Just Compensation

"... nor shall private property be taken for public use, without just compensation."  5th Amendment to the United States Constitution.

Our founding fathers deemed that the government could only take land for public purposes through eminent domain if they paid Just Compensation. It sounds fair. It even has a certain patriotic ring to it. But what does it mean? And how do landowners know they are receiving just compensation?

Generally, Just Compensation is equal to fair market value of the land if the entirety of the land is taken. However, that is sometimes a difficult number to arrive at as one person's belief as to just compensation might be very different than another person's idea particularly when unusual or unique pieces of property are involved. Therefore, if the landowner and the acquiring authority cannot agree on a price, Wisconsin law sets out rules for determining the value of the land that is going to be taken through a process in the Courts. 

The procedure for determining the just compensation can be found in Wis. Stat. sec 32.09. The property must be evaluated on the basis of "its most advantageous use" also commonly referred to as "highest and best use." The process for determining highest and best use has been explained as follows:

It is well established that market value in an eminent-domain proceeding is to be based not necessarily on the use to which the property was being put by its owner at the time of taking but rather on the basis of the highest and best use, present or prospective, for which it is adapted and to which it might in reason be applied. Bembinster v. DOT, 57 Wis. 2d 277, 283, 203 N.W.2d 897 (1973).

In some cases, one of the biggest issues in determining just compensation is determining what the "highest and best use" of the subject property is. Just because land is currently being used for one purpose does not mean that the highest and best use is not a different (more valuable) purpose. For example, a landowner may currently be using the property as farmland or recreational land which is often a lower unitary value, but it is reasonably foreseeable that the property will be developed for residential purposes which may have a higher value. Or the landowner could be living in a family house near a highway which actually would have a high value for commercial purposes. The landowner has a right to be compensated based on the most economically valuable use of the land that is physically and legally possible, and which is supported by the market.

If only part of your property is being taken through the eminent domain process (as opposed to a total taking) you have a right to compensation for certain types of damages caused to your remaining property as a result of the taking. Loss of value of your remaining property caused by the project is considered to be the taking if it is a type of damage that is recognized by law. Other types of damages may be very troubling from an economic standpoint but due to statutes or court decision are not required to be paid, these types of damages are called non-compensable because the condemning authority does not have to make the landowner whole. Both compensable and non-compensable losses caused by the project are of great concern to the landowner and the compensable damages are commonly referred to as severance damages.

It is very important to work with an experienced eminent domain attorney to ensure that compensable severance damages are identified and included in the case, and addressed in any valuation, such as an appraisal. It is also important to keep in mind that it is not helpful for non-compensable damages to be included in your case, as they will not be paid. Frequently, severance damages may be overlooked by the government agency acquiring your land, particularly since the law is in a certain state of flux on a number of issues. There may also be significant and legitimate legal disputes about which severance damages are compensable and which are not. What may look like a fair offer at first, may look less desirable when you account for the impact the taking will have on your remaining land.