Eminent Domain and Fair Market Value in a Depressed Real Estate Market (2014) / Chapter Skim
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Pages 30-35
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30 action."322 If so, "a landowner is entitled to ‘precondemnation damages' caused by "government conduct that occurs prior to the filing of an eminent domain case."323 In State ex rel.
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31 Distributive justice, also referred to as comparative justice or efficiency maximization, is based on principles of equity and fairness.336 The distributive justice approach to just compensation is founded on the belief that "resources should be divided to secure the greatest overall utility to society as a whole….
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32 For Utilitarians, the amount and purpose of compensation for a taking, therefore, should equal the amount necessary to avoid these demoralization costs.351 Although the above approaches have been argued to be applicable principally to cases of regulatory takings, the approaches' underlying principles also have implications when property is taken by condemnation. As discussed below, the URA352 addresses some of the concerns expressed in the three views on distributive justice by providing additional compensation and by seeking to preserve home ownership.353 A policy founded on equity and fairness also evokes principles of environmental justice.
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33 domain cannot be exercised without first providing for just compensation to the owner for the interference with his exclusive rights."364 It is not clear that such a statute, however, would require the payment of compensation for a property owner's subjective losses in connection with a taking. One source reports that several states now require payments for intangible losses, such as owner's sentimental attachments to property.365 For example, one commentator notes that in Louisiana Resources Co.
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34 at a price far above its fair market value."381 When a homeowner receives only fair market value, the owner may lose any "contract purchase equity" existing at the time of the taking, leaving the homeowner "with nothing but the possibility of a deficiency judgment after applying his or her award to the debt still owed to the seller."382 To some extent, however, the issue has been addressed by FHWA's waiver, necessitated by the financial crisis and underwater mortgages, of the usual method for calculating Replacement Housing Payments under the URA.383 C Additional Losses or Values that May Be Compensable As noted in Section VIII.B., even though the courts refer to just compensation as full indemnification, there are losses peculiar to homeowners as well as businesses that are not compensable in eminent domain.
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35 personal property."398 One writer argues that more compensation should be paid precisely because the property is a home,399 for example, by paying "an additional…percent of market value for every year the owner has lived in the home."400 One writer argues that just compensation must be "the amount of compensation required to make the owner indifferent to the land acquisition at issue (not indifferent to the government's choice to use eminent domain as the means of acquisition) , accounting for the owner's reasonable subjective value."401 Another approach is to "require a higher measure of direct compensation when government takes land for private redevelopment than when it retains the land for direct public use."402 For example, it has been suggested that a legislatively approved schedule is a way to increase the amount of compensation in excess of what would be awarded based on a property's fair market value to compensate in an objective way for the loss of subjective home ownership values.403 Some propose something on the order of a surtax whereby a condemnee may receive, for instance, 150 percent of fair market value as compensation.404 Reformers also have proposed that a premium be added to compensate for emotional damages, perhaps adjusted for the number of years a property owner has lived in the home.405 One proposal that would result in additional compensation involves the use of a percentage premium plan (PPP)
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