Unfortunately for the Landowner, much information written about condemnation is fundamentally flawed.  That flaw stems from the mistaken assumption that DOT (the Department of Transportation) is required to pay Just Compensation for a citizen’s private property. 

While the above statement may be OK as a shorthand statement of the law among lawyers, it is potentially misleading to a Landowner who is confronted with the knowledge that the DOT is about to run a highway through the Landowner’s property.

Landowners do indeed have a strong Constitutional right to receive Just Compensation for their property, but the Landowner must take action to invoke that Constitutional right.

The US and State Constitutions require the Government to pay Just Compensation only if (1) property is “taken”, and (2) the Landowner asks the Court to determine Just Compensation.  This point of law is not merely technical.  There are potentially serious financial consequences for those who fail to understand this. 

The Government’s Two-Step Land Acquisition Process

Step One – Contractual Negotiations Controlled Entirely by DOT

The Landowner must understand that the procedure used by the DOT to acquire land is a two-step process. 

The first step is a contractual negotiation in which a full-time State employee (or a specially hired agent in cases involving the Triangle Expressway) who is a trained negotiator is paid to persuade the Landowner to sell the property to the State at a price which is determined by (guess who)  -the DOT! 

This land-purchasing specialist is called a Right-of-Way Agent.  It is his job to acquire the necessary land at a low cost to the State.

It may be helpful to think of the DOT Right-of-Way Agent in the same classification as an insurance adjuster or a car salesman.  Just like those skilled professionals, a Right-of-Way Agent’s livelihood depends on his skill at negotiating with the public to obtain favorable deals for his employer (the DOT). 

The Right-of-Way Agent only represents the DOT.  He does not represent the interests of the Landowner, regardless of how trustworthy, friendly, knowledgeable or folksy he may come across.

If this first-step of the process (the Right-of-Way Agent’s contractual negotiation) is successful, then the State breathes a sigh of relief and there is no second step. The Landowner simply gives the DOT a “deed in lieu of condemnation”, the DOT pays the agreed-upon price and the deal is over.  The Landowner then vacates the property and the road is constructed.

The key point is that in the first step, the DOT is in complete control of the process.  It will buy the land only at a price named by DOT.  Just Compensation is not directly in issue at this stage. 

To illustrate this point by giving an extreme example, if a Landowner were to offer to give property to DOT, then DOT would most likely accept the gift.  DOT would not refuse the gift and insist on paying Just Compensation; no other Governmental body would insist that the Landowner receive such payment.

Step 2 – Judicial Determination of Just Compensation

We can confidently tell you that it is our observation that the DOT has normally offered Landowners less than Just Compensation during the contractual negotiation step of the process.  Oftentimes, far less.

However, this is not universally the case, and in fact, there are even rare reports cited in the news media of the DOT paying the Landowner more than Just Compensation, but these are special situations and are only rarely reported.

A Landowner wishing to protect his or her right to Just Compensation should consult a condemnation attorney as soon as it is learned that the property may be affected by a highway project.  Even very early in the process, there are a number of areas in which the Landowner can benefit from the advice of a knowledgeable condemnation attorney.

If the Landowner wishes to invoke the Constitutional right to Just Compensation, then he or she must refuse to sell on unfair terms offered by the DOT.  The DOT will then be forced to take the land by filing a condemnation action in the Superior Court of the County in which the land is located.

The law requires the DOT to make a monetary deposit with the Clerk of Court at the time the condemnation action is filed.  The deposit must be equal to the DOT’s own estimate of the value of the property taken.

The Landowner may then withdraw the amount of the deposit and continue to seek a judicial determination of Just Compensation; certain technical requirements must be met in order to do this, but by this time the Landowner should have retained a lawyer and the task of satisfying those legal technicalities would be one of the lawyer’s duties.

When the DOT has filed the condemnation action and made the deposit with the Clerk of Court, the title then vests in the DOT and the Landowner is entitled to seek a judicial determination of Just Compensation. 

The legal procedures of determining Just Compensation are quite involved, but it is up to the Landowner’s condemnation attorney to understand and comply with those procedures.  If you’d like an overview of the procedures, you can click here. 

The Landowner should know that, at an absolute minimum, the condemnation action will involve hiring an impartial land appraiser to determine the true value of the property. 

The Landowner’s attorneys will then negotiate with the lawyers from the Attorney General’s office in an attempt to persuade the State to pay a fair price for the property.

If that negotiation is not successful, then the Court will order the matter into Mediation. The Mediation is a settlement conference to be attended by all parties and their attorneys and to be presided over by a neutral attorney.

If the Mediation does not result in an agreed-upon settlement, then the matter will proceed to a jury trial to determine Just Compensation. 

It is often the case that the DOT will only agree to pay a fair price for the property after the trial has begun!

As you can see, the DOT finds it much simpler to succeed in the first step of the process by letting its professional negotiators persuade the Landowner to voluntarily part with the property at a price named by the DOT.  Naturally, the table is tilted in favor of the DOT at that point.

The savvy Landowner will obtain professional advice as early as possible and certainly before considering the price named by the DOT in the first phase of the process. 

If the DOT refuses to negotiate fairly, then the Landowner can invoke his or her right to Just Compensation by refusing the DOT’s unfair offer thus forcing the DOT to take the property and pay Just Compensation.