Evidence of Low-Ball Appraisals and Offers From Condemning Authorities

When taking property by eminent domain, why would the NCDOT pay more than it’s own appraisal says a property is worth? A recent newspaper article helps to highlight some data, but the real story about condemnation case valuation can be seen if you look behind the numbers.

Analysis of a road project by a local newspaper has shown that compensation paid to many landowners by the North Carolina Department of Transportation (NCDOT) is substantially higher than the agency’s own appraisals. A review of the numbers invites a question: Is this a result of NCDOT overpaying, or is it because the NCDOT appraisals are artificially low?

The Statesville Record & Landmark recently analyzed the NCDOT project to expand and upgrade the interchange of Interstate 40 (I-40) and Interstate 77 (I-77) in Statesville, the heart of Iredell County. The project affects 196 different parcels. The State has already settled about 100 claims for a current cost of $10 million dollars. 93 parcels remain to be acquired, and the State expects to spend an additional $8.3 million dollars. Settlements have ranged from just $1,500 dollars to $1.3 million dollars for a large and valuable 52-acre tract of land.

The newspaper concluded, “A review of the settled claims showed the NCDOT had agreed to pay many of the property owners 30 to 40 percent more than the appraised value of their land.” Does this suggest that landowners are somehow taking advantage of the NCDOT? That is doubtful. If anything, this analysis suggests how artificially low the State’s appraisals are. They know that some landowners will simply accept the first offer they receive, especially when an allegedly “independent” property appraiser shows up with a report that seems pretty convincing, whether or not it reflects the full compensation the landowner deserves.

Entities that take property through the condemnation process using the power of eminent domain know that they can start with very low offers because there is no doubt as to whether the State can take the land for public uses. In fact, a landowner cannot delay construction or a project just by disputing the value of the land, which the article and NCDOT officials all acknowledge. There is no way to make the State “overpay” for a property – they can simply file the paperwork to start a condemnation action and take it! A landowner’s only recourse is in the courts, where one must prove to a judge or impartial jury what the land is truly worth. The State has all the time, legal expertise, and resources to go to court, and they do so hundreds of times per year. When it’s just one landowner trying to protect their constitutional rights against huge state agency with a nearly $4 billion dollar annual budget, who do you think has the leverage? The truth is that a landowner’s only chance to get fair compensation for the land that is taken is to hire lawyers and property appraisers with the right knowledge and experience to know the real value and level the playing field.

Since the State has all the power, it makes sense that the appraisals are so low. The article states that “the NCDOT makes an initial offer based on the property appraisal. If that offer, which by federal law cannot be less than the appraisal, is initially rejected, the negotiations begin.” Since the appraisal sets the very minimum of the offer, the appraisers and right of way agents have a good reason to keep these figures low. If the landowner is willing to accept a low-ball offer, then the NCDOT and it’s contractors are equally happy to settle for that amount.

Some landowners, however, had the wisdom to stand up to the State and demand compensation that reflects the real value of their property. As the newspaper’s numbers showed, landowners who refused to accept these low-ball offers were able to obtain substantially better settlements. It is only when landowners learn about their rights and get empowered by having the right legal advocates that they give themselves a chance to arrive at a fair price.

The experience of property owners in Statesville should be a lesson to other landowners throughout North Carolina, especially those affected by the Winston-Salem Northern Beltway, the Greensboro Urban Loop, and the Durham East End Connector. Don’t settle for the first offer, and consult the landowner attorneys at Sever Storey for their expertise.

North Carolina law requires that a landowner receive “just compensation” for the property that is taken from them, but the only way to know exactly what that means is to work with experienced eminent domain and condemnation attorneys like the team at Sever Storey. Phil Sever, Tonny Storey, Shiloh Daum, and the other landowner attorneys at the firm have the skills, knowledge and commitment to protects the rights of landowners whose property is subject to taking through condemnation and eminent domain.

Tags: North Carolina, eminent domain, condemnation, just compensation, landowner attorneys, NCDOT, Statesville, I-77, I-40, appraisal, valuation, property value, Winston Salem Northern Beltway, Greensboro Urban Loop, Durham East End Connector, Phil Sever, Tonny Storey, Shiloh Daum, property taking.

Copyright January 4, 2013, Shiloh Daum, Sever Storey, LLP.

*The article discussed here appeared in the December 25, 2012 edition of the Statesville Record & Landmark. No claim to previously copyrighted works.