Only one-seventh to one-eighth of an iceberg can be seen above water. The rest is hidden below the surface. Icebergs are therefore a great danger to ships. The phrase “tip of an iceberg” indicates that one may only be seeing a part of the whole picture.
In the same way, it is easy to focus on the taking in a condemnation case and fail to appreciate the whole picture. But the taking is often the tip of the iceberg. There is a larger parcel that must be identified and addressed to ensure that compensation is accurately determined. Just as an iceberg can sink a ship, the failure to recognize the larger parcel can sink a condemnation case.
Identifying the property out of which the taking occurs is one of the first and most important steps in the estimation of compensation owed in a condemnation case. Except in cases where the taking results in a special benefit to remaining property, the standard measure of compensation is either the market value of the taking, in a whole taking case, or the difference in market value before and after the taking, in a partial taking case. Neither measure can be understood without proper identification of the property before the taking, the larger parcel.
There are three situations in which an understanding of the larger parcel is important to a correct determination of compensation.
- Separate Economic Unit: a partial taking where the part taken cannot be valued at its full market value without consideration of additional property;
- Assemblage: a whole taking where the property cannot be valued at its full market value without consideration of additional property; and
- Remainder Damages: a partial taking where the taking impacts the market value of additional property owned by the landowner.
In each instance, the controlling factor is market value. Market value is the fundamental basis for just compensation, and the market will define the larger parcel. Depending on market considerations, the larger parcel may be some portion or all of the landowner’s ownership or may include property under disparate ownership.
The main market factor to be considered is unity of use. Usually, but not always, remainder damages will be based on impacts to the existing use of the property. However, property must be valued at its highest and best use, and it is a property’s highest and best use that will determine the larger parcel in the eyes of the market.
Additionally, courts have imposed non-market considerations in the determination of the larger parcel. Most significant of these considerations are unity of ownership and physical contiguity. Neither of these considerations should trump the market’s view of the property and the larger parcel.