Condemnation valuation : The taking of mineral bearing lands

Eminent domain overview Eminent domain is the power of the Government or a municipality to take property for public use without the consent or acceptance of the owner. Typically, the agency taking the prop¬erty will make an offer, hoping the owner will immediately accept and allow work to begin. If a mutual resolution regard¬ing its value cannot be reached, how¬ever, the municipality will institute a condemnation action in court seeking possion of the property. This is when the problems begin. The power of the Government to take the subject property is limited by Federal and state constitu¬tional requirements to pay "just com¬pensation" for the property. The exact nature of an owner's prop¬erty has been the subject of much debate and discussion. It is generally under¬stood, though, that property is consid¬ered to be "every kind of right or inter¬est, capable of being enjoyed and recog¬nized as such, upon which it is practi¬cable to place a money value" (US vs. 53 114 Acres of Land). A taking, for condemnation purposes, is considered to occur whenever there is a substantial interference with the free use and enjoyment of the property. Rarely is the necessity for the taking ever challenged and more rarely is the taking ever successfully challenged. When a taking occurs, it is not only the fee owner who is entitled to compen¬sation. Every person holding an interest in the subject property will be recog¬nized. Thus, all persons who at the time of taking have a compensable interest in the property will be made parties to the case (Swanson vs. US). Minerals, like all other interests in land, are recognized as property rights, giving the owner the power to dispose of them as he or she sees fit. Thus, the only remaining considera¬tion is only "just compensation." Ex¬actly what "just compensation" is has been difficult to define. Generally, it is that amount of money that will "put the person in as good a position as the per¬son would have been in had the taking not occurred." The owner must not be forced to sacrifice or suffer by receiving less than full and fair value for the prop¬erty. Every element that effects the value of the land and that would influence a purchaser must be evaluated. Courts have employed a variety of techniques to determine just compensa¬tion but have generally relied on market value as the standard for measuring compensation to the owner. The deter¬mination of market value is based on sales, income, costs, and use. These factors have been employed in various ways but can be summed up as: -The highest estimated monetary price the property will bring if exposed for sale in the open market with a reason¬able amount of time allowed to find a purchaser who is buying with knowl¬edge of all the uses and purposes to which it is adapted and for which it is capable of being used. • The amount the property would bring if it were offered for sale by one who desired, but was not obliged, to sell, and was bought by one who was willing, but not obliged to buy. • What the property would bring in the hands of a prudent seller, at liberty to fix the time and conditions of sale. • What the property would sell for in negotiations resulting in sale between an owner willing, but not obliged to sell, and a buyer willing, but not obliged to buy. • What the property would be rea¬sonably worth on the market for a cash price, allowing a reasonable time to affect a sale. (Michigan Standard Jury Instructions). Special consideration regarding mar¬ket value is given when the taking is only partial, rather than complete. An example of this partial taking is when a state highway cuts across the northern half of a parcel of property, leaving the rest behind for the owner. A variety of problems can be immediately seen. In a partial taking, the owner is permitted to recover not only for the property taken, but also for any loss in the value of the remaining property. The measure of compensation for partial taking purposes is generally the difference between the market value of the entire parcel before the taking, and the market value of what is left of the parcel after the taking (Michigan Stan¬dard Jury Instructions). Determining the partial taking value for mineral bear¬ing lands is the difficult issue.