An Introduction To Eminent Domain. By Barry A. Ross, Esq.
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It is important to be aware of the lease provisions and be sure that your clients are protected.   Most leases are drafted by lessor's attorneys.   The leases provide that in the event of eminent domain, all of the proceeds from eminent domain go to the lessor and none of the proceeds go to the lessee.   Such clauses are generally legal and enforceable.

In negotiating leases, the lessee's attorney may want to eliminate the eminent domain clause or provide that in the event of eminent domain, the award is distributed in accordance with eminent domain law.   Alternatively, there are various ways of dividing the settlement or judgment so that lessee and the lessor share the eminent domain proceeds.

The Importance of Appraisers
The primary dispute in eminent domain is over-valuation.   The government will usually contend that the property or business is worth less than the property or business owner believes it is worth. This results in a battle of the appraisal experts.   Each party retains an appraiser who will testify in court as to the value of the property or business.   Usually, the testimony of the appraisers is widely varied.

The Procedure
The government conducts a public hearing and adopts a resolution of necessity. The resolution authorizes the government to initiate the eminent domain action. The resolution requires a two-thirds vote. The resolution must contain certain specific findings relating to the public necessity of the project.   The next step is the filing of the lawsuit.

The government files the lawsuit and serves it on the property or business owner. Frequently, the government obtains an order for immediate possession at the same time it files the lawsuit.    By depositing the appraised value of the property as determined by the government and complying with certain other procedural formalities, the government is entitled to take possession of the property prior to trial.   In the case of occupied property, this may occur within 90 days after the order for immediate possession is served on the property owner.   In all other cases, thirty days notice is sufficient.   In the case of an "emergency," possession may be had within three days.   During the course of the litigation, the parties are required to exchange their respective appraisals and settlement offers.   At trial, a judge or jury determines the value of the property or business.  

Attorney's Fees
Questions that frequently arise are:   What are the amount of the attorney's fees?   Who pays them?   When are they payable?   Attorney's fees generally are not recoverable in an eminent domain action.   There are two major exceptions.   If the government does not make the property or business owner a reasonable settlement offer, but the property or business owner does make the government a reasonable offer, the property or business owner is entitled to recover attorney's fees and expert witness fees.  
What is reasonable is determined by the judge after the trial. There is no fixed formula.   If the government offers the property owner $100,000 for the property and the property owner counteroffers the government $200,000 for the property, with the jury determining that the property is worth $200,000, the property owner would be awarded attorney's fees.   In the same case, if the jury awarded the property owner $100,000, the property owner would not be awarded attorney's fees.   What if the jury awarded $150,000?   The result is uncertain.

 
Another major exception is the case of inverse condemnation.   If the property or business owner prevails in an inverse condemnation case, the property or business owner recovers attorney's fees.   Attorneys charge clients for fees based on an hourly fee, a contingent fee, or a combination of the two.   In the usual contingent fee arrangement, the attorney receives a percentage of the recovery above the amount which the government initially offered the property owner or business owner.   If the government offers the property owner $1,000,000 initially and the judge or jury determines that the value of the property is $1,500,000, the attorney's fee would be a percentage (usually 35 to 50) of the $500,000 recovery.  

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