Eminent Domain Appraisals for California Property Owners

How does the agency decide what to offer for my property?

Under Government Code Section 7267.1, the public entity must make every reasonable effort to buy the property by negotiation, and the property must be appraised before negotiations begin. You, or someone you designate, must be given the chance to go along with the agency's appraiser on the inspection. Take that chance. It is your best opportunity to point out what makes the property valuable.

Under Section 7267.2, before it adopts a resolution of necessity and starts negotiating, the agency sets the amount it believes is just compensation and offers it to the owner of record. That amount "shall not be less than the public entity's approved appraisal of the fair market value of the property." The agency also gives you a written statement and summary of the basis for the offer, including the date of valuation, highest and best use, applicable zoning, the principal sales, cost or income analysis behind the number, and, on a partial taking, the compensation for the part taken and the damages to what remains, stated separately.

That summary is where an independent appraiser starts. Did the agency's appraiser pick the right highest and best use? The right comparable sales? Did it account for the way the project affects the part you keep?

Will the agency pay for my own appraisal?

Up to a limit, yes. Code of Civil Procedure Section 1263.025 says a public entity "shall offer to pay the reasonable costs, not to exceed five thousand dollars ($5,000), of an independent appraisal ordered by the owner" of property it offers to buy under a threat of eminent domain. The appraisal must be done by an appraiser licensed by the state. The statute names the Office of Real Estate Appraisers, now the Bureau of Real Estate Appraisers, which licenses Paul Marinkovich as a California Certified General Appraiser (AG006592).

An offer counts as being made under a threat of eminent domain when it is made through eminent domain, after a resolution of necessity, or after the agency says it may take the property by eminent domain. Ask your attorney how the reimbursement works in your case and keep the agency's offer letter with your file.

How is just compensation measured in California?

The starting point is fair market value. Section 1263.320 defines it as "the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available." For property with no relevant, comparable market, the value is set by any method that is just and equitable.

Two parts of that matter a lot in practice. "Highest price" and "all the uses and purposes" mean the appraisal has to look at the property's highest and best use, not just how it is used today. A corner lot zoned for more density, a building with excess land, or acreage with development potential can be worth more than its current use suggests. And under Section 1263.330, value cannot include any increase or decrease caused by the project, the eminent domain proceeding or the agency's preliminary actions. If talk of a freeway widening has depressed values on your street, that effect is set aside.

The date of valuation is set by statute too. If the agency deposits probable compensation, it is generally the date of the deposit (Section 1263.110). Otherwise it is the date the proceeding started if compensation goes to trial within a year (Section 1263.120), or generally the date trial begins if it does not (Section 1263.130). A value as of a past date is a retrospective appraisal, built from the market data of that time.

What if the agency only takes part of my property?

Partial takings are where appraisals differ the most. A strip of frontage for a road widening, a corner for a turn lane, a pipeline or utility easement across a ranch, or a temporary construction easement over a parking lot can change what the rest of the property is worth. Under Section 1263.410, when the property taken is part of a larger parcel, the owner is also compensated for injury to the remainder: the damage to the remainder reduced by any benefit to it.

Damage to the remainder can come from the severance itself or from the construction and use of the project as the agency proposes it (Section 1263.420). Think lost parking, worse access or visibility, an irregular or undersized lot, or a building pushed out of compliance with setbacks. Benefits are measured the same way (Section 1263.430). If the benefits equal or exceed the damages, no remainder damages are awarded, but the benefit is never deducted from the compensation for the part taken.

This is appraisal work in the most literal sense: value the larger parcel before the taking, value the remainder after it, and support every adjustment in between.

What about my business on the property?

California law separately compensates a business owner for lost goodwill when the owner proves the elements in Section 1263.510, including that the loss is caused by the taking and cannot reasonably be prevented by relocating. Goodwill is a business valuation, not a real estate appraisal. We appraise the real estate, and your attorney can bring in a goodwill specialist for the business side. The two reports work together.

How do the appraisals fit the litigation timeline?

If the case does not settle, the appraisals drive it. Under Section 1258.210, after a trial date is selected, either side can demand an exchange of expert witness lists and statements of valuation data. Unless the parties agree or the court sets another date, the exchange happens 90 days before trial on compensation, and generally not earlier than nine months after the proceeding began (Section 1258.220).

At least 20 days before trial, the agency files its final offer and the owner files a final demand. Under Section 1250.410, if the court later finds the agency's offer was unreasonable and the owner's demand was reasonable, the owner's litigation expenses, defined to include reasonable attorney's fees and appraiser fees, can be added to the costs. A demand built on a supported appraisal is what makes that argument possible. Your attorney decides how and when the appraisal is used.

What kinds of California property get taken?

Every kind. Freeway and interchange projects take strips of retail frontage and gas station corners. Transit and rail projects, including high-speed rail work in the Central Valley, take farmland, industrial yards and commercial lots. Water, flood control and utility projects take easements across ranches, groves and vineyards. School, park and public safety projects take whole parcels in growing suburbs. In San Diego County, the Inland Empire, Los Angeles and the Bay Area, the same project can touch office, industrial, multifamily and mixed-use property on a single block.

We appraise all of it: office, retail, industrial and warehouse, multifamily, mixed-use, gas stations, hotels and motels, land and development, vineyards and agricultural property, special-use property and leasehold interests, in every California county. Eminent domain is one example of what we do. Our team writes every kind of commercial appraisal, from lending and estate and trust to divorce, litigation, partition, tax appeals and multi-property portfolios. See the property types we appraise and our statewide coverage.

How do owners and attorneys start an eminent domain appraisal?

Call or text (805) 990-9700. You talk directly to the appraiser, not a coordinator or an appraisal management company. We pick up the phone, and we are your ears and eyes on the property. Have these ready if you can: the agency's offer letter and written summary of the basis for its offer, the legal description or map of the part to be taken and any easements, the project plans, a resolution of necessity or complaint if one exists, leases and operating statements for income property, and the dates your attorney is working against.

Rush commercial appraisals are available in 5 to 7 business days. Standard timing depends on the property and scope. Call (805) 990-9700 for a timeline on your assignment. Our opinions are independent: we never take an assignment that requires a predetermined result, and our fees are never tied to the value.

This page is general information, not legal advice. Talk to your eminent domain attorney about your rights, deadlines and strategy.

Talk to your appraiser: (805) 990-9700