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As a business owner, having the right commercial space is often essential to your success. You want to find an accessible and noticeable space in the right neighborhood to attract clientele, as well as a space that suits the needs of your operations. You also want a place for the right price so it fits into your budget and still allows you to make profits.
Once you find a commercial space that fulfills all of your requirements, many business owners settle in and do not move their location for years—or even decades. However, what if your landlord suddenly receives notice that all or part of the property is subject to a condemnation action for a government project? Eminent domain can affect commercial as well as residential properties, and tenants are often left wondering about their rights.
First, the owner of the property has the right to agree to a partial or complete taking and to the amount of compensation they receive for the condemnation. A tenant does not have an ownership interest and does not have any say in whether to challenge an eminent domain action. Instead, the focus is on a commercial tenant’s rights after the condemnation occurs.
Many leases include specific clauses regarding what may happen in the event of a condemnation. If you signed a lease with a condemnation clause, it will determine your rights unless it is unconscionable or otherwise illegal. Clauses commonly stipulate that:
A complete condemnation of the property causes the lease to terminate once the condemning party takes possession
Upon a partial taking of the property, either the landlord or tenant has the option to terminate the lease without penalty
If the lease does continue, the rent may be adjusted if the leased space has been made smaller
The tenant may not seek damages from the landlord but may take a separate legal action for compensation from the condemning party
Absent a condemnation clause, the lease will still terminate upon a complete condemnation, as there is no property left to lease. With a partial taking, courts often will allow termination of the lease if the taking affects the nature of the lease and the practicality of the space for the tenant.
If the lease is terminated and you need to relocate your business, you may be able to recover for associated losses. For example, if your new rent is higher, you may be able to seek compensation for the difference for the remainder of the original lease. An experienced eminent domain lawyer will be able to identify your specific rights to compensation based on your circumstances.
Whether you are a property owner or a tenant, you should ensure that your rights are protected in the event that eminent domain affects you. At the law firm of Sever Storey, our condemnation attorneys represent landowners throughout the United States, including in Indiana, Illinois, Ohio, North Carolina, and Kentucky. Please call us today at (888) 318-3761 to discuss your situation.
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