A Basic Overview of Eminent Domain and Certain Issues · 1 A Basic Overview of Eminent Domain and Certain Issues Eminent domain proceedings in North Carolina are governed by Chapter

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ABasicOverviewofEminentDomainandCertainIssues

EminentdomainproceedingsinNorthCarolinaaregovernedbyChapter40Afor

anyprivatecondemnorsorlocalpubliccondemnorsandChapter136fortheNorth

CarolinaDepartmentofTransportation(formerlyNCStateHighwayCommission).There

aresomelocalmodificationstoChapter136whichenableslocalpubliccondemnorsto

availthemselvesoftheprovisionsofChapter136butthosewillnotbediscussedinthis

paperandpresentationsince,ifyouencounteralocalcondemnorwhobylocal

modificationisentitledtouseChapter136proceduresratherthanChapter40A

procedures,thenanydiscussionconcerningChapter136intheNorthCarolinaDepartment

ofTransportationwillbeapplicable.

Article1ofChapter40Aprovides:

“(a)Notwithstandingtheprovisionsofanylocalact,itistheintentoftheGeneral

Assemblythat,effectiveAugust15,2006,theusessetoutinG.S.40A‐3aretheexclusive

usesforwhichtheauthoritytoexercisethepowerofeminentdomainisgrantedtoprivate

condemnors,localpubliccondemnors,andotherpubliccondemnors.

G.S.40A‐1(b)furtherstates,“itistheintentoftheGeneralAssemblythatthe

proceduresprovidedbythisChaptershallbetheexclusivecondemnationprocedurestobe

usedinthisStatebyallprivatecondemnorsandalllocalpubliccondemnors.”

G.S.40A‐3setsouttheentitiesbywhomthepowerofeminentdomainmaybe

exercisedpursuanttoChapter40A.

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§ 40A-3. By whom right may be exercised.

(a) Private Condemnors. - For the public use or benefit, the persons or organizations listed

below shall have the power of eminent domain and may acquire by purchase or condemnation

property for the stated purposes and other works, which are authorized by law.

(1) Corporations, bodies politic or persons have the power of eminent domain for the

construction of railroads, power generating facilities, substations, switching stations, microwave

towers, roads, alleys, access railroads, turnpikes, street railroads, plank roads, tramroads, canals,

telegraphs, telephones, electric power lines, electric lights, public water supplies, public

sewerage systems, flumes, bridges, and pipelines or mains originating in North Carolina for the

transportation of petroleum products, coal, gas, limestone or minerals. Land condemned for any

liquid pipelines shall:

a. Not be less than 50 feet nor more than 100 feet in width; and

b. Comply with the provisions of G.S. 62-190(b).

The width of land condemned for any natural gas pipelines shall not be more than 100 feet.

(2) School committees or boards of trustees or of directors of any corporation holding title to

real estate upon which any private educational institution is situated, have the power of eminent

domain in order to obtain a pure and adequate water supply for such institution.

(3) Franchised motor vehicle carriers or union bus station companies organized by authority

of the Utilities Commission, have the power of eminent domain for the purpose of constructing

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and operating union bus stations: Provided, that this subdivision shall not apply to any city or

town having a population of less than 60,000.

(4) Any railroad company has the power of eminent domain for the purposes of:

constructing union depots; maintaining, operating, improving or straightening lines or of altering

its location; constructing double tracks; constructing and maintaining new yards and terminal

facilities or enlarging its yard or terminal facilities; connecting two of its lines already in

operation not more than six miles apart; or constructing an industrial siding.

(5) A condemnation in fee simple by a State-owned railroad company for the purposes

specified in subdivision (4) of this subsection and as provided under G.S. 124-12(2).

The width of land condemned for any single or double track railroad purpose shall be not less

than 80 feet nor more than 100 feet, except where the road may run through a town, where it may

be of less width, or where there may be deep cuts or high embankments, where it may be of

greater width.

No rights granted or acquired under this subsection shall in any way destroy or abridge the rights

of the State to regulate or control any railroad company or to regulate foreign corporations doing

business in this State. Whenever it is necessary for any railroad company doing business in this

State to cross the street or streets in a town or city in order to carry out the orders of the Utilities

Commission, to construct an industrial siding, the power is hereby conferred upon such railroad

company to occupy such street or streets of any such town or city within the State. Provided,

license so to do be first obtained from the board of aldermen, board of commissioners, or other

governing authorities of such town or city.

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No such condemnor shall be allowed to have condemned to its use, without the consent of the

owner, his burial ground, usual dwelling house and yard, kitchen and garden, unless

condemnation of such property is expressly authorized by statute.

The power of eminent domain shall be exercised by private condemnors under the procedures of

Article 2 of this Chapter.

(b) Local Public Condemnors - Standard Provision. - For the public use or benefit, the

governing body of each municipality or county shall possess the power of eminent domain and

may acquire by purchase, gift or condemnation any property, either inside or outside its

boundaries, for the following purposes.

(1) Opening, widening, extending, or improving roads, streets, alleys, and sidewalks. The

authority contained in this subsection is in addition to the authority to acquire rights-of-way for

streets, sidewalks and highways under Article 9 of Chapter 136. The provisions of this

subdivision (1) shall not apply to counties.

(2) Establishing, extending, enlarging, or improving any of the public enterprises listed in

G.S. 160A-311 for cities, or G.S. 153A-274 for counties.

(3) Establishing, enlarging, or improving parks, playgrounds, and other recreational

facilities.

(4) Establishing, extending, enlarging, or improving storm sewer and drainage systems and

works, or sewer and septic tank lines and systems.

(5) Establishing, enlarging, or improving hospital facilities, cemeteries, or library facilities.

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(6) Constructing, enlarging, or improving city halls, fire stations, office buildings,

Courthouse jails and other buildings for use by any department, board, commission or agency.

(7) Establishing drainage programs and programs to prevent obstructions to the natural flow

of streams, creeks and natural water channels or improving drainage facilities. The authority

contained in this subdivision is in addition to any authority contained in Chapter 156.

(8) Acquiring designated historic properties, designated as such before October 1, 1989, or

acquiring a designated landmark designated as such on or after October 1, 1989, for which an

application has been made for a certificate of appropriateness for demolition, in pursuance of the

purposes of G.S. 160A-399.3, Chapter 160A, Article 19, Part 3B, effective until October 1, 1989,

or G.S. 160A-400.14, whichever is appropriate.

(9) Opening, widening, extending, or improving public wharves.

The board of education of any municipality or county or a combined board may exercise the

power of eminent domain under this Chapter for purposes authorized by Chapter 115C of the

General Statutes.

The power of eminent domain shall be exercised by local public condemnors under the

procedures of Article 3 of this Chapter.

(b1) Local Public Condemnors - Modified Provision for Certain Localities - For the public

use or benefit, the governing body of each municipality or county shall possess the power of

eminent domain and may acquire by purchase, gift or condemnation any property or interest

therein, either inside or outside its boundaries, for the following purposes.

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(1) Opening, widening, extending, or improving roads, streets, alleys, and sidewalks. The

authority contained in this subsection is in addition to the authority to acquire rights-of-way for

streets, sidewalks and highways under Article 9 of Chapter 136. The provisions of this

subdivision (1) shall not apply to counties.




facilities.

(4) Establishing, extending, enlarging, or improving storm sewer and drainage systems and

works, or sewer and septic tank lines and systems.



Courthouse jails and other buildings for use by any department, board, commission or agency.

(7) Establishing drainage programs and programs to prevent obstructions to the natural flow

of streams, creeks and natural water channels or improving drainage facilities. The authority

contained in this subdivision is in addition to any authority contained in Chapter 156.




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purposes of G.S. 160A-399.3, Chapter 160A, Article 19, Part 3, effective until October 1, 1989,


(9) Opening, widening, extending, or improving public wharves.

(10) Engaging in or participating with other governmental entities in acquiring, constructing,

reconstructing, extending, or otherwise building or improving beach erosion control or flood and

hurricane protection works, including, but not limited to, the acquisition of any property that may

be required as a source for beach renourishment.

(11) Establishing access for the public to public trust beaches and appurtenant parking areas.

The board of education of any municipality or county or a combined board may exercise the

power of eminent domain under this Chapter for purposes authorized by Chapter 115C of the

General Statutes.

The power of eminent domain shall be exercised by local public condemnors under the

procedures of Article 3 of this chapter.

This subsection applies only to Carteret and Dare Counties, the Towns of Atlantic Beach,

Carolina Beach, Caswell Beach, Emerald Isle, Holden Beach, Indian Beach, Kill Devil Hills,

Kitty Hawk, Kure Beach, Nags Head, North Topsail Beach, Oak Island, Ocean Isle Beach, Pine

Knoll Shores, Sunset Beach, Surf City, Topsail Beach, and Wrightsville Beach, and the Village

of Bald Head Island.

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(c) Other Public Condemnors. - For the public use or benefit, the following political entities

shall possess the power of eminent domain and may acquire property by purchase, gift, or

condemnation for the stated purposes.

(1) A sanitary district board established under the provisions of Part 2 of Article 2 of

Chapter 130A for the purposes stated in that Part.

(2) The board of commissioners of a mosquito control district established under the

provisions of Part 2 of Article 12 of Chapter 130A for the purposes stated in that Part.

(3) A hospital authority established under the provisions of Part B of Article 2 of Chapter

131E for the purposes stated in that Part, provided, however, that the provisions of G.S. 131E-

24(c) shall continue to apply.

(4) A watershed improvement district established under the provisions of Article 2 of

Chapter 139 for the purposes stated in that Article, provided, however, that the provisions of G.S.

139-38 shall continue to apply.

(5) A housing authority established under the provisions of Article 1 of Chapter 157 for the

purposes of that Article, provided, however, that the provisions of G.S. 157-11 shall continue to

apply.

(6) A corporation as defined in G.S. 157-50 for the purposes of Article 3 of Chapter 157,

provided, however, the provisions of G.S. 157-50 shall continue to apply.

(7) A commission established under the provisions of Article 22 of Chapter 160A for the

purposes of that Article.

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(8) An authority created under the provisions of Article 1 of Chapter 162A for the purposes

of that Article.

(9) A district established under the provisions of Article 4 of Chapter 162A for the purposes

of that Article.

(10) A district established under the provisions of Article 5 of Chapter 162A for purposes of

that Article.

(11) The board of trustees of a community college established under the provisions of Article

2 of Chapter 115D for the purposes of that Article.

(12) A district established under the provisions of Article 6 of Chapter 162A for the purposes

of that Article.

(13) A regional public transportation authority established under Article 26 of Chapter 160A

of the General Statutes for the purposes of that Article.

The power of eminent domain shall be exercised by a public condemnor listed in this subsection

under the procedures of Article 3 of this Chapter. (1852, c. 92, s. 1; R.C., c. 61, s. 9; 1874-5, c.

83; Code, s. 1698; Rev., s. 2575; 1907, cc. 39, 458, 783; 1911, c. 62, ss. 25, 26, 27; 1917, cc. 51,

132; C.S., s. 1706; 1923, c. 205; Ex. Sess. 1924, c. 118; 1937, c. 108, s. 1; 1939, c. 228, s. 4;

1941, c. 254; 1947, c. 806; 1951, c. 1002, ss. 1, 2; 1953, c. 1211; 1957, c. 65, s. 11; c. 1045, s. 1;

1961, c. 247; 1973, c. 507, s. 5; c. 1262, s. 86; 1977, c. 771, s. 4; 1981, c. 919, s. 1; 1983, c. 378,

s. 2; 1983 (Reg. Sess., 1984), c. 1084; 1985, c. 689, s. 10; c. 696, s. 2; 1987, c. 2, s. 1; c. 564, s.

13; c. 783, s. 6; 1989, c. 706, s. 3; c. 740, s. 1.1; 2000-146, s. 8; 2001-36, ss. 1, 3; 2001-478, s. 2;

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2001-487, s. 58; 2002-172, s. 4.1; 2003-282, ss. 1, 2; 2004-203, s. 32(a), (b); 2006-224, s. 2;

2006-259, s. 47.)

G.S.40A‐4statesthatthereisnorequirementthatthecondemnorattemptto

purchasethepropertypriortoinitiatingeminentdomainproceedings.

G.S.40A‐5statesthatacondemnorlistedinG.S.40A‐3(a),(b)or(c)shallnot

possessthepowerofeminentdomainwithrespecttopropertyownedbytheStateofNorth

Carolinaorastate‐ownedrailroadasdefinedinG.S.124‐11,unlesstheStateconsentsto

thetaking.

G.S.40A‐5(b)statesthatunlessotherwiseprovidedbystatute,acondemnorlisted

inG.S.40A‐3(a),(b)or(c)maycondemnthepropertyofaprivatecondemnorifsuch

propertyisnotinactualpublicuseornotnecessarytotheoperationofthebusinessofthe

owner.

G.S.40A‐6governstherepaymentoftaxestoapropertyowner.However,please

notethatG.S.40A‐6onlyprovidesforpaymentofproratataxesifthetakinginvolvesa

totaltakingunderthepowerofeminentdomain.Inotherwords,ifthetakingisapartial

taking,thereisnostatutoryrequirementthattheownerbereimbursedforthetaxespaid

ontheportiontakenfortheyearofcondemnation.

Inaddition,ifanownerisanaturalpersonwhoownsthepropertyandowns

agriculturalland,horticulturalland,orforestlandthatiscontiguoustothecondemned

propertyandthatisinactiveproductionand,asaresultofthecondemnation,isrequired

topaydeferredtaxes(rollback)pursuanttoG.S.105‐277.4(c),thenandinsucheventthe

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ownerisentitledforreimbursementofthosetaxeswhichareincurredbyhimorherasa

resultofthetaking.

G.S.40A‐7containsaprovisionthatwhereaprojectrequirescondemnationofonly

aportionoftheparcelofland,leavingaremainderofsuchsize,shapeorconditionthatisof

littlevalue,acondemnormayacquiretheentireparcelbypurchaseorcondemnation.If

theremainderistobecondemned,thePetitionfiledundertheprovisionsofG.S.40A‐20or

theComplaintfiledundertheprovisionsofG.S.40A‐41shallinclude:

(1) adeterminationbythecondemnorthatapartialtakingofthelandwould

substantiallydestroytheeconomicvalueorutilityoftheremainder;or

(2) adeterminationbythecondemnorthateconomyintheexpenditureofpublic

fundswouldbepromotedbytakingtheentireparcel;or

(3) adeterminationbythecondemnorthattheinterestofthepublicwouldbe

bestservedbyacquiringtheentireparcel.

G.S.40A‐8governstheawardingofcostandstates“(a)inanyactionunderthe

provisionsofArticle2or3ofthisChapter,theCourt,initsdiscretion,mayawardtothe

ownerasumtoreimbursetheownerforchargeshehaspaidforappraisers,engineersand

plats,providedsuchappraisersorengineerstestifyaswitnessesandsuchplatsare

receivedintoevidenceasexhibitsbyorderoftheCourt.”

G.S.40A‐8(b)providesifacondemnorinstitutesaproceedingtoacquireby

condemnationanypropertyand(i)ifthefinaljudgmentinaresultingactionisthatthe

condemnorisnotauthorizedtocondemntheproperty,or(ii)ifthecondemnorabandons

theaction,theCourtwithjurisdictionoftheactionshall,aftermakingappropriatefindings

offact,awardeachownerofthepropertysoughttobecondemnedasumthat,inthe

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opinionoftheCourtbaseduponitsfindingsoffact,willreimbursetheownerfor:his

reasonablecosts;disbursements;expenses(includingreasonableattorney,appraisal,and

engineeringfees);andanylosssufferedbytheownerbecausehewasunabletotransfer

titletothepropertyfromthedateofthefilingoftheComplaintunderG.S.40A‐41.

G.S.40A‐8(c)governsthosesituationswhereaninversecondemnationisbrought

andwheretheownerissuccessfulandobtainsajudgmentinhisorherfavorG.S.40A“the

Courtshallawardtotheownerasapartofthejudgmentafterappropriatefindingoffactsa

sumthat,intheopinionoftheCourt,baseduponitsfindingoffact,willreimbursethe

ownerassetoutinsubsection(b).Ifapropertyownerbringsaninversecondemnation

allegingthatanentitywhichhasthepowerofeminentdomainhasnotfiledanappropriate

actionbuthasbyitsactionsactuallytakenorappropriatedaportionoftheirproperty,then

intheeventtheownerissuccessfulinsuchaction,inadditiontoanyawardsthatthe

ownermaybeentitledandmaybeawardedbyjuryverdictorotherwise,theowneris

entitledtobepaidallexpenseshehasincurredincludingreasonableattorneys’fees.

G.S.40A‐11providesthatanycondemnorhavingthepowerofeminentdomain

may,withouthavingfiledaPetitionorComplaint,norhavingdepositedanysumortaken

anyotheractionprovidedbyChapter40Aisauthorizedtoenteruponthelands,butnot

structures,tomakesurveys,borings,examinationsandappraisalsasmaybenecessaryor

expedientincarryingoutorperformingitsdutiesunderthischapter.Thecondemnorshall

givethirty(30)daysnoticeinwritingtotheownerathislastknownaddressandtheparty

inpossessionofthelandoftheintendedentryauthorizedbythissection.

Intheeventacondemnorentersontothepropertyafterhavinggivenpropernotice

andcausesdamagestosuchproperty,thentheownerisentitledtobringanactionto

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recoverforsuchdamageandiftheownerrecoversdamagesinexcessof25%overthe

amountofferedbythecondemnorforreimbursementforactivities,theCourt,inits

discretion,mayawardreasonableattorneys’feestotheowner.

HowDoTheyDoIt

CondemnationProceedingsByPrivateCondemnors

Article2ofChapter40Agovernsthetakingofpropertybyprivatecondemnors,

thelistofwhicharecontainedinG.S.40A‐3(a).Themostcommonprivatecondemnor

actionsthatonewillencounterwilleitherinvolvenaturalgas,electricalcorporationsand

telephonecompanies.Thereareothersbutthesearethemostcommonthatonewill

encounterbuttheprocedurestobeutilizedarethesameregardlessofwhoisexercising

thepowerofeminentdomaininsofarasprivatecondemnorsareconcerned.

Acondemnationproceedinginstitutedbyaprivatecondemnordifferssubstantially

differsfromtheprocedureusedbyapubliccondemnorpursuanttoChapter40A.

Inacondemnationbyaprivatecondemnor,theactioniscommencedbythefilingof

aPetitionwiththeClerkofSuperiorCourt“ofanyCountyinwhichtherealestatedescribed

inthePetitionissituated.”ThePetitionmustasktheCourttoappointCommissionerswho

aretoappraisethepropertyandthePetitionmustbesignedandverified.Itmustalso

containadescriptionofthepropertywhichthecondemnorseekstoacquireanditmust

statethatthecondemnorisdulyincorporatedandthatitisitsintentioningoodfaithto

conductandcarryonthepublicbusinessauthorizedbyitscharter,statingindetailthe

natureofitspublicbusinessandthespecificuseofthepropertyandthattheproperty

describedinthePetitionisrequiredforthepurposeofconductingtheproposedbusiness.

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G.S.40A‐20goesontostatethat“thePetitionmustalsocontainastatementasto

whethertheownerwillbepermittedtoremoveallorspecifiedportionsofanybuildings,

structures,permanentimprovements,orotherfixturessituatedonoraffixedtotheland.”

ThePetitionmustalsostatethenames,places,andresidencesofallotherownersas

farasbyreasonablediligencecanbeascertainedorthosewhoclaimtobeownersofthe

property.NoticeofthisproceedingisfiledwiththeClerkofSuperiorCourtofeachCounty

inwhichanypartofthelandislocated.TheClerkisrequiredtoindexandcross‐indexthis

NoticeasrequiredbyG.S.1‐17(lispendens).

ASpecialProceedingsummons,togetherwithacopyofthePetition,isrequiredto

beservedonallpersonswhoseestatesorinterestsareaffectedbytheproceedingsand

suchservicemustbeatleastten(10)dayspriortothehearingofthesamebytheCourt

(G.S.40A‐22).G.S.40A‐23governsservicewherethepartiesareunknown.

Question: IsthepropertyownerrequiredtofilearesponsetothePetition?No.

G.S.40A‐25doesprovidethat“alloranyotherpersonswhoseestatesorinterestsaretobe

affectedbyproceedingsmayanswersuchPetitionandshowcauseagainstthegrantingof

theprayerofsame.”IfanAnswerisfiledcontestingtherighttocondemn,theClerkisto

hearproofsandallegationsapartandifnosufficientcauseisshownagainstthegrantingof

theprayerofthePetitionshallmakeanorderfortheappointmentofthreeCommissioners

andshallfixthetimeandplaceforthefirstmeetingoftheCommissioners.NotethatG.S.

40A‐25providesthateachCommissionershallbearesidentofthecountywhereinthe

propertycondemnedlies.”

Question: Whathappensifaprivatecondemnorattemptstofileanactionwhere

propertyissituatedinmorethanonecountybutconstitutesonetract?Canthecondemnor

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simplycomplywiththerequirementsofChapter40Abyfilingtheactioninonecountyand

allowingtheClerkofCourtinonecountytoappointCommissionerswhoresideinone

countyandyetdeterminethedamagesforpropertylocatedinbothcounties?Weshallsee

arecentcaseofRutherfordElec.MembershipCorp.v.130ofChatham,LLC,No.COA14‐

134,SlipOp.(N.C.App.Sept.2,2014)haspointedoutsomeoftheproblemsinChapter40A

actionsbyprivatecondemnors.Infact,theCourt,initsopinion,urgedthelegislatureto

addresstheseissues.ApetitionforrehearinghasbeenfiledintheChathamcase.

OncetheCommissionersareappointed,G.S.40A‐26clearlystatestherequirements

oftheCommissioners,whicharetotakeanoaththattheywillfairlyandimpartially

appraisethepropertyinthePetition.Interestingly,theCommissionershavethepowerto

issuesubpoenasandadministeroathsandanytwoofthemmayadjourntheproceedings

beforethemfromtimetotimeandintheirdiscretion.OncetheCommissionersare

appointedandtaketheoath,theyarerequiredtocauseten(10)daysnoticeofsuch

meetingtobegiventothepartieswhoareaffectedbytheirproceedingsortheirattorney

oragent.TheyarefurtherrequiredtoviewthepremisesdescribedinthePetition,hearthe

proofsandallegationsofthepartiesandreducethetestimony,ifanyistakenbythem,to

writing.Afterhearingthetestimony,theCommissionersarerequiredbymajorityto

ascertainanddeterminethecompensation,whichoughtjustlybemadebythecondemnor

totheowner(s)ofthepropertyappraisedbythem.Themethodofvaluationwillbe

discussedlateronsinceitisalsoapplicabletotakingsbypubliccondemnorspursuantto

Chapter40A.OncetheCommissionersmaketheaward,theyaretoreportthesametothe

Clerkwithinten(10)days.G.S.40A‐26.G.S.40A‐27providestheformofthe

Commissioners’reportthatistobefiledwiththeClerk.

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OncethereportoftheCommissionersismadetotheClerkandfiled,theClerkis

requiredtomailcopiestotheparties.G.S.40A‐28(a)recites“withintwenty(20)daysof

thefilingofthereport,anypartyoftheproceedingmayfileexceptionsthereto.TheClerk,

afternoticetotheparties,shallhearanyexceptionssofiledandmaythereafterdirecta

newappraisal,modifyorconfirmthereport,ormakesuchotherordersasCourtmaydeem

rightandproper.”IftheClerk’sfinaljudgmentisinfavorofthecondemnor,oncethe

condemnordepositstheamountorderedbytheCommissionerstogetherwithany

costallowedintotheofficeoftheClerkofSuperiorCourt,thenandinthatevent,all

ownerswhohavebeenmadepartiestotheproceedingshallbedivestedofthe

propertyortheinterestthereintotheextentsetforthinproceedings.However,any

partyintheproceedingsmayfileexceptionstotheClerk’sfinaldeterminationonthereport

andmayappealfortrialdenovototheSuperiorCourt.Noticeoftheappealshallbefiled

withinten(10)daysaftertheClerk’sdetermination.G.S.40A‐28(c).Pleasenotethatifa

propertyownerortheirattorneyfailstofileexceptionstothereportoftheCommissioners,

thateveniftheythereafterexcepttotheconfirmationbytheClerkandgivepropernotice

ofappealfromtheClerktotheSuperiorCourt,theSuperiorCourthasnojurisdiction.

CarolinaPowerandLightCo.v.Crowder,89N.C.App.578,366S.E.2d499(1988).

PleasebemindfulthatifapartyexceptstotheawardofCommissionersandthen

exceptstotheconfirmationandappealsfromtheconfirmationoftheawardbytheClerkof

CourtandprovidedthatthecondemnordepositswiththeClerkofCourtthesumappraised

bytheCommissioners,thenandinthatevent,thecondemnormayenter,takepossessionof

andholdsaidpropertyinthemannerandtotheextentsoughttobeacquiredbythe

proceedingsuntilfinaljudgmentisrenderedonappeal.G.S.40A‐28(d).

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Question: Supposethataprivatecondemnorhasfiledanactionseekingto

condemnaportionofpropertyowner’sland.TheClerkofCourthasappointed

Commissionerspursuanttothestatuteandpropertyownerhasobjectedthatthe

condemnordoesnothavetheauthoritytocondemntheproperty.TheClerkdenies

propertyowner’sclaimandtheCommissionersproceedwiththetakingofevidenceover

propertyowner’sobjections.TheCommissionersentertheirawardandpropertyowner’s

attorneyfilesexceptionstothereportoftheCommissionersandtheClerkthereafter

confirmstheawardandexceptionsandaNoticeofAppealarefiled.Propertyownerthen

appearsbeforetheJudgeandagainraiseshisargumentthattheydidnothavetherightto

condemnhispropertyandafterhearinglegalargument,theJudgeispersuadedthatthisis

notapropertakinganddismissesthematter.Condemnorhaspaidthemoneyintothe

ClerkofCourt,whichhasnotbeendrawndownbythepropertyownernorhisattorney.

Whatdoyou,asaJudge,do?

G.S.40A‐28(e)recitesthat

“If,onappeal,theJudgeshallrefusetocondemntheproperty,thenthe

moneydepositedwiththeClerkofCourtintheproceedings,orsomuch

thereofasshallbeaJudge,shallberefundedtothecondemnorandthe

condemnorshallhavenorighttothepropertyandshallsurrender

possessionofsame,ondemand,totheowner.TheJudgeshallhavefull

powerandauthoritytomakesuchorders,judgmentsanddecreesasmaybe

necessarytocarryintoeffectthefinaljudgmentrenderedinsuch

proceedings,includingcompensationinaccordancewiththeprovisionsof

G.S.40A‐8.”

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RememberthatG.S.40A‐8providesthattheCourtshall“makeappropriatefindings

offactsandawardeachownerofthepropertysoughttobecondemnedasum,thatinthe

opinionoftheCourtbaseduponitsfindingsoffact,willreimbursetheownerfor:his

reasonablecosts;disbursements;expenses(includingreasonableattorney,appraisaland

engineeringfees);andanylosssufferedbytheownerbecausehewasunabletotransfer

titletothepropertyfromthedateofthefilingoftheComplaint.

Chapter40AproceedingsdifferfromChapter136proceedingsinthattwomeasures

ofdamagesareavailableforChapter40Atakings.

G.S.40A‐64provides:

(a) exceptasprovidedinsubsectionB,themeasureofcompensationforthe

takingofpropertyisitsfairmarketvalue(totaltaking);

(b) ifthereisatakingoflessthantheentiretract,themeasureof

compensationisthegreaterofeither(i)theamountbywhichthefair

marketvalueoftheentiretractimmediatelybeforethetakingexceeds

thefairmarketvalueoftheremainderimmediatelyafterthetaking;or

(ii)thefairmarketvalueofthepropertytaken.

Chapter136(takingbytheNorthCarolinaDepartmentofTransportation)only

providesforthedifferenceinthefairmarketvalueoftheentirepropertybaseduponits

highestandbestuseimmediatelybeforethetakingandthevalueoftheremainingproperty

baseduponitshighestandbestuseafterthetaking.

WhathappenswhenanactionpursuanttoArticle2ofChapter40Ahasbeen

commencedandtheownerofthepropertyhassoldittoathirdpartyorthepropertyis

otherwisebeentransferred?Doyouhavetohaveachangeofsubstitutionofparties?

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G.S.40A‐33provides“whenanyproceedingsunderthisArticleshallbe

commenced,nochangeofownershipbyvoluntaryconveyanceortransferoftheproperty

shallinanymanneraffectsuchproceedings,butthesameshallbecarriedonandperfected

asifnoconveyanceortransferhasbeenmadeorattemptedtobemade.”CityofKings

Mountainv.Goforth,283N.C.316,196S.E.2d231(1973).Thisisconsistentwiththe

priortakinginthecaseofN.C.StateHighwayComm’nv.YorkIndus.Center,Inc.,263

N.C.230,139S.E.2d253(1964),whichheldthattherighttocompensationrestsinthe

personwhoownedthelandimmediatelypriortothefilingoftheComplaintand

DeclarationofTakingandhehasnothinghecansellpendingascertainmentofjust

compensation.

TakingsByPublicCondemnorsPursuantToChapter40A

Unlikeatakingbyaprivatecondemnor,anactionbyapubliccondemnorrather

thanbeinginstitutedbyPetitionbeforetheClerkofSuperiorCourtinstitutesitsactionby

thefilingofaComplaint.However,G.S.40A‐40providesthat

“(a)notlessthanthirty(30)dayspriortothefilingoftheComplaintonthe

provisionsofG.S.40A‐41,apubliccondemnorlistedin40A‐3(b)or(c)shall

providenoticetoeachownerwhosenameandaddresscanbeascertainedby

reasonablediligenceofitsintenttoinstituteanactiontocondemnproperty.“

Thenoticeisrequiredtobesenttoeachownerbycertifiedmail,returnreceipt

requested.Thenoticeisfurtherrequiredtocontainageneraldescriptionoftheproperty

tobetakenandoftheamountestimatedbythecondemnortobejustcompensationforthe

propertycondemned.Thenoticealsomuststatethepurposeforwhichpropertyisbeing

condemnedandthedatethecondemnorintendstofiletheComplaint.

20

G.S.40A‐40(b)alsocontainsotherrequirementsandisattachedheretoasan

appendix.OnceapubliccondemnorinstitutesanactionpursuanttoChapter40A,theyare

required(liketheDepartmentofTransportation)todepositwiththeClerkofCourtthe

estimatedamountofjustcompensationbythecondemnorforthetaking.Onlywhenalocal

publiccondemnorisacquiringpropertyforcertainpurposesdoestitlevestimmediately.

G.S.40A‐42liststheinstanceswhenalocalpubliccondemnorcandowhatiscalleda

“quicktake.”Thefollowingarenotpermittedasquicktakesbylocalpubliccondemnors:

G.S.40A‐42:




facilities.



courthouse jails and other buildings for use by any department, board, commission or agency.




purposes of G.S. 160A-399.3, Chapter 160A, Article 19, Part 3B, effective until October 1, 1989,


21

Ifthetakingisforoneofthepurposesotherthana“quicktake”asspecifiedbyG.S.

40A‐42(a)(1)and(2),thenandinsucheventtitletopropertyandrighttopossessionshall

vestinthecondemnoronlyuponthefollowing:

1. AnAnswerfiledbytheownerwhorequestsonlythattherebea

determinationofjustcompensationandwhodoesnotchallengethe

authorityofthecondemnortocondemntheproperty;or

2. Afailureoftheownertoanswerwithinthe120‐daytimeperiodestablished

byG.S.40A‐46;or

3. Uponthedisbursementofthedepositinaccordancewiththeprovisionsof

G.S.40A‐44.

UponthefilingoftheComplaint,thecondemnorisrequiredtodeposittheirgood

faithestimateofdamagestobeawardedtothepropertyowner.Thepropertyownermay

petitiontheCourtforanOrderallowingtheClerktodisbursethefundsdepositedtothe

propertyownerasacreditagainstjustcompensationwithoutprejudicetofurther

proceedingsinthecausetodeterminejustcompensation.Ifpresentedwithsuchan

application,G.S.40A‐44states“theJudgeshallorderthatthemoneydepositedtobepaid

forthwithtothepersonentitledtheretoinaccordancewiththeapplication.”Becognizant

ofthefactthatyou,asapresidingJudge,arealsoentitledtomakeorderswithrespectto

encumbrances,liens,rents,taxes,assessments,insuranceandotherchargespursuantto

G.S.40A‐60(a).Asapracticepointer,IwouldsuggestthatifpresentedwithaPetition

seekingthatthemoniesbeawardedtothepropertyownerthatitwouldbeprudentto

makeaninquiryaboutlienholdersand,ifpossible,reviewtheactualcourtfilewhich

shouldrevealiftherearelienholdersorunpaidpropertytaxesthatyou,asthepresiding

22

Judge,shouldmakeprovisionsforpursuanttoG.S.40A‐60(a).Inaddition,anAnswerisnot

requiredtobefiledbeforetheexpirationof120daysfromthedateofservice.

G.S.40A‐46doesprovidethatatanytimepriortotheentryoftheFinalJudgment,

theJudgemay,forgoodcauseshownandafternoticetothecondemnor,extendthetime

forfilingtheAnswerforthirty(30)days.

SettlementofIssuesHearing

Anyissues,otherthantheissueofjustcompensation,aredeterminedbytheJudge

pursuanttoG.S.40A‐47.Theseissuesaregoingtobediscussedlaterherein.Theissues

encounteredinthistypeofcasearecommontobothChapter136and40Atakings.G.S.

40A‐48providesthateithertheownerorcondemnormay,withinsixty(60)daysafterthe

filingoftheAnswer,requestthattheClerkappointCommissionerstodetermine

compensationforthetaking.(SeeNCG.S.40A‐48).Ifsuchrequestismadeafter

determinationofanyissuesasrequiredbyG.S.40A‐47,theClerkisrequiredtoappoint

threepersonstoserveasCommissioners.OncetheCommissionersmaketheaward,the

ClerkisrequiredtomailthereportoftheCommissionerstoeachofthepartiesortheir

counselofrecord.Withinthirty(30)daysafterthemailingofthereport,eitherthe

condemnorortheownermayexcepttheretoanddemandatrialdenovabyjuryonthe

issueofjustcompensation.Notethatanyproceedingbypubliccondemnorwherea

propertyownerorthecondemnorthemselveshavefiledarequestfortheappointmentof

Commissioners,thatthereisnoactionnecessarybytheClerkinsofarasconfirmationofthe

award,unlikethatofaprivatecondemnor.

Oncetheamountofjustcompensationisawarded,interestisrequiredtobeadded

at6%perannumfromthedateoftaking.G.S.40A‐53.Oneshouldalsobeawarethatin

23

theeventweevergobacktothedayswheninvestmentsyieldeddoubledigitreturns,thata

propertyownerisentitledtopresentevidenceunderthe“PrudentInvestorStandard”to

showthatheisentitledtomorethanthestatutory6%.ConcreteMachineryCo.,Inc.v.

CityofHickory,134N.C.App.91,517S.E.2d155(1999).Evenifapropertyowner

presentsevidenceandtheCourtisconvincedthatunderthe“PrudentInvestorStandard,”a

higherrateofinterestisapplicable,itshouldonlybeawardedfromthedateofthetakingto

thedateofthejudgmentandnotpostjudgment.

Whatisthedateofthetaking?Thisisimportantbecausetheevidencethatthe

juryhearswithregardtodamagesmustbebasedondateoftaking!G.S.40A‐63statesthat

thedeterminationoftheamountofcompensationshallreflectthevalueoftheproperty

immediatelypriortothefilingofthePetitionunderG.S.40A‐20(privatecondemnors)or

theComplaintunderG.S.40A‐41(localpubliccondemnors)and,exceptasprovidedinthe

followingsections,shallnotreflectanincreaseordecreaseduetocondemnation.

G.S.40A‐65(a)statesthevalueofthepropertytaken,oroftheentiretractifthereis

apartialtaking,doesnotincludeanincreaseordecreaseinvaluebeforethedateof

valuationthatiscausedby(i)theproposedimprovementorprojectforwhichthe

propertyistaken;(ii)thereasonablelikelihoodthatthepropertywouldbeacquiredfor

thatimprovementorproject;or(iii)thecondemnationproceedinginwhichthepropertyis

taken.

Chapter136Takings

ThemostcommoneminentdomaincasestriedareactionsinstitutedbytheNorth

CarolinaDepartmentofTransportationfornewhighwayconstructionorhighway

improvementprograms.TheprocedureforsuchanactionisgovernedbyChapter136of

24

theNorthCarolinaGeneralStatutes.ThelawgoverningcondemnationpursuanttoChapter

136beginsatG.S.136‐103.However,thereareotherstatutescontainedthroughout

Chapter136thatbearuponsuchtakingsandthetrialofsuchmatters.

Asmostofyouknow,theDepartmentofTransportationinstitutesanactionbyfiling

civilactionintheofficeoftheClerkofSuperiorCourtwherethepropertyislocated.At

suchtime,theDepartmenthastolistanumberofthingsontheComplaint,allwhichare

enumeratedinG.S.136‐103.TheDepartmentofTransportationisalsorequiredtodeposit

thesumofmoneyestimatedbytheDepartmenttorepresentjustcompensationforsaid

taking.G.S.136‐105statesthatthepersonnamedintheComplaintmayapplytotheCourt

fordisbursementofthemoneydepositedintheCourtasacreditagainstjustcompensation

withoutprejudicingfurtherproceedingsinthecausetodeterminejustcompensation.In

theeventthereareencumbrances,liens,rents,taxes,assessments,orothercharges,the

Judgeisempoweredtomakesuchorderswithrespecttosame.G.S.136‐105.

AnypersonnamedintheComplainthastherighttofileanAnswerwithintwelve

(12)monthsfromthedateofservicethereof.G.S.136‐107.PleasenotethatG.S.136‐107

statesatanytimepriortotheentryofFinalJudgment,theJudge,forgoodcauseshownand

afternoticetothePlaintiff,mayextendthetimeforfilingtheAnswerforthirty(30)days.

You,asaJudge,maybefacedwithasituationsomedaywhereanindividual,whohasbeen

suedbytheDepartmentofTransportationinaChapter136taking,didnothirealawyer

untilthetimeforfilingtheAnswerexpiredbutbeforeaFinalJudgmenthadbeenentered

andtheindividualmay,throughcounsel,beappearingandrequestingthisthirty(30)day

extension.OneshouldconsultG.S.136‐107andthecasesdecidedforguidance.However,

unlesstheDepartmentofTransportationcanshowsomesortofdetrimentalreliance,since

25

theissueinvolvesaconstitutionalissue,thatisthetakingofpropertyforapublicpurpose,

itwouldseemthebetterpartofdiscretionwouldbetoallowtheownertofiletheir

Answer,especiallyiftheonlyissueisthatofjustcompensation.

IssuesDeterminedbytheCourt

TheCourtresolvesallissuesexceptheissueofjustcompensation.Thisisprobably

oneofthemosttroublingareasformostJudgesisthesettlementofissues.G.S.136‐108

states

“afterthefilingoftheplat,theJudge,uponmotionandtendaysnoticeby

eithertheDepartmentofTransportationortheowner,shall,eitherinorout

ofterm,hearanddetermineanyandallissuesraisedbythepleadingsother

thantheissueofdamages,includingbutnotlimitedto,ifcontroverted,

questionsofnecessaryandproperparties,titleoftheland,interesttakenand

areataken.”

IssuesthatyoumayhavetoconsideronahearingpursuanttoG.S.40A‐47and/or

NCG.S.136‐108:

1. Inversecondemnation.N.C.Dep’tofTransp.v.Cromarti,Jr.,214N.C.

App.307,716S.E.2d361(2011).

2. Extentofexistingright‐of‐way.N.C.StateHighwayComm’nv.Nuckles,

271N.C.1,155S.E.2d772(1967).

3. Extentofpropertytakenindedication.N.C.Dep’tofTransp.v.ElmLand,

Co.,163N.C.App.257,593S.E.2d131(2004).

4. UnityofOwnership.N.C.Dep’tofTransp.v.AirliePark,Inc.,156N.C.App.

63,576S.E.2d341(2003).

26

5. Properandnecessarypartyandjoinder.N.C.Dep’tofTransp.v.

StagecoachVillage,360N.C.46,619S.E.2d495(2005).

6. Adversepossessionandamendmenttomap.CityofCharlottev.

Williams,210N.C.App.257,707S.E.2d710(2011).

Itwouldtakemehourstogothrougheachoftheselistedabove.Ihave,however,

selectedtheonewhichcancreateconfusiontodiscussinthispaper.ThatbeingtheUnity

ofOwnershipissuewhichwouldalsoencompasstheExtentofpropertytakenorwhich

shouldbereflectedonthemap.

Thestatutesoundsverysimplebutsomeoftheissuesthatyoumaybecalledupon

inwhatiscommonlyreferredtoasa108hearingcansometimesbecomplexandrequirea

greatdealoftimeandstudyonyourbehalf.Forexample,a108hearingmightconsistof

thefollowingissuesregardingthemap.TheDepartmentofTransportation,byvirtueofNC

G.S.136‐106issupposed,withinninety(90)daysofthereceiptoftheAnswer,tofileaplat

ofthelandtakenandsuchadditionalareaasmaybenecessarytoproperlydetermine

damages.ThisisprobablythemostignoredrequirementofChapter136asmaps

sometimestakeayearorlonger.People,includingattorneys,refertothesemapsas

surveys.Theyarenotsurveys.Ifyouwilllookcloselyatanymap,youwillnotethatitdoes

notcontainthecertificatenecessaryorrequiredbyalicensedsurveyorinNorthCarolina

statingthatthemapisasurvey.Portionsofthepropertyorright‐of‐wayareinfact

surveyedbuttheentiretractoflandisnotsurveyedbytheDepartmentofTransportation

andthiscanleadtoissuesthatyouwillbecalledupontoresolve.Forexample,the

DepartmentofTransportationwilloftentimescontendthatithasanexistingright‐of‐way

andwillshowsuchpurportedexistingright‐of‐wayonthemap,thusexcludingthearea

27

fromconsiderationofjustcompensation.Untilthepropertyownerreceivesthemapfrom

theDepartmentofTransportationandtheirattorneyhasanopportunitytoreviewit,they

arenotinapositiontoagreeordisagreewiththeDepartmentastoanyexistingright‐of‐

way.ApropertyownermayfileamotionforhearingpursuanttoG.S.136‐108contending

thattheplatdoesnotaccuratelyreflectthepropertyaffectedbythetaking.Ifthisoccurs,

youwill,ofcourse,behearingfromsurveyorsonbehalfofbothpartiesandperhaps

attorneystestifyingastothechainoftitle.

Inthepast,itwascommonpracticebytheNorthCarolinaDepartmentof

TransportationandformerlytheStateHighwayCommissiontoacquireeasementsofright‐

of‐wayandsometimesnotrecordthoseeasements.N.C.Dep’tofTransp.v.Auten,106

N.C.App.489,417S.E.2d299(1992)heldthattheDepartmentofTransportationwasnot

requiredtorecordtheright‐of‐wayandthatanypurchaserstooksubjecttotheunrecorded

right‐of‐way.Unfortunately,theattorneysinAutendidnotappealthatdecisionandfor

severalyearsthisappearedtobethelawofNorthCarolina.Fortunately,forproperty

owners,N.C.Dep’tofTransp.v.Humphries,347N.C.649,496S.E.2d563(1998),was

decidedandheldthattheDepartmentofTransportation(formerlytheStateHighway

Commission)wasrequiredtorecordtheireasementsinordertobebindingonthirdparty

purchasersforvalue.HumphrieswasacasewheretheDepartmentofTransportation

underanunrecordedeasementforanoldright‐of‐way,reducedtheamountoflandfor

whichtheywouldhavetocompensatetheowner.Humphries’attorneyshada108hearing

andwereruledagainstonthebasisofAuten.Thecasewasappealedandultimatelythe

NorthCarolinaSupremeCourtheldthattheDepartmentofTransportationwasnodifferent

thananyoneelseandiftheyfailedtorecordtheireasementsofright‐of‐way,thusfailingto

28

putapurchaserforvalueonnotice,thentheDepartmentofTransportationcouldnot

asserttheclaimagainstathirdparty.

Anotherissuethatoftenariseswitha108hearingiswhatpropertyshouldbe

includedinthemap.Manytimes,youwillfindpropertieswhicharecontiguoustoone

anotherbutforsomereasontheDepartmentofTransportationhasnotincludedinthemap

orinthedescriptionofthepropertytobeaffected.TheBibleforthisissuecanbefoundin

Barnesv.N.C.StateHighwayComm’n,250N.C.378,109S.E.2d219(1959).Ifyouare

tryinganyhighwaycasesatall,IrecommendthatyoureadBarnesseveraltimes.Barnes

involvedthetakingofpropertyinForsythCountyforwhatisnowknownasInterstate

Highway40(Business40)andU.S.Highways158and421.Thelandofthepetitioner

(Barnes)contained46.86acresbeforethetaking.Therespondent(StateHighway

Commission)took12.19acresfortheexpressway(BusinessInterstate40).Allofthe

petitioner’sproperty,atthattime,wasundevelopedandconsistedofopenfieldsand

woodlands.Abranchorcreekranfromeasttowestthroughthepropertywithabout

three‐fourthsofthepropertytothenorthofthecreek.KnollwoodStreet,atthetimeofthe

taking,traversedthepropertyrunninginanorth‐southdirectioninapproximatelythe

middleoftheland.ThepropertylyingwestofKnollwoodStreetcontained15.92acres.

ThepropertylyingeastofKnollwoodStreetandnorthofaneasementtotheThruway

ShoppingCentercontained24.22acresandtheremainingportionofthepropertywas

situatedeastofKnollwoodandsouthoftheeasementtotheshoppingcenterandcontained

6.72acres.Therewerevariouszoningdistrictsassignedtotheportionedpropertyranging

from“ResidenceA‐1”(single‐familydwellings)to“BusinessB”(retailtrade,general

business,andoutlyingshoppingareas)and“ResidenceA‐2”(singlefamilyandmulti‐family

29

dwellings).TheSupremeCourtheldinBarnesthatwhethertwoormoreparcelsofland

constituteonetractforpurposesofassessingdamagesforinjurytotheportionnottaken

oroffsettingbenefitsagainstdamagesisoneoflawfortheCourt.TheCourtstatedthatthe

factorsgenerallyemphasizedareunityofownership,physicalunity,andunityofuse

(Barnes,250N.C.at384,109S.E.2dat224‐25).However,pleasenotethatundercertain

circumstances,thepresenceofalltheseunitiesisnotessential.Usually,unityofuseis

giventhegreatestofemphasis.

UnityofOwnership

Whiletheparcelsclaimedasasingletractmustbeownedbythesamepartyor

parties,itisnotarequisiteforunityofownershipthatapartyhavethesamequantityor

qualityofinterestorestateinallofthepartsofthetract.Tysonv.HighwayComm’n,249

N.C.732,107S.E.2d630(1959).

ForadetaileddiscussionofunityofownershipseeDep’tofTransp.v.Roymac

P’ship,158N.C.App.403,581S.E.2d770(2003),holdingthataparcelownedbya

partnershipandanadjacentparcelownedbyasecondpartnershipwasthegeneralpartner

couldnotbetreatedasaunifiedtractforthepurposeofassessingcondemnationdamages.

However,unityofownershipdidexistfortwoparcelsownedbydifferentpartnershipsfor

purposesofdeterminingwhetherbothparcelsmustbetreatedasoneforcondemnation

purposes,where11of13partnersinbothpartnershipswerethesame.Dep’tofTransp.

v.NelsonCo.,127N.C.App.365,489S.E.2d449(1997).Also,seeCityofWinston‐Salem

v.Tickle,53N.C.App.516,281S.E.2d667(1981)foranexcellentdiscussionofunityof

ownership,unityofuseandphysicalunity.

30

PhysicalUnity

Thegeneralruleisthatparcelsoflandmustbecontiguousinordertoconstitute

themasasingletractforseverance,damagesandbenefits.Butinexceptionalcases,where

thereisanindividualuseofunity,ownershavebeencommittedtoincludeparcelsin

condemnationproceedingsthatarephysicallyseparateandtotreatthemasaunit(Barnes

at384‐385).

UnityofUse

Theunityofuseisdeterminedbywhetherthevarioustractsoflandarebeingused

asanintegratedeconomicunit.CityofWinston‐Salemv.Slate,185N.C.App.33,647

S.E.2d643(2007).Thefactthattheparcelsoflandarephysicallyseparatefromone

anotherdoesnotnecessarilymeanthattheownercannottreatthemasasingleunit.

Dep’tofTransp.v.Rowe,138N.C.App.329,531S.E.2d836(2000)rev’donother

grounds,353N.C.671,549S.E.2d203(2001).

Howaboutplannedfutureuses?Generally,presentuseofthetractsasoneis

required.However,ifaparcelorparcelshavebeensurveyedandplattedfordevelopment

priortonoticeofcondemnation,thelandownerwillmeettheunityofusetest.Townof

Hillsboroughv.Crabtree,143N.C.App.707,547S.E.2d139(2001).

EvidenceRelatingtoValuation

OneofthemostdifficultareasforevenexperiencedJudgesandattorneysintrying

condemnationmattersiswhatevidenceshouldbeadmittedduringthepresentationofthe

trialontheissueofjustcompensation.Rule701statesthatifthewitnessisnottestifying

31

asanexpert,histestimonyintheformofopinionsorinferencesislimitedtothoseopinions

orinferenceswhichare(a)rationallybasedontheperceptionofthewitness,and(b)

helpfultoaclearunderstandingofhistestimonyorthedeterminationofafactinissue.It

isrumoredthatsomefolksarenowtakingtheapproachthatonly“expertwitnesses”can

testifyastothevalueofpropertyinvolvedinaneminentdomainproceeding.Inthis

writer’sopinion,thatisincorrect.

Awitnesswhohasknowledgeofvaluegainedfromexperience,information,and

observationmaygivetheiropinionofthevalueofspecificrealproperty.Brandisand

BrownonNorthCarolinaEvidence,7thEdition,Section180,citingRedevelopment

Comm’nv.DennyRollandPanelCo.,273N.C.368,159S.E.2d861(1968),State

HighwayComm’nv.Conrad,263N.C.394,139S.E.2d553(1965).

Inaddition,ownershavealwaysbeenabletotestifyastothevalueoftheirproperty

eventhoughtheirknowledgeandexperiencewouldnototherwisequalifythemtodoso.

N.C.StateHighwayComm’nv.Helderman,285N.C.645,207S.E.2d720(1974).In

addition,thewitnessofferingsuchtestimonymaybecross‐examinedabouttheir

knowledgeofthevalueorpriceofdissimilarneighboringland,thoughnotordinarilyabout

thevalue,saleprice,orofferingpriceofsuchland.DukePowerCo.v.Winebarger,300

N.C.57,265S.E.2d227(1980).Dep’tofTransp.v.Burnham,61N.C.App.629,301S.E.2d

535(1983)heldthat,whileawitnessmaybeaskediftheyarefamiliarofthepricesofsales

ofsimilarordissimilarproperties,theymaynotbeaskedaboutthespecificprice,unless

theJudgeconductsahearingoutsideofthepresenceofthejury.

Ifthewitnesstestifiestheyarefamiliarorarenotfamiliarwithsuchsalesprice,

thentheimpeachmentprongissatisfied.Counselshouldnotbeallowedtoaskaboutthe

32

specificsalesprice,unlessyouconductavoirdireandmakespecificfindingstosupportits

admission.If,atanytime,anypartyinacondemnationproceeding(propertyowneror

condemnor)attemptstointroduceevidenceofspecificsalespricesduringthedirectexam

orcross‐examinationofanywitness,IwouldsuggestthatyoureadDukePowerCo.v.

Winebarger,300N.C.App.57,265S.E.2d227.Ihaveattachedacopyofthatcaseforyour

conveniencetothistranscript.TheWinebargercasewaswherethelandowner’switness

wascross‐examinedaboutspecificsalespricesinattemptingtoimpeachthewitness’s

credibilityafterthewitnesshadopinedastovalue.TheSupremeCourt,inreversingthe

trialcourt,heldthattherewasnoshowingthatanyofthepropertiesreferredtointhose

questionswereinanywaycomparabletorespondent’sproperty.Therefore,therewasno

foundationfortheuseofsuchstatementsoftheirvaluesorsalespricesascompetent

circumstantialevidenceofthevalueofrespondent’sland.Despitethetrialcourthaving

givenalimitinginstructiontothejurynottoconsiderthetestimonyassubstantive

evidenceforthepurposeofevaluatingthelandowner’sproperty,theSupremeCourtheld

thattheadmissionofsuchtestimony,evenwithsuchlimitinginstruction,resultedinerror

prejudicialtotherespondents(landowners).Infact,theCourtwentontosay

“…that,whileawitness’sknowledge,orlackofit,ofthevaluesandsales

pricesofcertainnon‐comparablepropertiesintheareamayberelevantto

hiscredibility,thespecificdollaramountofthosevaluesandpriceswill

rarely,ifever,besorelevant.Theimpeachmentpurposeofcross‐

examinationissatisfiedwhenthewitnessrespondstoaquestionprobingthe

scopeofhisknowledge.Anyfurtherinquiry,whichstatesorseekstoelicit

thespecificvaluesofpropertydissimilartotheparcelsubjecttothesuit,isat

33

bestmeresurplusage.Atworst,itrepresentsanattemptbythecross‐

examinertoconveytothejuryinformationwhichshouldbeexcludedfrom

theirconsideration.”Winebarger,300N.C.App.at64‐65,265S.E.2dat231‐

32.

JusticeExumthenwentontoreiteratethelawofNorthCarolina,whichprovided

thatthepricepaidatavoluntarysaleoflandsimilarinnature,location,andconditionof

thelandinvolvedinthesuitisadmissibleasindependentevidenceofthevalueoftheland

inquestion,ifthesalesarenottooremoteintime.Whethertwopropertiesaresufficiently

similartoadmitthesalespriceofoneascircumstantialevidenceofthevalueoftheotherin

questionistobedeterminedbythetrialjudge,usuallyonvoirdire.Statev.Johnson,282

N.C.1,191S.E.2d641(1972),RedevelopmentComm’nofHighPointv.DennyRolland

PanelCo.,273N.C.368,159S.E.2d861.

Asapracticalmatter,Ihaveneverseentwoparcelsofrealestatethatareidentical.

ThisisespeciallytrueinthemountainsofWesternNorthCarolinawheretopographycan

varygreatlyonadjoiningparcelsofrealestate.Therearegenerallyotherdissimilarities

betweenpropertiessuchasroadfrontage,availabilityofutilities,zoning,the

improvementslocatedthereon,trafficcounts,conditionoftheimprovementslocated

thereon,topographyandthelistgoeson.Anyonewhohastriedaneminentdomain

proceedingknowsthatappraisersgenerallymakeadjustmentstothesalesusedintheir

marketorsalescomparisonapproach.Theywillgenerallymakeadjustments,whichare

basedonnothingmorethantheirexperienceandtheirsubjectivedecisionastohowmuch

apropertyshouldbeadjustedupwardordownwardbaseduponthefactorbeing

considered.Ifalawyerforanypartyisattemptingtoelicitspecificsalespricesevidence,

34

eitherondirectexaminationoroncrossexamination,youshouldimmediatelysendthe

juryoutoftheroomandconductavoirdireasWinebargersuggests.

Followingtheconclusionofthevoirdire,youmustthenmakefindingsoffactto

determinewhetherornotthesaleorsalesinquestionaresosimilartothesubject

propertythattherewillnotbeprejudicetotheopposingpartyoftheadmissionofsuch

salesprice.In37yearsofpracticinglaw,Ihaveneverattemptedtointroduceinto

evidence,eitherbydirectorcross‐examination,salespricesofpropertiesconsideredby

thewitnessthatIamexamining.

“Itiswithinthesounddiscretionofthetrialjudgetodeterminewhether

thereissufficientsimilaritytorendertheevidenceofthesaleadmissible.It

isthebetterpracticefortheJudgetohearevidenceintheabsenceofthejury

asabasisfordeterminingsuchadmissibility.”Barnes,250N.C.at394,109

S.E.2dat232.

InN.C.StateHighwayComm’nv.Privett,246N.C.501,99S.E.2d61(1957),a

witnesswasaskedoncross‐examinationwhetherheknewthevaluesofanyotherproperty

intheareaorthepriceswhichsuchpropertieshadbeensoldandheansweredinthe

negative.JusticeBobbitstated,

“Thetestimonysoelicitedwasrelevantsolelytothecredibilityofthewitness

andtheweight,ifany,tobegiventohistestimony.Letitbenotedthatnone

ofthequestionsundertooktoelicittestimonyastothevaluationsorsale

pricesoftheproperties,thequestionsbeingdirectedtowhetherthewitness

hadopinionsorknowledgewithreferencethereto.”Privett,246N.C.at506‐

07,99S.E.2dat65.

35

Rule702anditsrecentamendment,havecreatedagreatdealofconfusioninthe

trialofeminentdomaincases.Itisrumoredthatsomejudgesbelievethatonlypersons

whoqualifyas“experts”pursuanttoRule702canopineastothevalueoftheproperty

bothbeforeandafterthetakingbytheDepartmentofTransportation.Ifthatisthecase,

thenlandownersareingreattrouble.

Rule702statesapersontenderedasanexpertmaytestifyifqualifiedby

knowledge,skill,experience,trainingoreducation,ifallofthefollowingapply:

1. Thetestimonyisbaseduponsufficientfactsordata.

2. Thetestimonyisaproductofreliableprinciplesandmethods.

3. Thewitnesshasappliedtheprinciplemethodsreliablytothefactsofthe

case.”

TwoqualifiedMAIcertifiedappraiserscanbeappraisingthesamepieceofproperty

andeachonemayselectfoursalesthattheyconsiderappropriatesalesforcomparisonand

neitherhasselectedthesamesale.Theseappraisers,ifquestionedunderoath,wouldsay

thatthereisnowayofdeterminingwhoisrightorwrongastheselectionofthesalestobe

usedforthecomparisonmarketapproachisstrictlyleftuptotheappraiserbaseduponhis

orherexperienceandtheirsubjectivedecisionmakingprocess.Inaddition,evenifthetwo

appraisersselectthesamepropertyforacomparisonsalesapproach,theadjustmentsthat

theymaymaketosuchsalescanvarydrasticallyandagainthereisnotesttoresorttoto

determinewhoisrightorwhoiswrong.Inshort,appraisingismoreofanartthana

science.Mysuggestion,withallduerespect,istoallowthelawyersforboththe

condemnorandthepropertyowner,todotheirjobsandpointoutshortcomingsofany

personwhoisopiningastovalue,whetheritisbaseduponthesalestheyhaveselectedfor

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marketcomparisonortheadjustmentstheyhavemadetosuchsales,whetherornotthey

arebiasedforanyreason,andwhetherthereareinconsistenciesintheirappraisal.

Inaddition,manytimes,thesalesusedbytheappraisersarebypurchasersand

sellerswhoareactuallywhatIcall“marketmakers.”Thesearealsocommonlyreferredto

astradersorpeoplewhospeculateandbuyandsellrealestateforaliving.Oftentimes,

thesearethemostknowledgeablewitnessessincetheydonothavetogotothecourthouse

togettheirinformationonsalesprices,theyknowitbecausetheyliveitandtheyputtheir

ownmoneyatriskinmakingsuchpurchasesandsales.Thefactthatawitnessdoesnot

carrythenamecertifiedappraiserdoesnotprecludethewitnessfromopiningastovalue.

Whocantestifyaboutvalue?

Landowner–Generallyspeaking,alandownerisallowedtogivehisorheropinion

ofvalue.ResponsibleCitizensinOppositiontoFloodPlainOrdinancev.Cityof

Asheville,308N.C.255,302S.E.2d204(1983),LeaCo.v.N.C.BoardofTransp.,308N.C.

603,304S.E.2d164(1983),N.C.StateHighwayComm’nv.Helderman,285N.C.645,207

S.E.2d720.Therearenumerousothercasesthatalsostatewithoutequivocationthatthe

ownerofthepropertyisentitledtoexpresshisorheropinionastothevalueofthe

propertyinquestioneveniftheirknowledgeandexperiencewouldnototherwisequalify

them.SeeN.C.StateHighwayComm’nv.HeldermanandResponsibleCitizensin

OppositiontoFloodPlainOrdinancev.CityofAsheville.Inaddition,whilethe

Commissionersmaybecalledtotestifyastotheiropinion,thereportbythe

Commissionersisnotcompetentasevidenceuponthetrialofjustcompensationnorshall

evidenceofthedepositbythecondemnorbecompetentuponthetrialissueofjust

compensation.NCG.S.40A‐48(d),NCG.S.136‐109(d).

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AppraisalWitnesses–Clearly,anyappraiserattemptingtotestifymustuseoneof

theacceptablemethodsofappraisalinmakinghisorherappraisalofthesubjectproperty

bothinitsbeforeandaftervalue.Appraisersgenerallyusethreemethodsofappraisal,

whicharereferredtoasthecostapproach,marketcomparisonapproach,and

capitalizationofincomeapproach.

Thecostapproachiswheretheappraiserattemptstolocateparcelsofunimproved

realestatewhicharesimilartothesubjectpropertyandtowhichtheappraiserwillmake

adjustmentsfortopography,zoning,utilities,frontage,trafficcount,marketconditions

(timeofsaletodateoftake)aswellasotheradjustmentstotrytocomeupwithavalueof

therawlandbasedonapersquarefootpricetodeterminethevalueofthesubject

property.Theywillthen,usuallyusingMarshall&Swift,orsometimesinconsultationwith

anindependentthirdparty,getthecostofreproducingthebuilding.Theywillthen

depreciatethecomponentsofthebuildingbasedupontheirobservationofthecondition

andusingtheirsubjectivedeterminationastotheusefullifeofthatportionofthebuilding

tocomeupwithavalueofthestructure(s).

Thesalescomparisonormarketcomparisonapproachiswheretheappraiserwill

attempttolocateactualsalesofpropertythatheorshedeemstobesimilartothesubject

propertybutagainmakingadjustmentsforsizeofthetract,configurationofthetract,

zoning,roadfrontage,access,topography,marketconditions,etc..Theywillgenerally

comeupwitharangeofvaluesandfromwhichtheywillselect(atrandom)avaluetobase

theiropinionupon.

Thecapitalizationofincomeapproachisanapproachthatismostoftenusedwhere

propertyisgeneratingincome.Pleasenotewiththeoneexceptionofadairyfarm.Cityof

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Statesvillev.Cloaninger,106N.C.App.10,415S.E.2d111(1992),theincomeofa

businessbeingoperatedonthepropertyisnotadmissible.Dep’tofTransp.V.Fleming,

112N.C.App.580,436S.E.2d407(1993).Theincomereferredtoistherentthatproperty

iscapableofgenerating.Inotherwords,theappraiserwilldeterminebyexaminingother

propertiesthatarebeingrentedtodetermineasuitablerentalrateforthesubjectproperty

andthenselectacapitalizationrate,whichheorshedeemsappropriateforthetypeof

investmentandthetimeofthetaking,todetermineavalue.Example:Anappraiser

determinesthatapieceofpropertybeingacquiredbytheDepartmentofTransportation

couldberentedfor$120,000peryear.Theappraiserdeterminesthattheappropriate

capitalizationrateis6%.Assumingthatitisatriplenetlease,thatisalloftheincome

goingdirectlytotheownerofthepropertyandthetenantpayingtaxes,insuranceand

othercosts,thenthevalueofthepropertywouldbe$2,000,000,whichisdeterminedby

taking$120,000anddividingitby.06($120,000÷ .06=$2,000,000.00).Youwillmost

oftenseethisapproachbeingusedoncommercialpropertiesthatareeitherbeingrented

orcapableofbeingrentedtogenerateincome.Donotconfusethiswithallowing

introductionoftheevidenceoftheincomegeneratedbythebusinesslocateduponthe

property.Dep’tofTransp.v.Fleming,112N.C.App.580,436S.E.2d407.Theonly

exceptiontotheincomeisstatedintheCloaningercase,althoughotherjurisdictionshave

madeotherexceptions,butnotNorthCarolina.

Realtors–Somecondemnorattorneyswilltaketheapproachthatarealtorisnot

qualifiedtotestifyandexpresshisorheropinionastovalue.Thisisnotcorrect.Priorto

2012,theNorthCarolinaAppraiser’sActrequiredthatpersonsperformingappraisalsfor

feetohaveanappraisallicenseorcertificatefromtheNorthCarolinaAppraisalBoard.An

39

exceptionwasprovidedforlicensedrealestatebrokersprovidingaCMA(Comparative

MarketAnalysis)forperspectiveoractualbrokerageclientsorforrealpropertyinvolved

inanemployeerelocationprogram.Thiscreatedanobviousproblemsincerealtorsdidnot

wanttodothestudynecessarytodeterminethevalueforapieceofproperty,gotocourt

andtestifyandbebeatenupbytheotherlawyer,andreceivenocompensationforsame.

ThisproblemwasaddressedintheNorthCarolinaGeneralAssemblyin2012andinSenate

Bill521,whichwasenacted.Brokerpriceopinionsarenowauthorizedforthefollowing:

1. anexistingorpotentialsellerofaparcelofrealestate;

2. anexistingorpotentialbuyerofrealproperty;

3. anexistingorpotentiallessorofaparcelorinterestinrealproperty;

4. anexistingorpotentiallesseeofaparcelorinterestinrealproperty;

5. athirdpartymakingdecisionsorperformingduediligencerelatedtothe

potentiallisting,offering,sale,option,leaseoracquisitionpriceofaparcelor

interestinrealproperty;

6. anexistingorpotentiallienholderorotherpartyforthepurposeother

thanasthebasistodeterminethevalueofparceloraninterestinreal

propertyforamortgageloanorigination,includingfirstandsecond

mortgages,refinances,orequitylinesofcredit.Theprovisionsofthis

subsectiondonotprecludethepreparationofbrokerpriceopinionor

comparativemarketanalysistobeusedinconjunctionwithorinadditionto

anappraisal.

Inshort,abrokercannowtestifyforafeeinacondemnationcasebutmaynotdoa

comparativemarketanalysisthatwillbeusedbysomelenderinconjunctionwithany

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mortgageloan.Inotherwords,theappraisersprotectedtheirturfinsofaraslending

institutionswereconcerned.TheNorthCarolinaRealEstateCommissionadopted,in21

NCAC58A.2202,thestandardsthatabrokermustadheretoinperformingabrokerprice

opinionorcomparativemarketanalysisforafee.Ihaveattachedthatportionofthe

AdministrativeCodetotheappendixhereto.

LayWitnesses–Finally,anyonewhoisfamiliarwiththesubjectpropertyandreal

estatevaluesshouldbeallowedtotestifysubjecttocrossexamination.Some“traders”

havemuchmoreknowledgeofvaluesandsalespricesincertainlocalesthanappraisers.

Theycantellyouwhatpropertiessoldfor,theapproximatedateofsuchsaleaswellasany

conditionsofthesaleanddifferencesbetweenthesubjectpropertyandthepropertywhich

sold.Thesepeopleclearlyhavetheknowledgetoassistthejuryindeterminingtheissueof

justcompensation.RememberRule701providesthatapersonnottestifyingasanexpert

maytestifyintheformofanopinion(s),whichare:

(a) rationallybasedontheperceptionofthewitness;and

(b) helpfultothedeterminationofafactissue.

Surelyapersonwhoisfamiliarwiththesubjectproperty,salesandsalespricesof

similarpropertyacquiredthroughhisorherexperienceand/orpersonaldealingscan

testifyandtheirtestimonywillassisttheissueoffact.

Awitnesswhoestablisheshisfamiliaritywiththelandinquestionandstateshehas

anopinionsatisfactorytohimselfastoitsvalueatthetimeinquestioniscompetenttogive

hisopinionastoitsvalue.Harrelsonv.Gooden,229N.C.654,50S.E.2d901(1948).

41

APPENDIXA

§ 40A-40. Notice of action.

(a) Not less than 30 days prior to the filing of a complaint under the provisions of G.S. 40A-

41, a public condemnor listed in G.S. 40A-3(b) or (c) shall provide notice to each owner (whose

name and address can be ascertained by reasonable diligence) of its intent to institute an action to

condemn property. (The notice shall be sent to each owner by certified mail, return receipt

requested. The providing of notice shall be complete upon deposit of the notice enclosed in a

postpaid, properly addressed wrapper in a post office or official depository under the exclusive

care and custody of the United States Postal Service. Notice by publication is not required.

Notice to an owner whose name and/or address cannot be ascertained by reasonable diligence is

not required in any manner.)

The notice shall contain a general description of the property to be taken and of the amount

estimated by the condemnor to be just compensation for the property to be condemned. The

notice shall also state the purpose for which the property is being condemned and the date

condemnor intends to file the complaint.

(b) In the case of a condemnation action to be commenced pursuant to G.S. 40A-42(a), the

notice required by subsection (a) of this section shall substantially comply with the following

requirements:

(1) The notice shall be printed in at least 12 point bold legible type.

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(2) The words "Notice of condemnation" or similar words shall conspicuously appear on the

notice.

(3) The notice shall include the information required by subsection (a) of this section.

(4) The notice shall contain a plain language summary of the owner's rights, including:

a. The right to commence an action for injunctive relief.

b. The right to answer the complaint after it has been filed.

(5) The notice shall include a statement advising the owner to consult with an attorney

regarding the owner's rights.

An owner is entitled to no relief because of any defect or inaccuracy in the notice unless the

owner was actually prejudiced by the defect or inaccuracy, and the owner is otherwise entitled to

relief under Rules 55(d) or 60(b) of the North Carolina Rules of Civil Procedure or other

applicable law. (1981, c. 919, s. 1; 1981 (Reg. Sess., 1982), c. 1243, s. 3; 1999-410, s. 1.)

A Basic Overview of Eminent Domain and Certain Issues · 1 A Basic Overview of Eminent Domain and Certain Issues Eminent domain proceedings in North Carolina are governed by Chapter

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