The Government Comes Knocking: Evaluating “Offers” to Take Your Property

In the event the government decides to take your property, you will most likely receive a visit from a “right of way agent” who will present you the government’s “offer” to acquire your property.  This post explores what that “offer” typically looks like and what next steps you need to think about.

What kind of communication from the government will accompany the offer?

The government must attempt to reach agreement with you on the fair market value of the property and its acquisition.  ORS 35.235(1).  Without such an attempt, the government cannot initiate a condemnation lawsuit.  ORS 35.245(1).  As part of this negotiation, the government must make you an unqualified offer based upon what the government contends is the just compensation for the property.  The offer will be in the form of a letter from the government or a private right of way agent with whom the government has contracted.

What is the government’s offer based upon?

In most cases, the government’s offer must be accompanied and supported by a written appraisal.  ORS 35.346(2).  However, if the government determines that the amount of just compensation is less than $20,000, it may provide you with a “written explanation of the bases and method” by which it arrived at fair market value, in place of a formal appraisal.

The offer mentions possible environmental issues. What is this about?

As part of the appraisal process, the government will often times conduct an environmental review of the targeted property.  This review is looking for evidence of possible environmental contamination stemming from present or past uses of the property.  A common example giving rise to governmental concern is the presence of an underground storage tank for petroleum products.  If the government determines that the property will require some level of environmental remediation, it may seek to have associated costs deducted from the determination of just compensation.

Am I entitled to relocation compensation?

Yes, property owners, as well as tenants, are often entitled to reimbursement for certain relocation and business reestablishment costs resulting from displacement from the taken property.  Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C. § 4601 et seq.; ORS 35.500 to 35.530.  Relocation compensation is determined by an administrative process different from the process used to determine just compensation for the taking of the property.

Am I entitled to loss of value to my business?

Technically, no.  In the event of a partial taking of property, however, the taking could affect your ability to use the property for a particular business purpose, which also happens to be its highest and best use—for example, a restaurant adjacent to a highway.  If the taking results in a less intensive highest and best use, you may be entitled to resulting damages.

Are there benefits to securing a team of experienced advisors in responding to the offer?

Yes, definitely.  A team of advisors experienced in condemnation matters can help you achieve just compensation, advise you on relocation issues, and assist you with tax planning in regard to the proceeds of condemnation.  Your team may include a condemnation attorney, appraiser, relocation specialist, real estate broker, and tax planner.  In certain circumstances, you may need to also enlist the services of, among others, surveyors, land use planners, architects and engineers.

How much time do I have to respond to the offer? Do I have to accept or reject the government’s offer within this time?

The government must give you at least 40 days to respond to the offer before filing a condemnation action.  ORS 35.346(1).  It is important to note, however, that you are not required to respond to the offer.  If you fail to respond, you will be deemed to have rejected the offer.  The government may then initiate the condemnation action, but negotiations will most likely continue regarding fair market value and the government’s acquisition of title up to and through the litigation process.

If I reject the offer or do not respond to it, will the government lower its offer?

No, the government generally cannot lower its offer as a negotiation strategy.  For practical purposes, the government’s initial offer represents a floor for the negotiations regarding just compensation.  As a matter of law, the government cannot lower the amount of its initial offer except upon an order of the court, and that order cannot be entered less than 60 days before trial.  ORS 35.346(2).

Should I obtain an independent appraisal?

Yes, in most circumstances, you should obtain an independent appraisal.  Though the appraiser contracted by the government is a professional and bound by professional standards, he or she is hired by the government.  You also need an analysis performed by an independent professional.  Further, if you know the government’s offer is imminent, obtaining an independent appraisal before receiving the offer will, in certain situations, provide you and your advisors the necessary information to develop a proper negotiation strategy.

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