Turner Padget Insights
Eminent Domain in South Carolina: Don't Sell until the Price is Right
Posted On Apr 16, 2015
Proper ty owners in South Carolina no longer have to fear that their land will be taken from them for an economic development project. Voters put the brakes on what they saw as the abuse of eminent domain in 2006 with a constitutional amendment that forbids the use of eminent domain for economic development.
Nonetheless, eminent domain is alive and well for other purposes in South Carolina, and here’s what you need to know.
The narrower use of eminent domain is tough to challenge
The seminal event in eminent domain law was the U.S. Supreme Court’s 2005 ruling in Kelo v. City of New London. Suzette Kelo, whose little house in the Connecticut city stood on land where the city envisioned a grand economic redevelopment plan that included hotels, offices and the expansion of a pharmaceutical company’s research facility, didn’t want to move. Her lawyers argued that using eminent domain to benefit the private developers involved in the big project wasn’t a “public use,” as eminent domain laws require. The city argued that the project’s promise of new jobs and an expanded tax base met the requirement of taking land only for public use.
The high court sided with the city, saying that government had wide discretion to interpret what constitutes public use in eminent domain. The decision prompted outrage across the country, and many states passed laws to restrict the use of eminent domain.
In South Carolina, voters approved a constitutional amendment in 2006 that forbids taking property for economic development. The law also narrowed the circumstances under which governments can seize property because it is “blighted,” saying that it has to constitute a clear danger to health and safety.
The limits of the South Carolina law have not been tested extensively in the courts, probably because local governments have been reluctant to pick fights on the issue. The national view has been that “public use” includes parks and recreation areas that are open to everyone, as well as roads, pipelines, electric lines, reservoirs, sewer plants and similar projects that clearly have a broad public benefit.
In our experience, eminent domain in South Carolina is now most likely to be used by the state highway department or public utilities.
You can challenge the offer
You are not likely to be successful challenging the use of eminent domain by the highway department or a utility, but you may be able to secure a better price. Offers are based on appraisals, and determining property values is not an exact science.
This is especially true in assessing the diminished value of remaining land, a process that is sometimes called the “before and after” rule, and it comes into play when a portion of property is taken and that results in the remaining property losing value. A homeowner might lose only 20 feet of frontage for a road, but removing that buffer between the living room and a busy road arguably has reduced the resale value of the property.
How to make the challenge
If you think the offer isn’t fair, the place to start is with an independent appraisal. You shouldn’t expect a windfall if your property is condemned, but you should get a fair price in line with the appraisal. On larger takings, the state or utility usually makes an offer that leaves a little room for negotiation.
Before condemnation, the condemnor will have the property appraised, and then must make a “reasonable” effort to negotiate a fair price, though there is no guidance on what this means. Offering the appraised value seems to satisfy this requirement.
If no agreement is reached, the condemnor begins the condemnation process by sending a notice to the landowner, with a proposed price for the taking. You have 30 days to accept it. If you don’t respond, that is considered a rejection of the offer. The condemnor then has the option of taking the matter to a trial court or an appraisal panel with each side picking one of the members and the third agreed upon by both parties.
Should the matter proceed to trial, the landowner may recover its costs and attorney’s fees if the verdict is closest to the value of the property that the landowner presented at trial. Even if the verdict is closest to the value presented by the condemnor, the condemnor may only recover its attorney’s fees from landowner if it proves that the landowner’s challenge is raised or litigated in bad faith.
As with all legal matters, there are deadlines and procedures to follow, and retaining legal counsel experienced in such matters as soon as you receive an offer will ensure that you don’t lose because you didn’t follow the right process. Also, an experienced eminent domain lawyer will know what arguments are more likely to be successful, and what experts will help prove your case in a dispute over valuation.
Jeffrey L. Payne is a shareholder in Turner Padget’s Florence, S.C., office. He focuses his practice on commercial litigation, with an emphasis on business torts, construction, commercial collection, eminent domain, foreclosures, banking and probate disputes. He may be reached at (843) 656-4432 or by email at jpayne@turnerpadget.com.
