value in an eminent domain case. Rather, only confirmed and completed transactions may be considered.
- Additionally, laws may require that the appraiser perform specific steps in confirming or verifying the sales data being relied upon, which may even include personally speaking with either the buyer or the seller to a transaction.
- Finally, in some jurisdictions the value of subdivided property cannot be determined by simply adding up the individual subdivided lots or building sites.
In closing, given the fact that an appraisal in an eminent domain case must not only ascertain value, but must also withstand legal challenge in order to be admissible in the case, the attorney for the property owner plays a larger role in reviewing and even critiquing the appraisal than in other situations. Moreover, most appraisers experienced in doing eminent domain appraisals understand the importance of the attorney review and welcome the chance to have their valuation product scrutinized by another legal professional.
For a more complete list of factors that an eminent domain attorney may consider in reviewing an appraisal upon which the client’s valuation position relies, refer to this source: Anatomy of An Eminent Domain Appraisal
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.