Threat Of Eminent Domain or Condemnation

More Eminent Domain Threats
I am being retained by more and more clients that have been threatened with eminent domain or condemnation proceedings recently. It is an interesting trend considering the current economic landscape that we are working in, but it is also one that will probably continue to grow as more and more cities receive some portion of the economic stimulus funds that are available and need to acquire or take land in order to spend the money.

The purpose of this article is to cover three important issues here.

Never Panic
First, don't panic should you be confronted with a threat of eminent domain or condemnation or find yourself going through an actual eminent domain proceeding. The eminent domain process can be very overwhelming, but it often works out well for you as the property owner. I would be happy to walk you through what to expect.

Get Your Own Valuation
Second, don't roll over and merely accept the first offer that the city, state, Federal Government or other agency shows you. They will often try to low ball you. Get your own real estate appraisal or business valuation. You need to know what is fair so that you can protect yourself and negotiate for the best possible price.

Tax Deferred Exchange
You can structure a tax-deferred exchange pursuant to Section 1033 of the Internal Revenue Code ("1033 exchange") and defer the payment of your depreciation recapture taxes and capital gain taxes by acquiring another replacement property.

Consulting Services
We are one of the few consulting groups in the country that really understand the 1033 tax deferred like kind exchange transaction, including the special structures and how it differs from the 1031 tax deferred exchange transaction. Please feel free to call us for assistance.