Eminent Domain proceedings will almost always end with the government taking title to private property after it pays out “just compensation” to a homeowner.
But sometimes, the government begins condemnation proceedings against the backdrop of a large project with encroaching deadlines. In these instances, California law allows the entity to obtain possession of the property early on in the condemnation process, granting the government the ability to begin its work sooner rather than later.
That said, there are numerous requirements that the government must fulfill in order to obtain pre-judgment possession. And even when the government meets its burden, defendant property owners can still oppose early possession by meeting various showings of hardship.
What is Eminent Domain?
Eminent domain is a complicated and controversial subject. At its core, it is the right of the government to take the private property of its citizens for its own means. But this cannot be done without compensating the owners.
Eminent domain is enshrined in both the California and federal Constitutions. Article 1, section 19, subdivision (a) of the California Constitution provides: “[p]rivate property may be taken or damaged for a public use and only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner.”
Put simply, when the government exercises its power of eminent domain and condemns private property for public use, it must pay “just compensation” to the owner of the property.
Can the Government Possess Your Property Before a Taking?
Yes. In an ordinary eminent domain action, the court comes to a determination on just compensation and then orders it paid out to the defendant property owner. Once this is done, the property owner moves out, and the government begins incorporating the property into its project.
But there are other instances where the government wishes to get started on its project as quickly as possible. Called “quick-take” eminent domain actions, these situations involve the government possessing the subject property as soon as it files its complaint. (Mt. San Jacinto Community College Dist. v. Superior Court (2007) 40 Cal.4th 648, 653.)
That is not to say that quick-takes are the only times a government can possess the subject property early. The government can seek an application for pre-judgment possession at any time after it files its complaint but before the trial court issues its judgment. (Cal. Const. art. I, § 19.)
What is a “Probable Compensation” Deposit?
Pre-judgment possession is subject to rigid statutory guidelines that set out exactly how and when the government may possess a property early.
Once the government files its complaint, the first thing it must do is file a deposit with the State Treasury called the “probable amount of compensation.” (CCP § 1255.010.) This is something the government will usually do, regardless of whether it plans on applying for early possession.
The “probable” amount of compensation must be made based on the appraisal of an expert qualified to opine and testify as to the property’s value. Once the expert finishes their appraisal, they must prepare a lengthy written report and present it to the court. After the report is presented, the government then makes its deposit. While it accrues interest, the defendant property owner is free to withdraw this deposit, or amounts of it, any time they see fit. (Id.)
At the outset, this deposit process seems to be especially similar to pre-condemnation offers, which are final offers an entity will make to property owners before they file the complaint. This is somewhat true. And in fact, the probable compensation amount may be close to or exactly that of the pre-condemnation offer.
The difference between these two, however, is in the effect. Once the deposit funds are added and the rest of the requirements are met, the landowner is effectively deprived of their property rights. (Escondido Union School Dist. v. Casa Suenos De Oro, Inc. (2005) 129 Cal.App.4th 944, 960.)
In addition, the ability to “withdraw” the deposit is, more or less, a poisoned apple. Yes, the property owner can immediately withdraw the deposit funds. Still, by doing so, they waive all rights to dispute the taking other than to challenge the amount of the just compensation. (CCP § 1225.260.)
What is the Process for Possession Once the Government Makes its Deposit?
If the government successfully deposits the probable compensation, it can, on motion, seek pre-judgment possession.
California Code of Civil Procedure section 1255.410 is the statute that directly deals with this scenario. If the property is occupied, then the defendant property owner has only 30 days from the date of service of the possession request to oppose the motion in writing.
If the landowner’s opposition is based on the hardship that instant possession would cause, then the court enters a “weighing of the burden” determination. At the hearing, the government must show that there is an overriding need for possession and that the landowner’s hardship will not be “substantial.” Additionally, the government must also show that its own hardship will substantially outweigh that of the homeowner if its motion is denied.
An example of this process in play is the recent Los Angeles Superior Court case of Metro Gold Line Foothill Ext. Const. Auth. v. Dan Bissell Interior Design. There, the Construction Authority succeeded in its motion by demonstrating that failure to obtain early possession would delay the construction schedule, unnecessarily increase construction costs, and could possibly even prevent the project from being built altogether.
What is the statutory interest in pre-judgment possession?
As stated, when the government makes a probable compensation deposit, it accrues interest. (CCP § 1268.310.) But there is no exact percentage at which interest accrues. The ultimate determination of the rate of interest required for “just compensation” is a judicial function. (Redevelopment Agency v. Gilmore (1985) 38 Cal.3d 790, 797.)
This means that the court will determine what interest rate is appropriate on a case-by-case basis. That said, an adequate rate will usually reflect conditions in the usual interest markets. (Id.)
How can the Attorneys at Underwood Law Assist You?
Eminent Domain is an immensely complicated field. A property must usually be appraised multiple times to arrive at a fair market value, leaving “probable compensation” amounts as often inaccurate measures of a property’s value. Moreover, pre-judgment possession opens the door to all types of counter-claims, especially if the government abandons the project.
As each case is unique, property owners would be well-served to seek experienced counsel familiar with the field of Eminent Domain. At Underwood Law, our knowledgeable attorneys are here to help. If you’re concerned that a public entity’s probable compensation deposit is too low, if you’re trying to fight a motion for prejudgment possession, or if you just have questions, please do not hesitate to contact our office.
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