Fighting Chance

Dueling Appraisers

If a government agency wants your land (or a portion of it), your first official notice is likely to be a letter stating the agency's interest in the property. This letter--or one soon to follow--typically includes the agency's initial proposal for compensation based on its own appraisal. In many cases, you and your attorney have an opportunity to negotiate with the agency, bringing in your own evidence of the value of the property and what it would cost you to relocate your business.

If you refuse the initial offer, the next step might be a hearing, in which a commissioner examines the evidence, hears arguments from both sides and proposes a compromise. If you still aren't happy with the offer, in some states you have the right to a jury trial. Unfortunately, that's often just a battle of experts, with each side trying to convince the jury what the property is worth.

Augustus F. Wagner Jr., an attorney with Nutter, McClennen & Fish in Boston who has represented both businesses and government agencies in condemnation cases, contends that the most important thing a business can do is get organized and start negotiating long before receiving an official notice. Business owners are almost always aware of the government's plans for development soon enough to get involved in the early planning stages, he says, when arguments could have a significant impact in shaping the project. Maybe the agency doesn't really need your whole property, just half the parking lot. Maybe the road could be slightly rerouted so it doesn't go through your assembly plant. By sitting on your hands, you lose the opportunity to do anything more than argue about compensation.

If you lease property for your business, your rights depend entirely on the lease. In a standard lease, Nolan says, the landlord gets all the proceeds of an eminent domain condemnation--and you, as the business owner, are out in the cold. At the opposite extreme, one of Nolan's clients has a 99-year lease that entitles the tenant to all proceeds if the property is taken. Be sure to address this issue when negotiating your lease. The longer the term of the lease, the better your chances of getting a clause that entitles your business to compensation in case of a condemnation.

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This article was originally published in the November 1998 print edition of Entrepreneur with the headline: Fighting Chance.

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