Fair Market Value versus Minimum Compensation: Understanding Eminent Domain Law Helps You Get the Best Deal for Your Business
Minnesota is one of a handful of states with a law requiring the government to pay minimum compensation for the property it seizes. The law was enacted in 2006, and since then, case law has helped define how the statute works in the real world. Here’s a look at minimum compensation and how understanding the law helps you get the best deal for your business.
Defining Fair Market Value and Just Compensation
For years, governments have had to offer property owners fair market value for properties seized under eminent domain laws. In determining fair market value, the government’s appraisers look at comparable recently sold properties in the area.
The government uses this fair market value to determine just compensation for your property. Just compensation may also include relocation expenses, time, stress, and even staffing changes associated with your forced move.
Defining Minimum Compensation in Minnesota
Around 2006, it became clear that the state’s eminent domain laws did not adequately compensate property owners. Valuing a property is not black and white and includes a lot of intangibles that make putting a price on it very difficult. Property owners, especially commercial property owners, found that the just compensation they received for their seized properties was not enough to assist them with purchasing a similar replacement property.
The minimum compensation statute, Minnesota Statute 117.187, tries to bridge that gap. It requires the government to pay a minimum amount that will allow a property owner to purchase a comparable property within their community.
Since 2006, case law has helped clarify the minimum compensation law. Minimum compensation is not meant to provide a replacement property; instead, it’s meant to provide money equivalent to what would be needed to purchase such property. To determine minimum compensation, appraisers can use any property in the community, not just recently sold properties or properties for sale. But currently, the law does not stipulate what happens when there is not comparable property to consider.
If your business is being condemned by the government for a public project, it’s important for you to know your rights under Minnesota law. I can help you understand current laws and help you negotiate the best deal for your property. Contact Jon Morphew and the Morphew Law Office, PLLC at 612-790-9189 today for a free consultation.