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What Every Small Business Owner Should Know About Eminent Domain

Eminent domain is defined as the right of the government to take private property for public purpose. Business owners should take note because Florida is bursting at the seams. We are the third-fastest growing state in the U.S. and, according to census data, more than 1,000 people move to Florida each day. More people mean more cars, and the government is pressed to develop and maintain the infrastructure necessary to support this growth.

The government uses the power of eminent domain to acquire property necessary to widen existing roads and build new ones. Under the Constitution, the government is only required to compensate the owner of the property. For a business owner who leases, this could mean that the business owner is only entitled to nominal compensation in the event of a taking.

Fortunately, the Florida legislature recognized this inequity and passed a statute allowing business owners to make claims for compensation under certain circumstances. In order to be eligible to make a business damage claim, the acquisition must be a partial taking for a road project and the business must be in existence for at least five years. If a business qualifies to make a business damage claim, the amount of the claim will be based on the projected loss of revenue caused by the taking.

For business owners who own the land that their business is located on, the government must pay for the value of the property it acquires and damages to the remainder of the property in addition to the possible business damage claim.

When the government exercises its power of eminent domain, your property will be evaluated by a government appraiser. Although the government is required to make a good-faith estimate, these estimates tend to be low. This is because the government appraiser often does not have access to information necessary to determine the real value of your property. Another reason the government’s appraisals tend to be low is that they do not adequately take into account the rapidly escalating real estate market. Over the last few years, commercial and industrial properties have experienced rapid appreciation. As the owner, you are entitled to realize the benefits of this appreciation if the government wishes to acquire your property.



Florida has some of the most favorable eminent domain laws of any other state in the U.S.

Many people are surprised to learn that the government can take your property for its own use. Both the federal and Florida constitutions place limitations on the government’s right to exercise its power of eminent domain. The Florida Constitution requires the government to pay “full compensation” for property it acquires through eminent domain. This means that you are entitled to fair market value and the costs associated with determining what fair market value is, which includes attorneys’ fees and appraisal fees. The idea is to make the property owner whole.

For instance, if the government says your business’s property is worth $100,000 and you believe it is worth $150,000, you do not have to pay appraisers, attorneys and other experts to contest the value. Even if your property is determined to be worth less than $150,000, the government still must pay the reasonable fees associated with the taking.

Many eminent domain cases involving businesses are “partial takings,” in which the government takes a portion of your property rather than the entire parcel. Your business’s parking, access and ability to expand could be affected.

For example, if the Department of Transportation re-routes a main road in front of your business, it might make the entrance more difficult to access. Because of the inconvenience, you may lose impulse customers – resulting in lost revenue. In cases such as these, you may be entitled to compensation when your property has not been directly taken, but the value of your property has been damaged because of the taking. Because the government may not recognize the impact of the new road on your business, you may need to make officials aware of the inconvenience and assert a claim in order to receive compensation.

You should hire an attorney as soon as you are aware of a condemnation. An attorney usually cannot prevent the taking of your property, but he or she can limit its scope or significantly minimize its impact. Rely on referrals from friends and other business professionals about whom to hire to assess your eminent domain case or conduct your own research. You may want to use the Florida Bar’s eminent domain committee (www.floridabar.org) or the Association of Eminent Domain Professionals (www.aedp.org) as a starting reference.

Remember, you are being a good citizen and business owner by insisting on a full evaluation of your property.

What are you doing to protect...yourself, your family, and your business? With Prepaid Legal... you get all your Legal Advice and Resources!

For more information:
Call Brenda Martinson 760-476-0685, or E-mail: brenmarinc@prepaidlegal.com
Visit: http://www.prepaidlegal.com/hub/brenmarinc
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