A Warning to Those Who Exercise Eminent Domain Powers

By: Michael M. Shapiro

Earlier this month, a three-judge panel upheld a decision awarding $18 million to the Halper family, former owners of a farm in Piscataway, New Jersey, which was taken by the Township through eminent domain. The Halpers had argued that they were entitled to the market value of the property when they had exhausted their legal options in 2004 while the Township sought to pay the family $4.3 million, the value of the property when the condemnation complaint was filed in 1999. The Court found that the Halpers were entitled to the market value of the property in 2004, holding that the legal actions undertaken by the family should not be used against them when determining the appropriate market value of the property.

The Panel’s decision sends a clear message to those who have the power to exercise eminent domain: this kind of procedure can be a financial risk. An entity that exercises the power must now worry a great deal more about an aggrieved property owner launching full-scale litigation to block the property’s sale, not only because of the costs of litigation but because, at least in a positive real estate market, the longer a property owner can drag out the litigation proceedings, the higher the payout from the entity exercising the eminent domain power. The corollary to this for property owners whose property becomes the subject of eminent domain proceedings is that a massive litigation fight might be worth it, not only for the principles involved but for the financial benefits that may accrue.

Of course, in the current stagnant real estate market, dragging out eminent domain proceedings through all-out litigation may not provide the returns the Halper family realized or the significant expense paid by the Township of Piscataway. However, given that real estate has historically done well, a betting man whose property is being taken through eminent domain might do well to hire a crackerjack legal team, and preferably one that is willing to pursue the matter on a contingency basis.

Michael M. Shapiro, founder of ShapTalk.com, is an attorney who resides in New Providence, New Jersey. He currently serves as the Editor of The Alternative Press, www.thealternativepress.com Contact Mike at mike@shaptalk.com