D.O.T. vs. YOU
SEMINAR ON LAND CONDEMNATION
How does my land get condemned?
What if I am not paid enough?
What if more land is taken?
What are my rights?
D.O.T. vs. YOU
INSTITUTION OF ACTION § 136-103
The D.O.T. shall file a complaint and declaration of taking
It must include:
1. A statement of authority and public use for land
2. A description of tract or tracts taken
3. A statement of the estates or interests in the land
4. Names, addresses, competency, and unknowns
5. Sum of $$ “estimated” to be just compensation
D.O.T. Must Deposit $$$
G.S. § 136-203. The filing of the complaint
shall be accompanied by a deposit of
money. Sub (d) “The D.O.T. may amend
the complaint and declaration of taking
and may increase the amount of its
deposit with the Court at any time.” –Does
not happen often.
Get Life Estate Valued ASAP!
G.S. §136-104. “Where there is a life estate and a
remainder interest either vested or contingent, in lieu of
the investment of the proceeds of the amount
determined and awarded as just compensation to which
the life tenant would be entitled to the use during the life
estate, the court may in its discretion order the value
of said life tenants share during the probable life of
such tenant be ascertained as now provided by law
and paid directly to the life tenant out of the final award
as just compensation established by the judgment in the
cause and the life tenant may have the relief provided for
in G.S. § 136-105.”
Value of Life Estate
How do you value the life tenant’s share?
-
It is the present value of the expected
life span.
Judge will use actuary tables
See G.S. § 44-11 for more details
Applying for Disbursement
• G.S. §136-105. Persons named in the
complaint may apply to the judge for a
disbursement, either as full compensation,
or as a credit against just compensation.
• Can not use if a dispute about title.
• D.O.T. does not need notice, but you must
serve the Judge’s Order on D.O.T.
D.O.T.’s Answer & Plat
The Answer shall contain (G.S. §136-106)
1. Admissions or denials
2. Names and addresses of Defendants
3. Affirmative defenses and other matters
Note Also:
Answer is deemed denied.
You can force a map to be filed 6
months after complaint is filed.
Time Rules
How long to you have to file an answer?
- 12 months (Normally 1 month)
- Failure to file is an admission you
received just compensation!
- Judge may extend time by one month
(13 months is the absolute max)
Section 404: Clean Water Act
Presented by Gary A. Mitchell
• What are considered waters of the United
States?
• Intercoastal Waterway – Obviously Yes
• Rivers - Yes
• Streams (Wet or Dry) - Maybe
• Bays - Maybe
• Low Areas - Maybe
Land can become Wet Lands!
• Existing vs. Caused by Man (Example:
Improperly installed funnel drain)
• Soil can become wetter – use borings test
• Plant matter changes over time
• Dry areas reclaimed by wet areas
• Could be delineated Wet Lands- regulated
by the U.S. Army Corps. of Engineers.
DOT Environmental Assessments
• First, DOT requests landowner’s permission to
enter landowner’s land
• Second, Enter by Court Order if necessary.
(Landowner could delay but not stop
See §136- )
• DOT hired experts submit their reports and
maps to U.S. Army Corps. of Engineers
• Landowner should immediately get his/her own
wet lands delineation.
Points of Discussion
Presenter Gary A. Mitchell
• U.S. Army Corps. procedures to D.O.T.
• U.S. Army Corps. procedures to
Landowner
• U.S. Army Corps. Appeals procedure
• Referral to Environmental Protection
Agency (E.P.A.)
Fight About Area Taken First!
G.S.§108 Is For Issues Other Than Damages
After the filing of the plat, the judge, upon motion
and 10 days notice by either the D.O.T. or the
owner, shall, either in or out of term, hear and
determine any and all issues raised by the
pleadings other than damages, including, but not
limited to, if controverted, questions of
necessary and proper parties, title to land,
interest taken, and area taken.
Don’t Make This Mistake!
D.O.T. vs. Tilley, 136 N.C. App. 370 (2000)
“ A condemnation hearing should proceed to trial only after
all issues other than that of just compensation have been
resolved – a controversy as to what land a condemnor is
seeking to condemn has no place in a condemnation
proceeding.”
G.S. § 136-108
D.O.T. vs. Tilley, 136 N.C. App. 370 (2000)
“Here defendants failed to avail themselves of the
mechanism provided in section 108, and instead
Specifically stipulated that only the matter of just
Compensation remained for resolution at trial.
We will not reward this failure on appeal.”
• Bad words for a lawyer. Call your malpractice carrier.
G.S. § 136-108
• Remember if you loose a 108 hearing you
must immediately appeal or you loose the
right.
• Smith vs. City of Charolotte, 339 S.E.2d
844, 847 (1986). “Orders from a
condemnation hearing concerning title and
area taken are ‘vital preliminary issues’
that must be immediately appealed.”
Take Action!
•
Answer: Get your evidence together,
get your experts ready with their
reports, and file for a 108 hearing.
•
Experts: Surveyor, Appraiser, Wetland
Delineator & Clean Water Expert,
Forensic Accountant, Realtor®
What is Inverse Condemnation?
• Smith vs. City of Charlotte, 339 S.E.2nd 884
(1986).
“Inverse condemnation is simply a device to
force a government body to exercise its
power of condemnation, even though it may
have no desire to do so”
• For Counties, Cities, Towns, Authorities etc. use
G.S. §40A-51
§111 Inverse Condemnation
YOUR BURDEN OF PROOF:
1.
2.
3.
4.
5.
Condemnor failed to pay compensation or file
condemnation proceedings
Condemnor’s actions amount to a “taking”.
The taking involved acquisition of property or rights for
which it is obligated to pay compensation.
Property is owned or possessed by one who has
rights. Examples: Life estate, 50 year lease
Condemnor took property for a public purpose.
§111 Inverse Condemnation
D.O.T.’s DEFENSES:
1.
2.
3.
4.
5.
6.
7.
Didn’t do it.
Defendant lawfully acquired the use of it.
Example: Assignment of 50 year lease.
Application of Res Judicata (A prior case)
Acquiescence without compensation (Who would do
this?)
Claim barred by Statute of Limitations (S.O.L.)
Adverse possession or prescriptive easement
Did it. - But you don’t have the right to the money $$$.
Some Examples:
Nuances: Which are Inverse takings?
• Runway and low flying aircraft?
NO!
• Landfill full of toxic chemicals?
NO!
• Stinking odors from a trash dump?
YES!
More Examples:
• Severing a cable under a radio station?
NO!
• Stinking odors from a sewage plant?
YES!
§111 Inverse Condemnation
MY CONCLUSION:
Judges sitting on appellate courts
have extremely sensitive noses!!!
How to Measure Damages
G.S. §136-112
The following is the measure of damages to be determined by the
commissioners, jury, or judge who determines the issue of damages:
(1) Where only a part of a tract is taken, the measure of damages
for said taking shall be the difference between the fair market value
of the entire tract immediately prior to said taking and the fair market
value of the remainder immediately after said taking, with
consideration being given to any special or general benefits
resulting from the utilization of the part taken for highway
purposes.
Measure of Damages: Entire Tract
(2) Where the entire tract is taken the
measure of damages for said taking shall
be the fair market value of the property at
the time of the taking.
Special & General Benefits
What are they and why do they matter?
D.O.T. vs. Rowe, 353 N.C. 671 (2001)
• D.O.T. condemned 11.41 acres of a 18.42 acre tract to
complete an interchange to I-40 in Catawba County. The
jury returned a verdict of $0.00.
• The verdict reflected the fact that the jury agreed with the
D.O.T. that general benefits to the remaining property
exceeded the cost in loss of acreage.
General Benefits
D.O.T. vs. Rowe, 353 N.C. 671 (2001)
“Increases in the value of land which arise
from the fulfillment of the public project
which justified the taking and which result
from the enjoyment of the facilities
provided by the new public and from the
increased general prosperity resulting from
such enjoyment”
General Benefits
Examples include:
• Rise in value due to increase traffic flow
(would apply to business area).
• Rise in value due to aesthetic upgrade of
the neighborhood.
• Creation of more convenient parking.
Special Benefits
D.O.T. vs. Rowe, 353 N.C. 671 (2001)
“Increases in the value of land which arise
from the peculiar relation of the land in
question to the public improvement.”
Special Benefits
Examples include:
• New road frontage
• New beach or pier access
• New frontage to man made lake
What happened to Mr. Rowe?
The Supreme Court said:
“The legislature has decided that the state can reduce
damages by all of the benefits accruing and that decision
rests with the legislature in conferring the right of
eminent domain. If defendants are dissatisfied with the
result, then their recourse is with the legislature.”
Result:
Supreme Court reversed Court of
Appeals. Mr. Rowe got $0.
Interest
G.S. § 136-113
• Interest is allowed at the legal rate from
the date of taking to the date of judgment.
• Interest is not allowed on what D.O.T. paid
into Court.
Get Costs Back in Inverse Claims
G.S. §136-119 Costs and Appeal:
Look at Third Paragraph:
“The judge rendering a judgment for the plaintiff in a
proceeding brought under G.S. § 111 [Inverse
Condemnation] awarding compensation for the taking of
property, shall determine and award or allow to such
plaintiff, as a part of such judgment, such sum as will in
the opinion of the judge reimburse such plaintiff for his
reasonable cost, disbursements and expenses, including
reasonable attorney, appraisal, and engineering fees,
actually incurred because of such proceedings.”
Reimbursement for Property Taxes
G.S. § 136-121.1
• A property owner who property is taken in Fee Simple
(fee simple means the entire interest) is entitled to pro
rata payment of his property taxes.
• Pro Rata kicks in when title is vested in condemnor or
when possession is taken, whichever is earlier.
• Rules out easements, no matter how long it was used.
Reimbursement for Property Taxes
G.S. § 136-121.1
And If:
You are a person who paid deferred taxes and you own
agricultural, horticultural, or forestland that was in
production, and is contiguous to the condemned
land, then you get all your deferred taxes paid.
Reimbursement for Taxes
Attention Farmers:
Machinery Act §105-277.4(c) says:
“The difference between the taxes due on the presentvalue basis and the taxes that would be payable in the
absence of this classification, together with any interest,
penalties, or costs, must be carried forward in the
records of the taxing unit or units as deferred taxes.
The taxes become due and payable when the land
fails to meet any condition or requirement for
classification.”
Valuation Issue: Unified tracts
City of Winston Salem vs. Slate, 185 N.C. App. 33 (2007).
The City condemned land to put in a permanent sewer
easement. There was a 75 acre tract and a smaller one.
The City wants the parcels valued separately. Some of
the landowners want tracts valued as one unified tract.
The trial judge would not let in evidence that several
tracts could be valued as a unified tract.
LANDOWNER’S DESIRE = value as unified tract
CONDEMNOR’S DESIRE = value as separate tracts
Valuation Issue: Unified tracts
City of Winston Salem vs. Slate, 185 N.C. App. 33 (2007).
Factors to Determine a Unified Tract:
1.
Physical unity.
2.
Unity of ownership.
3.
Unity of use.
Court said:
“Although all three factors need not be present,
some unity of ownership must be established when
separate parcels of land are involved.”
Valuation Issue: Unified tracts
City of Winston Salem vs. Slate, 185 N.C. App. 33 (2007).
Ruling from the Court:
“Based upon the possibility that defendants may be able
to show a unity of ownership as to some of the additional
tracts, we cannot say the trial court’s error was
harmless.”
REVERSED.
Valuation Issue: Physical Unity
Question: Do streets and roads break up physical unity?
D.O.T. vs. Roymac Partnership, 158 N.C. App. 403 (2003).
• D.O.T. argues the existence of Roymac Drive breaks up
the physical unity of the parcel from the condemned lots,
and therefore, there is no physical unity to the tract.
• General Rule: Lands separated by an existing street
which is open to the public are independent parcels.
Valuation Issue: Physical Unity
D.O.T. vs. Roymac Partnership, 158 N.C. App. 403 (2003).
Exception to the General Rule:
“If a tract of land, no part of which is taken, is used in
connection with the same farm, or the same
manufacturing establishment, or the same enterprise of
any other character as the tract, part of which was taken,
it is not considered a separate and independent parcel
merely because it was bought at a different time, and
separated by an imaginary line, or even if two tracts
are separated by a highway, railroad, or canal.
Valuation Issue: Direct Access
D.O.T. vs. Harkley, 308 N.C. 148 (1983).
“A landowner is only entitled to damages
for a deprivation of direct access to a
highway where, before the condemnation
occurred, his property abutted the highway
to which he is denied direct access.”
Valuation Issue: Future Uses
City of Charlotte vs. Hurlahe Jr., 178 N.C. App. 144 (2006).
City of Charlotte condemns parking spaces in an airport.
City deposits $842,500.00. Jury returns verdict of
$2,000,000.00. Owners testify they intended to use the
property as a valet parking business. Court admitted
evidence concerning net income of a hypothetical
parking business.
Valuation Issue: Future Uses
City of Charlotte vs. Hurlahe Jr., 178 N.C. App. 144 (2006).
Can you get intended future use into evidence?
“… if an owner has taken steps prior to the date of the
taking to adapt his land for future uses, the future uses to
which the land is adapted are admissible”.
Important: If you land is being taken, take steps to convert
it to the highest and best use!!!
Valuation Issue: Zoning
D.O.T. vs. Mahaffey, 137 N.C. App. 511 (2000).
“When property is unavailable for a particular use
because of a zoning ordinance, the possibility the
property may be rezoned may be taken into
consideration if there is a reasonable probability of a
change in the near future. If the possibility that the
property may be re-zoned is ‘purely speculative’,
however, such possibility should not be considered.”
Valuation Issue: Great Offers
Can you testify about that great offer?
Highway Commission vs. Helderman, 285 N.C. 654, (1974)
“A mere offer to buy or sell property is incompetent to
prove its market value. The figure named is only the
opinion of one who is not bound by his statement and it
is too unreliable to be accepted as a correct test of
value.”
Valuation Issue: Owner’s opinion
D.O.T. vs. M.M. Fowler, 361 N.C. 1 (2006).
“Further, a landowner may express an opinion as to the
fair market value of the property for the jury to weigh
because it is generally understood that the opinion of the
owner is so far affected by bias that it amounts to little
more than a definite statement of the maximum figure of
his contention.”
Practice: Landowner’s opinion is as important as “experts”.
I.R.C. § 1033
• Can be utilized when condemnation or
threat or imminence of condemnation
• Defers taxable gain on proceeds from
condemnation
• Taxpayer must make a timely election and
timely replacement of proper
• Omitting gain on a gain year tax return is a
“Deemed” election
I.R.C. § 1033
• You do not need an intermediary (Like in a
1031 exchange)
• “Proceeds” of condemned real property
held for productive use in trade or
business or for investment may be rolled
into “Like Kind” property
• Three year replacement period instead of
two years
I.R.C. § 1033
-ExampleA fire destroys Columbus Railroad Depo on July
15th 2010. The insurance recovery the Depo
receives results in a gain. The Depo reports the
gain on its calendar year 2010 return. If the
Depo later decides to seek deferral of all or part
of the gain, it must make the delayed election by
December 31st 2012. (2 years from the gain
year - 1033(a)(2)(B)) The Depo must acquire
qualifying replacement property (commercial
use) by December 31st 2013 and report the
details on its 2013 tax return due March 15th
2014.
I.R.C. § 1033
-Last Pointers-
• Replacement period for residential houses
is 2 years
• It is possible to get extension of time for
replacement period but not election period
• You must designate property on the tax
return to complete the election, merely
acquiring otherwise qualifying replacement
property is not sufficient.
WE HOPE YOU LEARNED A LOT!
THANK YOU FOR ATTENDING
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ATTORNEY WILL JOHNSON
TOLL FREE (866) 881-2252
www.johnsonlawyers.net