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Eminent domain laws can be complicated and have many gray areas that make it hard to know whether you are getting a fair offer for your land. Our attorneys discuss the basic concepts of eminent domain and provide an overview of how the valuation process works in the event of a partial or total taking of a property.
How Does Eminent Domain Work in North Carolina?
Eminent domain is a term used to describe the power that allows the government to take private property for public use but with fair compensation to the owner. Simply put, the government can buy your land or house if needed for building a road, a park, or a school. The idea behind eminent domain is to benefit the community as a whole. The government doesn’t randomly decide whose land to take – there must be a valid public reason, like building schools, hospitals, or improving infrastructure.
For example, suppose there is a small town with a congested road causing traffic jams and accidents. The government realizes that widening the road will solve this problem. However, the road expansion would require taking a piece of land owned by a local resident. This is when eminent domain comes into play. The government approaches the property owner and explains that they need his land to build the wider road. They negotiate a fair price for the property, ensuring the owner is adequately compensated. If they cannot agree on the price, a court may step in to determine what fair compensation would be.
How Does the Government Decide How Much to Offer for My Property?
To determine the fair market value of the property, real estate appraisers may use three main methods: the comparable sales method, the income method, and the cost approach.
With the comparable sales method, the appraiser looks at similar properties that have recently been sold in the same area to determine a range that is close to the actual value of the property. This method may often lead to disputes between the parties, as they may argue that specific properties are not comparable or the sales took place too long ago to be considered.
The income method values the property based on the present value of its future cash flows. This method is considered the most favorable when valuing a property, as it considers the actual rent received for the property at its highest and best value. However, to use this method, the rental transaction must have been recent enough to reflect the current market rent. Additionally, the property must currently be rented or generate income based on its physical characteristics and location.
The third method is the cost approach, which determines the fair market value by considering the property’s current replacement cost. This method does not allow the property owner to be paid their original cost unless it is the current replacement cost. This method may be considered somewhat inaccurate and unreliable because it does not consider the land’s inherent value.
Should I Accept the First Offer I Receive for My Property?
If you have received an offer from the government to buy your land, it is important to know that you are not required to accept it. Since there are different methods to value your property in an eminent domain scenario, it is crucial to understand how the government arrived at its current valuation for your land. Hiring your own real estate appraiser may also be best to ensure you receive just compensation for your land.
How Can an Eminent Domain Attorney Help?
Even though the government must offer fair compensation for taking some or all of your land, it is not unusual for landowners to receive offers well below market value. An attorney can help you understand your rights and navigate your eminent domain case, making sure you receive fair payment for your land.
At Hansen, Howell & Wilkie, PLLC, our firm focuses on representing landowners and helping them protect their rights. Call us at 984 205 8453 to schedule an initial consultation to discuss your case.
