Eminent Domain: Can the Government Reduce the ''Just Compensation'' Deposited With the Court?

In North Carolina, the answer is "no." Once the government deposits with the court what it believes to be the proper amount of "just compensation" to be paid for private land being taken through the power of eminent domain, the government has no authority to reduce the deposit. This is true even if the landowner goes forward and litigates the question of whether the amount deposited is, in fact, just compensation. In this sense, what the government deposits with the court is the minimum payment that the government will pay with one exception. The only way the government can pay less than what is deposited is:

• If the landowner challenges the amount that is paid AND
• The court determines that the fair market value of the land is less than the amount deposited

If that happens, the government is entitled to a refund from the deposit (or the landowner) of the amount that was overpaid. N.C. Gen. Stat., § 136-121 and § 40A-56. Here are a few things to know.

When a governmental unit or agency decides to begin a public works project -- like building a road or highway -- the government must determine if private land must be taken for completion of the project. Generally, governmental agencies will try and purchase the necessary land. Further, with some projects, governmental agencies will look for alternatives methods or placements of the project that might avoid the need to use eminent domain to take private land.

Once it is determined that private land must be taken via eminent domain, the government will have the property in question appraised. Usually, this is done by "in-house" appraisers employed by the government, but appraisals can also be obtained from private appraisers hired for the purpose.

The government's appraisal will then become the basis for the decision about how much to deposit with the court as part of the process of eminent domain. Generally, the legal name for this is a "condemnation proceeding."

But, importantly, landowners have the full right and power to obtain their own appraisals. This is done by hiring a real estate appraiser (in the same way that the government can hire a real estate appraiser). Indeed, if your land is being taken by the government, you SHOULD obtain an appraisal if only to have some peace of mind that the government is paying a fair price.

In North Carolina, most condemnation proceedings are "quick take" proceedings. This means that title and the right to possess private land is transferred almost immediately to the governmental agency. All that is required is that the government file the proper papers AND deposit the "just compensation" with the local court. Once that is done, the governmental agency has automatic title to the land and the right to immediate possession. Because of this, as noted above, the government has no authority to reduce the deposit amount. See City of Charlotte v. University Financial, 818 SE 2d 116 (NC Court of Appeals 2018) (condemnor can increase the deposit amount, but cannot reduce it).

Landowners have a right to have the money that has been deposited. Generally, the landowner asks the court for permission to take the money. The court may take some time to ensure that there are no other claimants to the money -- like a lender holding a mortgage on the land. But, pretty quickly, the court will release the funds.

Yes, a landowner may ask to have the deposit released and still litigate to obtain more "just compensation." For example, assume certain land is being taken in condemnation proceedings by the North Carolina Department of Transportation ("NCDOT"). Assume that the NCDOT has the land appraised and that appraisal says the land has a fair market value of $200,000. Let's further assume the landowner hires an appraiser who determines the value is $300,000. Finally, let's assume the NCDOT uses its appraisal and deposits with the court $200,000. In that kind of circumstance, the landowner might well decide that it is worth litigating to obtain more money.Note that the decision to litigation over the fair market value of the land must be made quickly. As you are considering your options, it is probably wise to consult with experienced North Carolina eminent domain and takings attorneys before making a final decision.

For more information, and to schedule a confidential consultation with experienced and dedicated eminent domain and condemnation attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our “Contact” page or give us a call at 704-370-2828. We handle land use, zoning and condemnation legal matters in federal court, in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.