Infrastructure Act Will Increase Eminent Domains Activity

After much debate, President Joe Biden signed into law the bipartisan $1.2 trillion Infrastructure Investment and Jobs Act last November. The law provides $550 billion in new federal infrastructure spending.

The problem of unprepared companies

The law will undoubtedly lead to a significant increase in the activity of eminent domains to acquire the property rights necessary for the implementation of new infrastructure projects. Many companies are not ready.

For the most part, companies don’t devote a lot of resources to eminent domain. Business people are too busy running the business to care, and in-house legal departments pay little attention either. After all, it’s quite rare from a historical perspective for a typical company to be affected by eminent domain.

The Eminent domain is often treated as “found money” rather than a traditional “cost” to the business. This is because the company will get something back, no matter how things turn out, since the sentencing authority is legally bound to provide some compensation. This can be a nice break for the company that actually has to pay applicants money. And while some businesses may regularly hire a real estate attorney, the eminent field is real estate litigation, a niche practice area requiring a specialized skill set, and most real estate attorneys aren’t equipped for it.

The result? Rather than considering a legal challenge to the taking or seeking to maximize its monetary recovery, the company is trying to push the sentencing authority a bit further than initially proposed and is focusing on how the changes made property can be “bypassed”. Things slip through the cracks and often big money stays on the table!

The solution

It’s time to change the way businesses view eminent domain. Real estate is one of the most valuable assets many businesses own, and exercising eminent domain to take some or all of that real estate will have a very real impact on the business in the long run.

A landlord should never blindly rely on the assessment of the condemner, which tends to underestimate the amount of fair compensation due. For a significant increase, in particular a loss of parking or an alteration of access, the company must obtain its own expertise. Only then will he have a complete picture of the value of the property, both before and after the project.

Also, most condemners will not seriously accept a meter from a homeowner unless it is backed up by an appraisal. Although a typical appraisal only costs $5,000 to $10,000, it can often lead to an exponential increase in compensation. Nevertheless, many companies balk at the price. This mentality must be overcome if a business is to successfully navigate eminent domain.

Large brick-and-mortar retailers — the companies likely to be hit hardest by a widespread increase in infrastructure spending — should also check how eminent domain issues are handled. Who receives notices from condemners? What happens once the notice is received? If the response is not consistent, systematize it and train staff to follow the protocol. If this sounds daunting, a qualified eminent domain attorney should be consulted. Small businesses should designate a contact person and develop a response plan. And all businesses should consider engaging a qualified eminent domain attorney in advance.

In many states, including Ohio, a condemner can file an eminent domain complaint soon after they send written notice of their intention to acquire the property. A business may find it difficult to conduct a proper search for counsel at the time its case is due in court, and failure to act in a timely and informed manner risks losing valuable rights.