Just compensation

Key Takeaways

• Just compensation is the payment a government owes a property owner when it takes private property through eminent domain, normally measured by fair market value.
• In Washington, article I section 16 of the state constitution requires compensation when private property is taken or damaged, which reaches further than the federal Fifth Amendment's reference to property taken.
• In a partial taking, compensation covers the part taken plus injury to the remainder, less any special benefits the project brings to the land the owner keeps.
• In Washington, RCW 8.26.180 requires the acquiring agency to appraise the property before negotiations begin and to give the owner a written statement of the amount it established as just compensation.

What It Means

Just compensation is the money a government must pay an owner when it uses eminent domain to take private property. The measure is normally fair market value: what a willing buyer would pay a willing seller when neither is forced to act, valued at the property's highest and best use rather than whatever the owner happens to be doing with it. What the owner paid years ago, what is still owed on the mortgage, and how attached the family is to the place are all irrelevant to the number.

Two situations complicate the arithmetic. In a total taking, the whole parcel goes and the value of the whole parcel is the award. In a partial taking, where an agency needs a strip for a road or a utility line, the owner is paid for the strip and for the loss in value to the land left behind, with any special benefit the project delivers to that remainder subtracted out. Just compensation is also the dividing line between the two great government powers over land: regulating under the Police Power costs the government nothing, while acquiring under Eminent Domain must be paid for.

How It Works in Washington

In Washington, the rule is written broader than the federal one. Article I, section 16 of the state constitution says no private property shall be taken or damaged for public or private use without just compensation having been first made, and that the compensation shall be ascertained by a jury unless a jury is waived. The words "or damaged" carry weight: they are why a Washington owner can bring an Inverse Condemnation claim over harm to property the agency never formally acquired.

The process is regulated as well. RCW 8.26.180 requires the acquiring agency to appraise the real property before negotiations begin, to let the owner accompany at least one appraiser, and to deliver a written statement and summary of the basis for the amount it established as just compensation, which may not be less than the agency's approved appraisal. RCW 8.04.090 addresses compensation and damages for injury to the remainder of the lands, less the special benefits accruing to that remainder. RCW 8.25.070 awards the owner reasonable attorney fees and expert witness fees if the condemnor made no written settlement offer at least thirty days before trial, or if the judgment exceeds the highest written offer by ten percent or more. Chapter 8.26 RCW adds relocation assistance on top of the purchase price.

Example

WSDOT is widening a state highway and needs a 30-foot strip across the frontage of Lena's 2-acre commercial lot in Vancouver. The strip works out to 0.35 acre, or 15,246 square feet (0.35 x 43,560). The appraiser values the land at $9.00 per square foot, so the part taken is worth $137,214 (15,246 x $9.00). The strip also erases 12 of the site's 60 parking stalls, and the appraiser puts the resulting loss in value to the remaining land at $48,000. WSDOT's written offer is $185,214 ($137,214 + $48,000).

Lena's own appraiser says $215,000, so she rejects the offer and the Condemnation case goes to trial. The jury awards $215,000. That is 16.1 percent above WSDOT's highest written offer, and because the judgment exceeds that offer by ten percent or more, RCW 8.25.070 entitles Lena to reasonable attorney fees and expert witness fees on top of the award.

Common Mistakes and Exam Traps

• Just compensation is measured by fair market value, not by the owner's purchase price, the mortgage balance, or sentimental value.
• Eminent domain is the power, condemnation is the court proceeding that exercises it, and just compensation is the payment. Questions often swap the three words.
• Washington's constitution requires payment when private property is taken or damaged. The federal Fifth Amendment speaks of property taken, so Washington's protection is broader.
• In inverse condemnation the owner files the case because the government already interfered without condemning. In an ordinary condemnation the government files.