Part Three: What are your rights when your property is taken?
In the first segment of this blog, we explored the new film “Little Pink House” which chronicles Ms. Susette Kelo’s struggle to keep her little pink house from being taken by the city of New London, Connecticut, which wanted to give it to a private developer to construct high-end residences, a marina, and office buildings to entice Pfizer Corp. to locate in the city. In the second segment, we examined the other side of the story – the legitimate need for the government to able to expropriate private property – and concluded that, even if some private interests would benefit from a taking, as long as the taking was primarily for a public purpose, it should be permitted. In this third segment, we explain that government takings are not always obvious (as was the case with Ms. Kelo’s little pink house); they can be very subtle but nonetheless drastically affect your property rights. We also outline your rights as a property owner and what you should know if you are ever faced with a taking of your property.
When your private property is taken by the government (or various private companies authorized by law to take private property, such as utility companies), you are entitled to “just compensation” under the federal and state constitutions. In Louisiana, the standard of just compensation is extremely broad. Under both the Louisiana and federal constitutions, in the event of a taking, you are entitled to the fair market value of your property at the time of the taking (without considering any effect on that value, positive or negative, resulting from the public project for which it is being taken), at a minimum. Fair market value is typically determined by licensed appraisers employing one or more of three generally-accepted approaches: (1) Market or Sales Comparison Approach (similar to the analysis your realtor prepares when you are house hunting, by comparing similar houses in the area that have sold recently to develop a price per square foot for the subject house), (2) Income Approach (for income-producing properties like businesses, by capitalizing the net operating income of the property or, often, by calculating the net present value of the future net income stream of the subject business), and (3) Cost Approach (where the cost to construct the subject property brand new is determined and then reduced to account for depreciation as a result of the age, wear and tear and any obsolescence of the subject property). Appraisers can and often do have differences of opinion regarding the fair market value of a given property. In a subsequent segment, we discuss how to protect your rights to the fair market value of your property if it is taken.
Under federal law, the property owner is only entitled to the fair market value of the property as of the date it was taken. But, just compensation in Louisiana doesn’t stop there. In fact, in Louisiana, a property owner is entitled to the “full extent of the loss”, which encompasses fair market value as of the date of taking, but also includes all other damages, such as inconvenience, business losses (lost profits), relocation expenses, and mental anguish, that the property owner can prove were caused by the taking. See La. Const. Art. I, §4(B). Further, if the government only takes a portion of your property, but the remainder of your property suffers a reduction in value as a result, you may be entitled to severance damages. Even temporary physical occupations of your property can be compensable. It has long been established by the Louisiana Supreme Court that, in a taking situation, “an owner must be placed in as good a position pecuniarily as he would have been had his property not been taken.” State v. Constant, 369 So.2d 699, 701 (La. 1979). Finally, should you succeed in proving that the government either did not compensate you or failed to fully compensate you for your damages caused by the taking, the court may grant you reasonable attorneys’ fees, experts’ fees and court costs. See La. R.S. 19:8. In short, Louisiana’s just compensation standard is very broad and provides you with relatively powerful rights in the event your property is taken. In our next segment, we discuss the Federal Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970 and state relocation programs that may apply in certain takings situations. In the blog following that, we discuss the types of “takings” that give rise to your right to the full extent of the loss.