Dallas Bar Association Real Property Section Eminent Domain 101 for Real Estate Lawyers July 11, 2011 J. Allen Smith

Fifth Amendment Nor shall private property be taken for public use, without just compensation. DBA Real Property Section – Presented by J. Allen Smith

Article I, Section 17 of the Texas Constitution No persons property shall be taken, damaged, or destroyed … without adequate compensation being made. DBA Real Property Section – Presented by J. Allen Smith

What is Property Constitutional Protection is not confined to real property, but includes any character of property necessarily damaged in promoting a public enterprise. See Dallas County v. Hart Bros. 271 S.W. 408, 409 (Tex.Civ.App.Texarkana 1925), revd on other grounds, 279 S.W.2d 1111, 1112 (Tex.Commn App. 1926, opinion adopted). DBA Real Property Section – Presented by J. Allen Smith

What is Property 155,387 shares of BARDs stock in the Goodrich Petroleum Corporation constituted property, and the State Comptroller took this property for public use without adequate compensation. Combs v. B.A.R.D. Indus., 299 S.W.3d 463, 467 (Tex. App. –Austin 2009) DBA Real Property Section – Presented by J. Allen Smith

What is Property Losses of a certification from the Texas Department of Agriculture that property was organic, and related certification that allowed shipment of cattle to the European Union, were unique property interests that are properly considered when valuing damages for property taken by condemnation. State v. Harrell Ranch, Ltd. 268 S.W.3d 247, (Tex.App.Austin 2008, no pet) DBA Real Property Section – Presented by J. Allen Smith

What is Property Garagemans lien on cars found to be valid property taken under Article One, Section Seventeen of the Texas Constitution. City of Dallas v. VSC, LLC, 242 S.W.3d 584 (Tex.App.Dallas 2008) DBA Real Property Section – Presented by J. Allen Smith

Eminent Domain Process Three general prerequisites for the proper exercise of eminent domain power: 1.the property must be taken for a public use, 2.the property is necessary to effectuate the public use, and 3.that the condemnation be carried out by and entity possessing the power of eminent domain. 4.The power of eminent domain is wholly vested in the state legislature and no taking of property can occur without an express legislative grant of authority. Hous. Auth. Of Dallas v. Higginbotham, 143 S.W.2d 79, 83-85, (Tex. 1940). DBA Real Property Section – Presented by J. Allen Smith

The Offer Stage The condemning authority must attempt to agree with the property owner on the amount of compensation or damages before beginning a condemnation proceeding. In addition, the condemning authority must disclose to the property owner at the time it is making its offer to purchase the property any and all existing appraisal reports. The property owner must also disclose any and all existing appraisal reports. Tex. Prop. Code § DBA Real Property Section – Presented by J. Allen Smith

Commissioners Hearing Once the condemnor and the landowner fail to reach an agreement, a petition is filed in court. The judge of such court must then appoint three disinterested landowners who reside in the county as special commissioners to conduct an administrative hearing to assess the property owners damages. [1] The special commissioners must give written notice to each of the parties of the time and place of the hearing no later than the eleventh day before the day set for the hearing. [2] [1] Tex. Prop. Code (a) [2] Tex. Prop. Code (b) DBA Real Property Section – Presented by J. Allen Smith

Damages The just compensation requirement is the payment of the fair market value of the property taken. In Texas, the market value in condemnation cases is the price which the property would bring when it is offered for sale by one who desires, but is not obligated to sell, and is bought by one who is under no necessity of buying it… City of Austin v. Cannizzo, 267 S.W.2d 808, 815 (Tex. 1954) DBA Real Property Section – Presented by J. Allen Smith

Granting the Award The award may be made with the concurrence of two of the three appointed commissioners. Angier v. Balser, 48 S.W.2d 668, 672 (Tex.Civ.App.Austin 1932, writ refd) DBA Real Property Section – Presented by J. Allen Smith After the special commissioners have made an award, the condemnor may take possession of the property pending the results of further litigation by depositing with the court the amount of money awarded.

Appealing the Award A party to a condemnation proceeding may object to the commissioners findings by timely filing objections. [1] The objection must be filed on or before the first Monday following the twentieth day after the day that the commissioners filed their findings with the court. To determine the twentieth day, many individuals incorrectly apply the counting rules in the Texas Rules of Civil Procedure. Instead, the Texas Government Codes counting rules in Section apply. [2] [1] Tex.Prop.Code § (a) [2] Cohen v. State, 858 S.W.2d 51 (Tex.App. Houston [14th Dist.] 1993, writ denied) DBA Real Property Section – Presented by J. Allen Smith

Appealing the Award Once the deposit is made, if the land owner files the objections to perfect an appeal and withdraws such deposit, the withdrawal amounts to consenting to the takings by the government. The landowner has waived contesting the right of the government to take the property and the only issue remaining to be litigated is the issue of just compensation. State v. Jackson, 388 S.W.2d 924, 925 (Tex. 1965) DBA Real Property Section – Presented by J. Allen Smith

De Novo Trial The trial is a trial de novo and, as such, the filing of objections vacates the special commissioners award. In the trial, parties can offer proof that they did not offer at the special commissioners hearing. [1] The court conducts the trial in the same fashion as a normal trial. Evidence should include landowners testimony, expert appraiser testimony, other applicable testimony, photographs, videotapes and other evidence in connection with the case. [2] [1] Kennedy v. City of Dallas, 201 S.W.2d 840 (Tex.Civ.AppDallas 1947, writ refd n.r.e.). [2] Atlantic Pipe Line Co. v. Fields, 256 S.W.2d 940 (Tex.Civ.App. San Antonio 1953, writ refd n.r.e.) DBA Real Property Section – Presented by J. Allen Smith

Tax Valuation Rule The tax assessment records are not admissible for any purpose in condemnation, either on value or upon an attempt to impeach the landowners testimony. [1] However, where the property owner has registered a protest of the tax value or rendered the property for taxation, the value the owner places on the property is admissible evidence on the grounds of it being a declaration against interest…[2] [1] Atlantic Pipe Line Co. v. Fields, 256 S.W.2d 940 (Tex.Civ.App. San Antonio 1953, writ refd n.r.e.) [2] Burton Lumber Corp. v. City of Houston, 101 S.W. 822 (Tex.Civ.App. 1907, writ refd); State v. Steifer, 443 S.W.2d 275 (Tex.Civ.App.Tyler 1969, writ refd n.r.e.) DBA Real Property Section – Presented by J. Allen Smith

Date of Taking When the whole tract or parcel of the persons property is condemned, the damages accorded to the landowner shall be the market value of the property in the market where it is located at the time of the hearing.[1][1] However, in the event of an appeal of the commissioners award, the date of taking changes from the date of the special commissioners hearing to the date of the deposit of the commissioners award.[2][2] [1] State v. Rodgers, 772 S.W.2d 559, 560 (Tex.App. Amarillo 1989, writ denied). [2] Aycock v. Houston Lighting and Power Co., 175 S.W.2d 710, 715 (Tex.Civ.App. Galveston 1943, writ refd w.o.m.) DBA Real Property Section – Presented by J. Allen Smith

Partial Taking When the government takes only a portion of the entire tract, the landowner is entitled to recover not only the value of the portion of the land that is actually taken, but also any damage or destruction that occurs to the remaining property as a result of the condemnation project. DBA Real Property Section – Presented by J. Allen Smith

Regulatory Takings …any governmental regulation which interferes with an individuals right to use and enjoy their property is considered a regulatory taking. In 1922, Justice Oliver Wendall Holmes first enunciated the often cited maxim that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. [1] Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) DBA Real Property Section – Presented by J. Allen Smith

Private Real Property Rights Preservation Act …the Act also covers governmental actions that either are the producing cause of at least a twenty-five percent decrease in the propertys market value or affects the owners property in a manner that restricts or limits the owners right to the property. [1] [1] Tex. Govt. Code § (5). DBA Real Property Section – Presented by J. Allen Smith

Senate Bill No. 18 (SB 18) Senate Bill 18 (SB 18) has already been signed into law and will take effect on September 1, 2011 SB 18 makes changes to the property, education, government, local government, transportation, and water codes. DBA Real Property Section – Presented by J. Allen Smith

Senate Bill No. 18 (SB 18) Offer Requirements: The initial offer and final offer are made in writing The final offer is made on or after the 30th day after the initial offer is made The entity gives the owner at least 14 days to respond to the final offer. DBA Real Property Section – Presented by J. Allen Smith Tex. Prop. Code §

Senate Bill No. 18 (SB 18) Notice Requirements: Where parties used to have only 11 days of notice regarding the hearing, they are now entitled to 20 days. DBA Real Property Section – Presented by J. Allen Smith Tex. Prop. Code §

Senate Bill No. 18 (SB 18) If the condemnor does not make a bona fide offer, then the court shall abate the suit, order the condemnor to make a bona fide offer, and order the condemnor to pay all costs and … any reasonable attorneys fees and other professional fees incurred by the property owner that are directly related to the violation. DBA Real Property Section – Presented by J. Allen Smith Tex. Prop. Code §

Senate Bill No. 18 (SB 18) Right to Repurchase: The right to repurchase the property exists only when: The public use for which the property was acquired was cancelled before the property is used for that public use. No actual progress on the property is made between the date of acquisition and the 10th anniversary of acquisition. DBA Real Property Section – Presented by J. Allen Smith Tex. Prop. Code Ann §

Senate Bill No. 18 (SB 18) When the public use is not realized within the 10-year period, the acquiring entity must give notice to the person with the right to repurchase. Right to Repurchase. [1] But the party has only one year, measured from the day the acquiring entity was required to give notice, to repurchase the property. [2] DBA Real Property Section – Presented by J. Allen Smith [1] Tex. Prop. Code § [2] Tex. Prop. Code §

S.B. No. 7 Chapter 2206: Limitations on Use of Eminent Domain (b)A Governmental or private entity may not take private property through the use of eminent domain if the taking: (3)is for economic development purposes… Chapter 2206 Government Code DBA Real Property Section – Presented by J. Allen Smith

S.B. No. 7 Chapter 373 or 374, Local Government Code Limitations on Use of Eminent Domain Section (a)(1)(I), Tax Code: This section does not affect the authority of an entity authorized by law to take private property through the use of eminent domain for: …a sports and community venue project approved by voters at an election held on or before December 1, 2005, under Chapter 334 or 335, Local Government Code… Chapter 2206 Government Code DBA Real Property Section – Presented by J. Allen Smith

When condemning the land, the government is in a better position than the average purchaser because it is able to compel the sale. To balance the transaction and to ensure the property owner is not burdened with the cost of community benefits, our constitution requires the property owner receive just compensation for his property. The Governments Fiduciary Duty DBA Real Property Section – Presented by J. Allen Smith State v. Biggar, 873 S.W.2d 11, 13 (Tex. 1994) (citing Armstrong v. United States, 364 U.S. 40, 49 (1960))

Conclusion: A strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change. U.S. Supreme Court Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) DBA Real Property Section – Presented by J. Allen Smith

Questions & Answers These materials have been for educational and informational purposes and do not constitute legal advice or services.