Valuation Issues

Eminent Domain Property Valuation Issues

Most eminent domain cases involve a competition between the appraisal testimony offered by the State’s appraiser versus the testimony offered by the independent appraiser testifying on behalf of the landowner. In Tennessee, certified appraisers may give testimony regarding the value of the subject property under the State Licensing and Certified Real Estate Appraisers law. The appraisers are required to follow the Uniform Standards of Professional Appraisal Practice (USPAP). There are three standard appraisal approaches to valuing property: 1) the market approach (using comparable sales); 2) the income approach (based on rental income); and 3) the cost approach (cost of building minus depreciation). Nearly all cases involve conflicting testimony on fair market value based on using the market approach. Appraisers for the two parties often times used different “comparable sales.” It is important to compare and contrast the property that is being considered to be “comparable” to the subject property. Appraisers sometimes make “adjustments” to account for property variability in size, location, zoning, etc. These adjustments must be carefully evaluated. The law requires appraisers to value the property as of the “date of possession,” which is typically the date 30 days after you have been served with a copy of the Petition and a Summons. The Court enters an Order of Possession transferring possession of the property to the condemning authority. Evaluating the government’s appraisal as well as the public proposed use and public necessity is critical to determine how to plan your defense to the condemnation/eminent domain proceeding in order to maximize the amount you will be paid for the involuntary taking of your property.

If the condemning authority is the Tennessee Department of Transportation, they are typically represented by the State Attorney General’s office, Real Property and Transportation Division (Mr. Hartsoe used to practice in this Division for the State Attorney General’s office). These lawyers handle essentially only eminent domain cases and are familiar with the special issues that the cases present. It is important for landowners to have an experienced eminent domain attorney to ensure that those issues are considered from the landowner’s perspective in order to increase the amount that you will receive from the government.

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