If the government takes your property for public use by eminent domain, it should make you whole, right? After all, eminent domain is the government’s ability to force an unwilling owner to sell her property, so shouldn’t the government have to put the owner in as good a position as she was before the taking?
Not quite. If only “Just Compensation” as required by the constitution were truly just.
A tale of eminent domain woe out of Cumberland County, Virginia has lessons for Hawaii property owners. Read the article for the details on the facts, but here’s the short form: the county auctioned off excess property (a dilapidated school), and a local realtor purchased and renovated the property, investing $360,000 into the effort. Then the government changed its mind, “decided they needed the school after all,” condemned it, deposited $200,000 to the court as “just compensation,” and seized it from the realtor.
The playing field is so tilted against [the former owner] that if the financial pressures force her to surrender and take the $200,000, she loses the right to challenge the constitutionality of the taking.
In other words, the law pressures her in several ways to settle for less money than her property is worth because it will be so expensive to defend her rights.
. . .
Instead, even if [the owner] prevails and proves that she was cheated, she will have to pay all her legal expenses – court costs, experts, lawyers and appraisers – from her final award. In other words, even if she wins, she will walk away with less than her property’s fair-market value.
Virginia law, apparently, is not all that much different from Hawaii’s current eminent domain law. Attorney’s fees and costs of litigation are not recoverable as part of a just compensation award, unless the condemnor acts in bad faith, or abandons the taking action before judgment. Even if the government is shown to have offered less than the fair market value of the property.
If a property owner believes the government has undervalued compensation, the only way to try and get more is to hire attorneys and appraisers, most of whom aren’t going to do the work for free. So even if an owner eventually prevails, the cost of obtaining fair compensation may eat up any extra awarded. An owner can tap into the deposit, but like Virginia, that will deemed to be an abandonment of all defenses except the amount of compensation, and the owner loses all right to challenge the taking itself. Haw. Rev. Stat. § 101-31.
Consequently, many property owners – especially small property owners – do not have the resources or the incentive to object, even if they know that their property has been undervalued. Eminent domain becomes a “take it or leave it” situation, and most owners have little choice but to take it.