Eminent Domain, which is a forced sale of private property to the government for a public project, is challenging before, during and after proceedings have concluded.
The government obtains a final order of condemnation, which it records in the county in which the property was located. Title officially transfers to the government upon recording, and the government's interest in the property is placed at the top of the chain of title. The government, which has likely already taken possession of the property, owns the property outright, and may use it for the public use the government condemned the property to serve.
From the owner side, property owners are entitled to certain special tax benefits from the involuntary conversion, including treatment under Internal Revenue Code section 1033. Property owners are entitled to transfer the tax basis from the condemned property to new property purchased which the condemnation proceeds. Peterson Law Group does not give tax advice, and property owners in eminent domain proceedings are encouraged to seek the advice of their tax advisors.
For instance, one woman lost her home after the California High-Speed Rail Authority acquired it and more than 1,200 other parcels of land across 119 miles.
Ultimately, the property is supposed to be home to a new bullet train system. However, the massive size of the project combined with the numerous legal battles involving property ownership along the project has left many parcels along the proposed route vacant.
Instead of active construction to build the high-speed railway, former owners like the woman in this story have watched their home sit empty and abandoned by everyone except people looking to steal from the property. Because she did not want to watch her home sit in this state, the woman worked with the fire department to burn the house down as practice for the department.
This story serves as a reminder that oftentimes, the eminent domain process is much more than a transaction. It involves battling with government agencies and grappling with the forced sale of property you may have never intended to give up. And at the end of it, you may not like what you see when you go back and visit.
With all this in mind, property owners should seriously consider their legal options for challenging condemnation and fighting for fair compensation. After all, it can be much more than a piece of property to you, and you have the right to protect it.