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Monday
Sep282015

Ohio Eminent Domain Law

Eminent domain is the right of governmental agencies and public utilities to take private property for public use. The right, use and over use of the power of eminent domain are the subject of countless articles, court cases and debate. This article is intended to provide but a mere overview of eminent domain. Today, the power of eminent domain is being used to further useful and needed road construction projects, such as Cleveland’s Opportunity Corridor and to further the controversial Nexus natural gas transmission pipeline running through northwest into northeast Ohio.

In general, any direct encroachment upon land, which subjects it to a public use that excludes or restricts the dominion and control of the owner, is a taking or appropriation of property, for which the owner is guaranteed a right of compensation. Eminent domain, however, is not limited to actual physical takings of property. In the absence of a physical taking of property, a taking occurs only where there is a substantial interference with the rights of ownership of private property. Any such substantial interference with the rights of ownership of private property is deemed to be a taking for which compensation is owed to the property owner. For example, Ohio courts routinely find that repeated flooding of private property from government-owned sewer and water management systems constitutes a taking.

In general, in appropriations by a government agency, the property owner is entitled to compensation for the property taken, as well as damages resulting from the taking to the residue of the property still held by the owner. As such, when a government agency appropriates property, the owner may be entitled to a two-fold remedy. The owner is entitled to “compensation” for the property actually taken. Compensation is defined as the fair market value of the property.  If the taking is only partial, the owner may be entitled to “damages.” Damages are the injury resulting from the taking to the “residue” of the property still held by the owner, less any special benefits accruing to the residue from improvements. Damage to the residue is measured by the difference between the pre- and post-appropriation fair market value of the residue. 

The term “fair market value” is usually defined as that price which would be agreed upon between a willing seller and a willing buyer in a voluntary sale on the open market. In determining the fair market value of the subject property before and after the appropriation, “’every element that can fairly enter into the question of value, and which an ordinarily prudent business man would consider before forming judgment in making a purchase, should be considered.´”  The rule of valuation in a land-appropriation proceeding is not what the property is worth for any particular use, but what it is worth generally for any and all uses for which it might be suitable, including the most valuable uses to which it can reasonably and practically be adapted.

In calculating fair market value of real property, real estate appraisers and other real estate professionals employ three recognized methods of appraisal: (1) cost of reproducing the property, less depreciation; (2) market data approach utilizing recent sales of comparable property; and (3) the income or economic approach based upon the capitalization of net income.

Property owners are also entitled to express their opinions about the fair market value of their property. For example, numerous Ohio courts have held that property owner's testimony that his property was worth less as a result of the removal of trees was properly admitted as "evidence of the diminution in market value.” Because the 'owner-opinion' rule assumes that the owner is so closely acquainted with the property as to stay abreast of its market value, such testimony does not require a specific foundation. Nonetheless, an arborist’s testimony can add substantial weight to the owners’ opinion.

There are numerous other issues which might arise from the use and misuse of the power of eminent domain. If you have any questions concerning your rights with regard to an appropriation case, please contact Patricia M. Ritzert or Scott D. Simpkins at (216) 621-8484.