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How does condemnation impact the value of real property?

On Behalf of | May 26, 2023 | Eminent Domain |

In Texas, state authorities can use eminent domain laws to lay claim to privately-owned real property. The state can condemn agricultural, commercial, industrial and residential properties for projects that will benefit the public, such as utility projects and highway expansions.

Texas has recently committed to several large projects to expand existing highway infrastructure, and those projects have faced some pushback from local communities. Despite a regulatory review of some of various highway expansion projects, many large-scale development projects that rely on eminent domain law will move forward and force people to sell properties that they would prefer to retain.

Some property owners fight eminent domain claims, but then they have to worry about changing property value. How might condemnation affect what a property is worth?

Condemnation changes how someone uses a parcel

Perhaps a vacant parcel was previously on a busy corner but will now be under a highway overpass or cut off from the main thoroughfare. Maybe a property previously was residential but will now see a huge amount of traffic coming through the area on a daily basis. Property owners often find that they will no longer be able to use a parcel for the purpose they had initially intended after nearby condemnation and a large public project. Being unable to use the property as intended can diminish the fair market value of the land.

A change in local zoning can drastically alter what the property is worth. Someone’s enjoyment of the property can also shift drastically after nearby condemnation. The area may be much noisier, and there could be unpleasant sights or smells as opposed to the pastoral or residential view previously enjoyed. In some cases, it could be difficulty accessing the highway due to the new construction or an inability to continue easily using the property which will diminish its value after condemnation.

The good news for those worried about how their property value may drop after condemnation proceedings in Texas is that the fair market value offered during the condemnation process should not reflect those factors but only the fair market value of the property as it stands currently. If someone does choose to fight to retain their property, they may need to weigh the potential reduction in property value and usefulness against the amount offered by the authority proposing the condemnation.

For some property owners, it makes financial sense to push back against condemnation efforts. For others, the biggest concern may be negotiating an appropriate value for the property rather than desperately seeking to avoid its sale, as it will be less useful and valuable after the project begins. Evaluating the impact that a project will have on nearby property values may help owners to make more informed choices about their rights and options under the law.