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ABasicOverviewofEminentDomainandCertainIssues
EminentdomainproceedingsinNorthCarolinaaregovernedbyChapter40Afor
anyprivatecondemnorsorlocalpubliccondemnorsandChapter136fortheNorth
CarolinaDepartmentofTransportation(formerlyNCStateHighwayCommission).There
aresomelocalmodificationstoChapter136whichenableslocalpubliccondemnorsto
availthemselvesoftheprovisionsofChapter136butthosewillnotbediscussedinthis
paperandpresentationsince,ifyouencounteralocalcondemnorwhobylocal
modificationisentitledtouseChapter136proceduresratherthanChapter40A
procedures,thenanydiscussionconcerningChapter136intheNorthCarolinaDepartment
ofTransportationwillbeapplicable.
Article1ofChapter40Aprovides:
“(a)Notwithstandingtheprovisionsofanylocalact,itistheintentoftheGeneral
Assemblythat,effectiveAugust15,2006,theusessetoutinG.S.40A‐3aretheexclusive
usesforwhichtheauthoritytoexercisethepowerofeminentdomainisgrantedtoprivate
condemnors,localpubliccondemnors,andotherpubliccondemnors.
G.S.40A‐1(b)furtherstates,“itistheintentoftheGeneralAssemblythatthe
proceduresprovidedbythisChaptershallbetheexclusivecondemnationprocedurestobe
usedinthisStatebyallprivatecondemnorsandalllocalpubliccondemnors.”
G.S.40A‐3setsouttheentitiesbywhomthepowerofeminentdomainmaybe
exercisedpursuanttoChapter40A.
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§ 40A-3. By whom right may be exercised.
(a) Private Condemnors. - For the public use or benefit, the persons or organizations listed
below shall have the power of eminent domain and may acquire by purchase or condemnation
property for the stated purposes and other works, which are authorized by law.
(1) Corporations, bodies politic or persons have the power of eminent domain for the
construction of railroads, power generating facilities, substations, switching stations, microwave
towers, roads, alleys, access railroads, turnpikes, street railroads, plank roads, tramroads, canals,
telegraphs, telephones, electric power lines, electric lights, public water supplies, public
sewerage systems, flumes, bridges, and pipelines or mains originating in North Carolina for the
transportation of petroleum products, coal, gas, limestone or minerals. Land condemned for any
liquid pipelines shall:
a. Not be less than 50 feet nor more than 100 feet in width; and
b. Comply with the provisions of G.S. 62-190(b).
The width of land condemned for any natural gas pipelines shall not be more than 100 feet.
(2) School committees or boards of trustees or of directors of any corporation holding title to
real estate upon which any private educational institution is situated, have the power of eminent
domain in order to obtain a pure and adequate water supply for such institution.
(3) Franchised motor vehicle carriers or union bus station companies organized by authority
of the Utilities Commission, have the power of eminent domain for the purpose of constructing
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and operating union bus stations: Provided, that this subdivision shall not apply to any city or
town having a population of less than 60,000.
(4) Any railroad company has the power of eminent domain for the purposes of:
constructing union depots; maintaining, operating, improving or straightening lines or of altering
its location; constructing double tracks; constructing and maintaining new yards and terminal
facilities or enlarging its yard or terminal facilities; connecting two of its lines already in
operation not more than six miles apart; or constructing an industrial siding.
(5) A condemnation in fee simple by a State-owned railroad company for the purposes
specified in subdivision (4) of this subsection and as provided under G.S. 124-12(2).
The width of land condemned for any single or double track railroad purpose shall be not less
than 80 feet nor more than 100 feet, except where the road may run through a town, where it may
be of less width, or where there may be deep cuts or high embankments, where it may be of
greater width.
No rights granted or acquired under this subsection shall in any way destroy or abridge the rights
of the State to regulate or control any railroad company or to regulate foreign corporations doing
business in this State. Whenever it is necessary for any railroad company doing business in this
State to cross the street or streets in a town or city in order to carry out the orders of the Utilities
Commission, to construct an industrial siding, the power is hereby conferred upon such railroad
company to occupy such street or streets of any such town or city within the State. Provided,
license so to do be first obtained from the board of aldermen, board of commissioners, or other
governing authorities of such town or city.
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No such condemnor shall be allowed to have condemned to its use, without the consent of the
owner, his burial ground, usual dwelling house and yard, kitchen and garden, unless
condemnation of such property is expressly authorized by statute.
The power of eminent domain shall be exercised by private condemnors under the procedures of
Article 2 of this Chapter.
(b) Local Public Condemnors - Standard Provision. - For the public use or benefit, the
governing body of each municipality or county shall possess the power of eminent domain and
may acquire by purchase, gift or condemnation any property, either inside or outside its
boundaries, for the following purposes.
(1) Opening, widening, extending, or improving roads, streets, alleys, and sidewalks. The
authority contained in this subsection is in addition to the authority to acquire rights-of-way for
streets, sidewalks and highways under Article 9 of Chapter 136. The provisions of this
subdivision (1) shall not apply to counties.
(2) Establishing, extending, enlarging, or improving any of the public enterprises listed in
G.S. 160A-311 for cities, or G.S. 153A-274 for counties.
(3) Establishing, enlarging, or improving parks, playgrounds, and other recreational
facilities.
(4) Establishing, extending, enlarging, or improving storm sewer and drainage systems and
works, or sewer and septic tank lines and systems.
(5) Establishing, enlarging, or improving hospital facilities, cemeteries, or library facilities.
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(6) Constructing, enlarging, or improving city halls, fire stations, office buildings,
Courthouse jails and other buildings for use by any department, board, commission or agency.
(7) Establishing drainage programs and programs to prevent obstructions to the natural flow
of streams, creeks and natural water channels or improving drainage facilities. The authority
contained in this subdivision is in addition to any authority contained in Chapter 156.
(8) Acquiring designated historic properties, designated as such before October 1, 1989, or
acquiring a designated landmark designated as such on or after October 1, 1989, for which an
application has been made for a certificate of appropriateness for demolition, in pursuance of the
purposes of G.S. 160A-399.3, Chapter 160A, Article 19, Part 3B, effective until October 1, 1989,
or G.S. 160A-400.14, whichever is appropriate.
(9) Opening, widening, extending, or improving public wharves.
The board of education of any municipality or county or a combined board may exercise the
power of eminent domain under this Chapter for purposes authorized by Chapter 115C of the
General Statutes.
The power of eminent domain shall be exercised by local public condemnors under the
procedures of Article 3 of this Chapter.
(b1) Local Public Condemnors - Modified Provision for Certain Localities - For the public
use or benefit, the governing body of each municipality or county shall possess the power of
eminent domain and may acquire by purchase, gift or condemnation any property or interest
therein, either inside or outside its boundaries, for the following purposes.
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(1) Opening, widening, extending, or improving roads, streets, alleys, and sidewalks. The
authority contained in this subsection is in addition to the authority to acquire rights-of-way for
streets, sidewalks and highways under Article 9 of Chapter 136. The provisions of this
subdivision (1) shall not apply to counties.
(2) Establishing, extending, enlarging, or improving any of the public enterprises listed in
G.S. 160A-311 for cities, or G.S. 153A-274 for counties.
(3) Establishing, enlarging, or improving parks, playgrounds, and other recreational
facilities.
(4) Establishing, extending, enlarging, or improving storm sewer and drainage systems and
works, or sewer and septic tank lines and systems.
(5) Establishing, enlarging, or improving hospital facilities, cemeteries, or library facilities.
(6) Constructing, enlarging, or improving city halls, fire stations, office buildings,
Courthouse jails and other buildings for use by any department, board, commission or agency.
(7) Establishing drainage programs and programs to prevent obstructions to the natural flow
of streams, creeks and natural water channels or improving drainage facilities. The authority
contained in this subdivision is in addition to any authority contained in Chapter 156.
(8) Acquiring designated historic properties, designated as such before October 1, 1989, or
acquiring a designated landmark designated as such on or after October 1, 1989, for which an
application has been made for a certificate of appropriateness for demolition, in pursuance of the
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purposes of G.S. 160A-399.3, Chapter 160A, Article 19, Part 3, effective until October 1, 1989,
or G.S. 160A-400.14, whichever is appropriate.
(9) Opening, widening, extending, or improving public wharves.
(10) Engaging in or participating with other governmental entities in acquiring, constructing,
reconstructing, extending, or otherwise building or improving beach erosion control or flood and
hurricane protection works, including, but not limited to, the acquisition of any property that may
be required as a source for beach renourishment.
(11) Establishing access for the public to public trust beaches and appurtenant parking areas.
The board of education of any municipality or county or a combined board may exercise the
power of eminent domain under this Chapter for purposes authorized by Chapter 115C of the
General Statutes.
The power of eminent domain shall be exercised by local public condemnors under the
procedures of Article 3 of this chapter.
This subsection applies only to Carteret and Dare Counties, the Towns of Atlantic Beach,
Carolina Beach, Caswell Beach, Emerald Isle, Holden Beach, Indian Beach, Kill Devil Hills,
Kitty Hawk, Kure Beach, Nags Head, North Topsail Beach, Oak Island, Ocean Isle Beach, Pine
Knoll Shores, Sunset Beach, Surf City, Topsail Beach, and Wrightsville Beach, and the Village
of Bald Head Island.
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(c) Other Public Condemnors. - For the public use or benefit, the following political entities
shall possess the power of eminent domain and may acquire property by purchase, gift, or
condemnation for the stated purposes.
(1) A sanitary district board established under the provisions of Part 2 of Article 2 of
Chapter 130A for the purposes stated in that Part.
(2) The board of commissioners of a mosquito control district established under the
provisions of Part 2 of Article 12 of Chapter 130A for the purposes stated in that Part.
(3) A hospital authority established under the provisions of Part B of Article 2 of Chapter
131E for the purposes stated in that Part, provided, however, that the provisions of G.S. 131E-
24(c) shall continue to apply.
(4) A watershed improvement district established under the provisions of Article 2 of
Chapter 139 for the purposes stated in that Article, provided, however, that the provisions of G.S.
139-38 shall continue to apply.
(5) A housing authority established under the provisions of Article 1 of Chapter 157 for the
purposes of that Article, provided, however, that the provisions of G.S. 157-11 shall continue to
apply.
(6) A corporation as defined in G.S. 157-50 for the purposes of Article 3 of Chapter 157,
provided, however, the provisions of G.S. 157-50 shall continue to apply.
(7) A commission established under the provisions of Article 22 of Chapter 160A for the
purposes of that Article.
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(8) An authority created under the provisions of Article 1 of Chapter 162A for the purposes
of that Article.
(9) A district established under the provisions of Article 4 of Chapter 162A for the purposes
of that Article.
(10) A district established under the provisions of Article 5 of Chapter 162A for purposes of
that Article.
(11) The board of trustees of a community college established under the provisions of Article
2 of Chapter 115D for the purposes of that Article.
(12) A district established under the provisions of Article 6 of Chapter 162A for the purposes
of that Article.
(13) A regional public transportation authority established under Article 26 of Chapter 160A
of the General Statutes for the purposes of that Article.
The power of eminent domain shall be exercised by a public condemnor listed in this subsection
under the procedures of Article 3 of this Chapter. (1852, c. 92, s. 1; R.C., c. 61, s. 9; 1874-5, c.
83; Code, s. 1698; Rev., s. 2575; 1907, cc. 39, 458, 783; 1911, c. 62, ss. 25, 26, 27; 1917, cc. 51,
132; C.S., s. 1706; 1923, c. 205; Ex. Sess. 1924, c. 118; 1937, c. 108, s. 1; 1939, c. 228, s. 4;
1941, c. 254; 1947, c. 806; 1951, c. 1002, ss. 1, 2; 1953, c. 1211; 1957, c. 65, s. 11; c. 1045, s. 1;
1961, c. 247; 1973, c. 507, s. 5; c. 1262, s. 86; 1977, c. 771, s. 4; 1981, c. 919, s. 1; 1983, c. 378,
s. 2; 1983 (Reg. Sess., 1984), c. 1084; 1985, c. 689, s. 10; c. 696, s. 2; 1987, c. 2, s. 1; c. 564, s.
13; c. 783, s. 6; 1989, c. 706, s. 3; c. 740, s. 1.1; 2000-146, s. 8; 2001-36, ss. 1, 3; 2001-478, s. 2;
10
2001-487, s. 58; 2002-172, s. 4.1; 2003-282, ss. 1, 2; 2004-203, s. 32(a), (b); 2006-224, s. 2;
2006-259, s. 47.)
G.S.40A‐4statesthatthereisnorequirementthatthecondemnorattemptto
purchasethepropertypriortoinitiatingeminentdomainproceedings.
G.S.40A‐5statesthatacondemnorlistedinG.S.40A‐3(a),(b)or(c)shallnot
possessthepowerofeminentdomainwithrespecttopropertyownedbytheStateofNorth
Carolinaorastate‐ownedrailroadasdefinedinG.S.124‐11,unlesstheStateconsentsto
thetaking.
G.S.40A‐5(b)statesthatunlessotherwiseprovidedbystatute,acondemnorlisted
inG.S.40A‐3(a),(b)or(c)maycondemnthepropertyofaprivatecondemnorifsuch
propertyisnotinactualpublicuseornotnecessarytotheoperationofthebusinessofthe
owner.
G.S.40A‐6governstherepaymentoftaxestoapropertyowner.However,please
notethatG.S.40A‐6onlyprovidesforpaymentofproratataxesifthetakinginvolvesa
totaltakingunderthepowerofeminentdomain.Inotherwords,ifthetakingisapartial
taking,thereisnostatutoryrequirementthattheownerbereimbursedforthetaxespaid
ontheportiontakenfortheyearofcondemnation.
Inaddition,ifanownerisanaturalpersonwhoownsthepropertyandowns
agriculturalland,horticulturalland,orforestlandthatiscontiguoustothecondemned
propertyandthatisinactiveproductionand,asaresultofthecondemnation,isrequired
topaydeferredtaxes(rollback)pursuanttoG.S.105‐277.4(c),thenandinsucheventthe
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ownerisentitledforreimbursementofthosetaxeswhichareincurredbyhimorherasa
resultofthetaking.
G.S.40A‐7containsaprovisionthatwhereaprojectrequirescondemnationofonly
aportionoftheparcelofland,leavingaremainderofsuchsize,shapeorconditionthatisof
littlevalue,acondemnormayacquiretheentireparcelbypurchaseorcondemnation.If
theremainderistobecondemned,thePetitionfiledundertheprovisionsofG.S.40A‐20or
theComplaintfiledundertheprovisionsofG.S.40A‐41shallinclude:
(1) adeterminationbythecondemnorthatapartialtakingofthelandwould
substantiallydestroytheeconomicvalueorutilityoftheremainder;or
(2) adeterminationbythecondemnorthateconomyintheexpenditureofpublic
fundswouldbepromotedbytakingtheentireparcel;or
(3) adeterminationbythecondemnorthattheinterestofthepublicwouldbe
bestservedbyacquiringtheentireparcel.
G.S.40A‐8governstheawardingofcostandstates“(a)inanyactionunderthe
provisionsofArticle2or3ofthisChapter,theCourt,initsdiscretion,mayawardtothe
ownerasumtoreimbursetheownerforchargeshehaspaidforappraisers,engineersand
plats,providedsuchappraisersorengineerstestifyaswitnessesandsuchplatsare
receivedintoevidenceasexhibitsbyorderoftheCourt.”
G.S.40A‐8(b)providesifacondemnorinstitutesaproceedingtoacquireby
condemnationanypropertyand(i)ifthefinaljudgmentinaresultingactionisthatthe
condemnorisnotauthorizedtocondemntheproperty,or(ii)ifthecondemnorabandons
theaction,theCourtwithjurisdictionoftheactionshall,aftermakingappropriatefindings
offact,awardeachownerofthepropertysoughttobecondemnedasumthat,inthe
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opinionoftheCourtbaseduponitsfindingsoffact,willreimbursetheownerfor:his
reasonablecosts;disbursements;expenses(includingreasonableattorney,appraisal,and
engineeringfees);andanylosssufferedbytheownerbecausehewasunabletotransfer
titletothepropertyfromthedateofthefilingoftheComplaintunderG.S.40A‐41.
G.S.40A‐8(c)governsthosesituationswhereaninversecondemnationisbrought
andwheretheownerissuccessfulandobtainsajudgmentinhisorherfavorG.S.40A“the
Courtshallawardtotheownerasapartofthejudgmentafterappropriatefindingoffactsa
sumthat,intheopinionoftheCourt,baseduponitsfindingoffact,willreimbursethe
ownerassetoutinsubsection(b).Ifapropertyownerbringsaninversecondemnation
allegingthatanentitywhichhasthepowerofeminentdomainhasnotfiledanappropriate
actionbuthasbyitsactionsactuallytakenorappropriatedaportionoftheirproperty,then
intheeventtheownerissuccessfulinsuchaction,inadditiontoanyawardsthatthe
ownermaybeentitledandmaybeawardedbyjuryverdictorotherwise,theowneris
entitledtobepaidallexpenseshehasincurredincludingreasonableattorneys’fees.
G.S.40A‐11providesthatanycondemnorhavingthepowerofeminentdomain
may,withouthavingfiledaPetitionorComplaint,norhavingdepositedanysumortaken
anyotheractionprovidedbyChapter40Aisauthorizedtoenteruponthelands,butnot
structures,tomakesurveys,borings,examinationsandappraisalsasmaybenecessaryor
expedientincarryingoutorperformingitsdutiesunderthischapter.Thecondemnorshall
givethirty(30)daysnoticeinwritingtotheownerathislastknownaddressandtheparty
inpossessionofthelandoftheintendedentryauthorizedbythissection.
Intheeventacondemnorentersontothepropertyafterhavinggivenpropernotice
andcausesdamagestosuchproperty,thentheownerisentitledtobringanactionto
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recoverforsuchdamageandiftheownerrecoversdamagesinexcessof25%overthe
amountofferedbythecondemnorforreimbursementforactivities,theCourt,inits
discretion,mayawardreasonableattorneys’feestotheowner.
HowDoTheyDoIt
CondemnationProceedingsByPrivateCondemnors
Article2ofChapter40Agovernsthetakingofpropertybyprivatecondemnors,
thelistofwhicharecontainedinG.S.40A‐3(a).Themostcommonprivatecondemnor
actionsthatonewillencounterwilleitherinvolvenaturalgas,electricalcorporationsand
telephonecompanies.Thereareothersbutthesearethemostcommonthatonewill
encounterbuttheprocedurestobeutilizedarethesameregardlessofwhoisexercising
thepowerofeminentdomaininsofarasprivatecondemnorsareconcerned.
Acondemnationproceedinginstitutedbyaprivatecondemnordifferssubstantially
differsfromtheprocedureusedbyapubliccondemnorpursuanttoChapter40A.
Inacondemnationbyaprivatecondemnor,theactioniscommencedbythefilingof
aPetitionwiththeClerkofSuperiorCourt“ofanyCountyinwhichtherealestatedescribed
inthePetitionissituated.”ThePetitionmustasktheCourttoappointCommissionerswho
aretoappraisethepropertyandthePetitionmustbesignedandverified.Itmustalso
containadescriptionofthepropertywhichthecondemnorseekstoacquireanditmust
statethatthecondemnorisdulyincorporatedandthatitisitsintentioningoodfaithto
conductandcarryonthepublicbusinessauthorizedbyitscharter,statingindetailthe
natureofitspublicbusinessandthespecificuseofthepropertyandthattheproperty
describedinthePetitionisrequiredforthepurposeofconductingtheproposedbusiness.
14
G.S.40A‐20goesontostatethat“thePetitionmustalsocontainastatementasto
whethertheownerwillbepermittedtoremoveallorspecifiedportionsofanybuildings,
structures,permanentimprovements,orotherfixturessituatedonoraffixedtotheland.”
ThePetitionmustalsostatethenames,places,andresidencesofallotherownersas
farasbyreasonablediligencecanbeascertainedorthosewhoclaimtobeownersofthe
property.NoticeofthisproceedingisfiledwiththeClerkofSuperiorCourtofeachCounty
inwhichanypartofthelandislocated.TheClerkisrequiredtoindexandcross‐indexthis
NoticeasrequiredbyG.S.1‐17(lispendens).
ASpecialProceedingsummons,togetherwithacopyofthePetition,isrequiredto
beservedonallpersonswhoseestatesorinterestsareaffectedbytheproceedingsand
suchservicemustbeatleastten(10)dayspriortothehearingofthesamebytheCourt
(G.S.40A‐22).G.S.40A‐23governsservicewherethepartiesareunknown.
Question: IsthepropertyownerrequiredtofilearesponsetothePetition?No.
G.S.40A‐25doesprovidethat“alloranyotherpersonswhoseestatesorinterestsaretobe
affectedbyproceedingsmayanswersuchPetitionandshowcauseagainstthegrantingof
theprayerofsame.”IfanAnswerisfiledcontestingtherighttocondemn,theClerkisto
hearproofsandallegationsapartandifnosufficientcauseisshownagainstthegrantingof
theprayerofthePetitionshallmakeanorderfortheappointmentofthreeCommissioners
andshallfixthetimeandplaceforthefirstmeetingoftheCommissioners.NotethatG.S.
40A‐25providesthateachCommissionershallbearesidentofthecountywhereinthe
propertycondemnedlies.”
Question: Whathappensifaprivatecondemnorattemptstofileanactionwhere
propertyissituatedinmorethanonecountybutconstitutesonetract?Canthecondemnor
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simplycomplywiththerequirementsofChapter40Abyfilingtheactioninonecountyand
allowingtheClerkofCourtinonecountytoappointCommissionerswhoresideinone
countyandyetdeterminethedamagesforpropertylocatedinbothcounties?Weshallsee
arecentcaseofRutherfordElec.MembershipCorp.v.130ofChatham,LLC,No.COA14‐
134,SlipOp.(N.C.App.Sept.2,2014)haspointedoutsomeoftheproblemsinChapter40A
actionsbyprivatecondemnors.Infact,theCourt,initsopinion,urgedthelegislatureto
addresstheseissues.ApetitionforrehearinghasbeenfiledintheChathamcase.
OncetheCommissionersareappointed,G.S.40A‐26clearlystatestherequirements
oftheCommissioners,whicharetotakeanoaththattheywillfairlyandimpartially
appraisethepropertyinthePetition.Interestingly,theCommissionershavethepowerto
issuesubpoenasandadministeroathsandanytwoofthemmayadjourntheproceedings
beforethemfromtimetotimeandintheirdiscretion.OncetheCommissionersare
appointedandtaketheoath,theyarerequiredtocauseten(10)daysnoticeofsuch
meetingtobegiventothepartieswhoareaffectedbytheirproceedingsortheirattorney
oragent.TheyarefurtherrequiredtoviewthepremisesdescribedinthePetition,hearthe
proofsandallegationsofthepartiesandreducethetestimony,ifanyistakenbythem,to
writing.Afterhearingthetestimony,theCommissionersarerequiredbymajorityto
ascertainanddeterminethecompensation,whichoughtjustlybemadebythecondemnor
totheowner(s)ofthepropertyappraisedbythem.Themethodofvaluationwillbe
discussedlateronsinceitisalsoapplicabletotakingsbypubliccondemnorspursuantto
Chapter40A.OncetheCommissionersmaketheaward,theyaretoreportthesametothe
Clerkwithinten(10)days.G.S.40A‐26.G.S.40A‐27providestheformofthe
Commissioners’reportthatistobefiledwiththeClerk.
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OncethereportoftheCommissionersismadetotheClerkandfiled,theClerkis
requiredtomailcopiestotheparties.G.S.40A‐28(a)recites“withintwenty(20)daysof
thefilingofthereport,anypartyoftheproceedingmayfileexceptionsthereto.TheClerk,
afternoticetotheparties,shallhearanyexceptionssofiledandmaythereafterdirecta
newappraisal,modifyorconfirmthereport,ormakesuchotherordersasCourtmaydeem
rightandproper.”IftheClerk’sfinaljudgmentisinfavorofthecondemnor,oncethe
condemnordepositstheamountorderedbytheCommissionerstogetherwithany
costallowedintotheofficeoftheClerkofSuperiorCourt,thenandinthatevent,all
ownerswhohavebeenmadepartiestotheproceedingshallbedivestedofthe
propertyortheinterestthereintotheextentsetforthinproceedings.However,any
partyintheproceedingsmayfileexceptionstotheClerk’sfinaldeterminationonthereport
andmayappealfortrialdenovototheSuperiorCourt.Noticeoftheappealshallbefiled
withinten(10)daysaftertheClerk’sdetermination.G.S.40A‐28(c).Pleasenotethatifa
propertyownerortheirattorneyfailstofileexceptionstothereportoftheCommissioners,
thateveniftheythereafterexcepttotheconfirmationbytheClerkandgivepropernotice
ofappealfromtheClerktotheSuperiorCourt,theSuperiorCourthasnojurisdiction.
CarolinaPowerandLightCo.v.Crowder,89N.C.App.578,366S.E.2d499(1988).
PleasebemindfulthatifapartyexceptstotheawardofCommissionersandthen
exceptstotheconfirmationandappealsfromtheconfirmationoftheawardbytheClerkof
CourtandprovidedthatthecondemnordepositswiththeClerkofCourtthesumappraised
bytheCommissioners,thenandinthatevent,thecondemnormayenter,takepossessionof
andholdsaidpropertyinthemannerandtotheextentsoughttobeacquiredbythe
proceedingsuntilfinaljudgmentisrenderedonappeal.G.S.40A‐28(d).
17
Question: Supposethataprivatecondemnorhasfiledanactionseekingto
condemnaportionofpropertyowner’sland.TheClerkofCourthasappointed
Commissionerspursuanttothestatuteandpropertyownerhasobjectedthatthe
condemnordoesnothavetheauthoritytocondemntheproperty.TheClerkdenies
propertyowner’sclaimandtheCommissionersproceedwiththetakingofevidenceover
propertyowner’sobjections.TheCommissionersentertheirawardandpropertyowner’s
attorneyfilesexceptionstothereportoftheCommissionersandtheClerkthereafter
confirmstheawardandexceptionsandaNoticeofAppealarefiled.Propertyownerthen
appearsbeforetheJudgeandagainraiseshisargumentthattheydidnothavetherightto
condemnhispropertyandafterhearinglegalargument,theJudgeispersuadedthatthisis
notapropertakinganddismissesthematter.Condemnorhaspaidthemoneyintothe
ClerkofCourt,whichhasnotbeendrawndownbythepropertyownernorhisattorney.
Whatdoyou,asaJudge,do?
G.S.40A‐28(e)recitesthat
“If,onappeal,theJudgeshallrefusetocondemntheproperty,thenthe
moneydepositedwiththeClerkofCourtintheproceedings,orsomuch
thereofasshallbeaJudge,shallberefundedtothecondemnorandthe
condemnorshallhavenorighttothepropertyandshallsurrender
possessionofsame,ondemand,totheowner.TheJudgeshallhavefull
powerandauthoritytomakesuchorders,judgmentsanddecreesasmaybe
necessarytocarryintoeffectthefinaljudgmentrenderedinsuch
proceedings,includingcompensationinaccordancewiththeprovisionsof
G.S.40A‐8.”
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RememberthatG.S.40A‐8providesthattheCourtshall“makeappropriatefindings
offactsandawardeachownerofthepropertysoughttobecondemnedasum,thatinthe
opinionoftheCourtbaseduponitsfindingsoffact,willreimbursetheownerfor:his
reasonablecosts;disbursements;expenses(includingreasonableattorney,appraisaland
engineeringfees);andanylosssufferedbytheownerbecausehewasunabletotransfer
titletothepropertyfromthedateofthefilingoftheComplaint.
Chapter40AproceedingsdifferfromChapter136proceedingsinthattwomeasures
ofdamagesareavailableforChapter40Atakings.
G.S.40A‐64provides:
(a) exceptasprovidedinsubsectionB,themeasureofcompensationforthe
takingofpropertyisitsfairmarketvalue(totaltaking);
(b) ifthereisatakingoflessthantheentiretract,themeasureof
compensationisthegreaterofeither(i)theamountbywhichthefair
marketvalueoftheentiretractimmediatelybeforethetakingexceeds
thefairmarketvalueoftheremainderimmediatelyafterthetaking;or
(ii)thefairmarketvalueofthepropertytaken.
Chapter136(takingbytheNorthCarolinaDepartmentofTransportation)only
providesforthedifferenceinthefairmarketvalueoftheentirepropertybaseduponits
highestandbestuseimmediatelybeforethetakingandthevalueoftheremainingproperty
baseduponitshighestandbestuseafterthetaking.
WhathappenswhenanactionpursuanttoArticle2ofChapter40Ahasbeen
commencedandtheownerofthepropertyhassoldittoathirdpartyorthepropertyis
otherwisebeentransferred?Doyouhavetohaveachangeofsubstitutionofparties?
19
G.S.40A‐33provides“whenanyproceedingsunderthisArticleshallbe
commenced,nochangeofownershipbyvoluntaryconveyanceortransferoftheproperty
shallinanymanneraffectsuchproceedings,butthesameshallbecarriedonandperfected
asifnoconveyanceortransferhasbeenmadeorattemptedtobemade.”CityofKings
Mountainv.Goforth,283N.C.316,196S.E.2d231(1973).Thisisconsistentwiththe
priortakinginthecaseofN.C.StateHighwayComm’nv.YorkIndus.Center,Inc.,263
N.C.230,139S.E.2d253(1964),whichheldthattherighttocompensationrestsinthe
personwhoownedthelandimmediatelypriortothefilingoftheComplaintand
DeclarationofTakingandhehasnothinghecansellpendingascertainmentofjust
compensation.
TakingsByPublicCondemnorsPursuantToChapter40A
Unlikeatakingbyaprivatecondemnor,anactionbyapubliccondemnorrather
thanbeinginstitutedbyPetitionbeforetheClerkofSuperiorCourtinstitutesitsactionby
thefilingofaComplaint.However,G.S.40A‐40providesthat
“(a)notlessthanthirty(30)dayspriortothefilingoftheComplaintonthe
provisionsofG.S.40A‐41,apubliccondemnorlistedin40A‐3(b)or(c)shall
providenoticetoeachownerwhosenameandaddresscanbeascertainedby
reasonablediligenceofitsintenttoinstituteanactiontocondemnproperty.“
Thenoticeisrequiredtobesenttoeachownerbycertifiedmail,returnreceipt
requested.Thenoticeisfurtherrequiredtocontainageneraldescriptionoftheproperty
tobetakenandoftheamountestimatedbythecondemnortobejustcompensationforthe
propertycondemned.Thenoticealsomuststatethepurposeforwhichpropertyisbeing
condemnedandthedatethecondemnorintendstofiletheComplaint.
20
G.S.40A‐40(b)alsocontainsotherrequirementsandisattachedheretoasan
appendix.OnceapubliccondemnorinstitutesanactionpursuanttoChapter40A,theyare
required(liketheDepartmentofTransportation)todepositwiththeClerkofCourtthe
estimatedamountofjustcompensationbythecondemnorforthetaking.Onlywhenalocal
publiccondemnorisacquiringpropertyforcertainpurposesdoestitlevestimmediately.
G.S.40A‐42liststheinstanceswhenalocalpubliccondemnorcandowhatiscalleda
“quicktake.”Thefollowingarenotpermittedasquicktakesbylocalpubliccondemnors:
G.S.40A‐42:
(2) Establishing, extending, enlarging, or improving any of the public enterprises listed in
G.S. 160A-311 for cities, or G.S. 153A-274 for counties.
(3) Establishing, enlarging, or improving parks, playgrounds, and other recreational
facilities.
(5) Establishing, enlarging, or improving hospital facilities, cemeteries, or library facilities.
(6) Constructing, enlarging, or improving city halls, fire stations, office buildings,
courthouse jails and other buildings for use by any department, board, commission or agency.
(8) Acquiring designated historic properties, designated as such before October 1, 1989, or
acquiring a designated landmark designated as such on or after October 1, 1989, for which an
application has been made for a certificate of appropriateness for demolition, in pursuance of the
purposes of G.S. 160A-399.3, Chapter 160A, Article 19, Part 3B, effective until October 1, 1989,
or G.S. 160A-400.14, whichever is appropriate.
21
Ifthetakingisforoneofthepurposesotherthana“quicktake”asspecifiedbyG.S.
40A‐42(a)(1)and(2),thenandinsucheventtitletopropertyandrighttopossessionshall
vestinthecondemnoronlyuponthefollowing:
1. AnAnswerfiledbytheownerwhorequestsonlythattherebea
determinationofjustcompensationandwhodoesnotchallengethe
authorityofthecondemnortocondemntheproperty;or
2. Afailureoftheownertoanswerwithinthe120‐daytimeperiodestablished
byG.S.40A‐46;or
3. Uponthedisbursementofthedepositinaccordancewiththeprovisionsof
G.S.40A‐44.
UponthefilingoftheComplaint,thecondemnorisrequiredtodeposittheirgood
faithestimateofdamagestobeawardedtothepropertyowner.Thepropertyownermay
petitiontheCourtforanOrderallowingtheClerktodisbursethefundsdepositedtothe
propertyownerasacreditagainstjustcompensationwithoutprejudicetofurther
proceedingsinthecausetodeterminejustcompensation.Ifpresentedwithsuchan
application,G.S.40A‐44states“theJudgeshallorderthatthemoneydepositedtobepaid
forthwithtothepersonentitledtheretoinaccordancewiththeapplication.”Becognizant
ofthefactthatyou,asapresidingJudge,arealsoentitledtomakeorderswithrespectto
encumbrances,liens,rents,taxes,assessments,insuranceandotherchargespursuantto
G.S.40A‐60(a).Asapracticepointer,IwouldsuggestthatifpresentedwithaPetition
seekingthatthemoniesbeawardedtothepropertyownerthatitwouldbeprudentto
makeaninquiryaboutlienholdersand,ifpossible,reviewtheactualcourtfilewhich
shouldrevealiftherearelienholdersorunpaidpropertytaxesthatyou,asthepresiding
22
Judge,shouldmakeprovisionsforpursuanttoG.S.40A‐60(a).Inaddition,anAnswerisnot
requiredtobefiledbeforetheexpirationof120daysfromthedateofservice.
G.S.40A‐46doesprovidethatatanytimepriortotheentryoftheFinalJudgment,
theJudgemay,forgoodcauseshownandafternoticetothecondemnor,extendthetime
forfilingtheAnswerforthirty(30)days.
SettlementofIssuesHearing
Anyissues,otherthantheissueofjustcompensation,aredeterminedbytheJudge
pursuanttoG.S.40A‐47.Theseissuesaregoingtobediscussedlaterherein.Theissues
encounteredinthistypeofcasearecommontobothChapter136and40Atakings.G.S.
40A‐48providesthateithertheownerorcondemnormay,withinsixty(60)daysafterthe
filingoftheAnswer,requestthattheClerkappointCommissionerstodetermine
compensationforthetaking.(SeeNCG.S.40A‐48).Ifsuchrequestismadeafter
determinationofanyissuesasrequiredbyG.S.40A‐47,theClerkisrequiredtoappoint
threepersonstoserveasCommissioners.OncetheCommissionersmaketheaward,the
ClerkisrequiredtomailthereportoftheCommissionerstoeachofthepartiesortheir
counselofrecord.Withinthirty(30)daysafterthemailingofthereport,eitherthe
condemnorortheownermayexcepttheretoanddemandatrialdenovabyjuryonthe
issueofjustcompensation.Notethatanyproceedingbypubliccondemnorwherea
propertyownerorthecondemnorthemselveshavefiledarequestfortheappointmentof
Commissioners,thatthereisnoactionnecessarybytheClerkinsofarasconfirmationofthe
award,unlikethatofaprivatecondemnor.
Oncetheamountofjustcompensationisawarded,interestisrequiredtobeadded
at6%perannumfromthedateoftaking.G.S.40A‐53.Oneshouldalsobeawarethatin
23
theeventweevergobacktothedayswheninvestmentsyieldeddoubledigitreturns,thata
propertyownerisentitledtopresentevidenceunderthe“PrudentInvestorStandard”to
showthatheisentitledtomorethanthestatutory6%.ConcreteMachineryCo.,Inc.v.
CityofHickory,134N.C.App.91,517S.E.2d155(1999).Evenifapropertyowner
presentsevidenceandtheCourtisconvincedthatunderthe“PrudentInvestorStandard,”a
higherrateofinterestisapplicable,itshouldonlybeawardedfromthedateofthetakingto
thedateofthejudgmentandnotpostjudgment.
Whatisthedateofthetaking?Thisisimportantbecausetheevidencethatthe
juryhearswithregardtodamagesmustbebasedondateoftaking!G.S.40A‐63statesthat
thedeterminationoftheamountofcompensationshallreflectthevalueoftheproperty
immediatelypriortothefilingofthePetitionunderG.S.40A‐20(privatecondemnors)or
theComplaintunderG.S.40A‐41(localpubliccondemnors)and,exceptasprovidedinthe
followingsections,shallnotreflectanincreaseordecreaseduetocondemnation.
G.S.40A‐65(a)statesthevalueofthepropertytaken,oroftheentiretractifthereis
apartialtaking,doesnotincludeanincreaseordecreaseinvaluebeforethedateof
valuationthatiscausedby(i)theproposedimprovementorprojectforwhichthe
propertyistaken;(ii)thereasonablelikelihoodthatthepropertywouldbeacquiredfor
thatimprovementorproject;or(iii)thecondemnationproceedinginwhichthepropertyis
taken.
Chapter136Takings
ThemostcommoneminentdomaincasestriedareactionsinstitutedbytheNorth
CarolinaDepartmentofTransportationfornewhighwayconstructionorhighway
improvementprograms.TheprocedureforsuchanactionisgovernedbyChapter136of
24
theNorthCarolinaGeneralStatutes.ThelawgoverningcondemnationpursuanttoChapter
136beginsatG.S.136‐103.However,thereareotherstatutescontainedthroughout
Chapter136thatbearuponsuchtakingsandthetrialofsuchmatters.
Asmostofyouknow,theDepartmentofTransportationinstitutesanactionbyfiling
civilactionintheofficeoftheClerkofSuperiorCourtwherethepropertyislocated.At
suchtime,theDepartmenthastolistanumberofthingsontheComplaint,allwhichare
enumeratedinG.S.136‐103.TheDepartmentofTransportationisalsorequiredtodeposit
thesumofmoneyestimatedbytheDepartmenttorepresentjustcompensationforsaid
taking.G.S.136‐105statesthatthepersonnamedintheComplaintmayapplytotheCourt
fordisbursementofthemoneydepositedintheCourtasacreditagainstjustcompensation
withoutprejudicingfurtherproceedingsinthecausetodeterminejustcompensation.In
theeventthereareencumbrances,liens,rents,taxes,assessments,orothercharges,the
Judgeisempoweredtomakesuchorderswithrespecttosame.G.S.136‐105.
AnypersonnamedintheComplainthastherighttofileanAnswerwithintwelve
(12)monthsfromthedateofservicethereof.G.S.136‐107.PleasenotethatG.S.136‐107
statesatanytimepriortotheentryofFinalJudgment,theJudge,forgoodcauseshownand
afternoticetothePlaintiff,mayextendthetimeforfilingtheAnswerforthirty(30)days.
You,asaJudge,maybefacedwithasituationsomedaywhereanindividual,whohasbeen
suedbytheDepartmentofTransportationinaChapter136taking,didnothirealawyer
untilthetimeforfilingtheAnswerexpiredbutbeforeaFinalJudgmenthadbeenentered
andtheindividualmay,throughcounsel,beappearingandrequestingthisthirty(30)day
extension.OneshouldconsultG.S.136‐107andthecasesdecidedforguidance.However,
unlesstheDepartmentofTransportationcanshowsomesortofdetrimentalreliance,since
25
theissueinvolvesaconstitutionalissue,thatisthetakingofpropertyforapublicpurpose,
itwouldseemthebetterpartofdiscretionwouldbetoallowtheownertofiletheir
Answer,especiallyiftheonlyissueisthatofjustcompensation.
IssuesDeterminedbytheCourt
TheCourtresolvesallissuesexceptheissueofjustcompensation.Thisisprobably
oneofthemosttroublingareasformostJudgesisthesettlementofissues.G.S.136‐108
states
“afterthefilingoftheplat,theJudge,uponmotionandtendaysnoticeby
eithertheDepartmentofTransportationortheowner,shall,eitherinorout
ofterm,hearanddetermineanyandallissuesraisedbythepleadingsother
thantheissueofdamages,includingbutnotlimitedto,ifcontroverted,
questionsofnecessaryandproperparties,titleoftheland,interesttakenand
areataken.”
IssuesthatyoumayhavetoconsideronahearingpursuanttoG.S.40A‐47and/or
NCG.S.136‐108:
1. Inversecondemnation.N.C.Dep’tofTransp.v.Cromarti,Jr.,214N.C.
App.307,716S.E.2d361(2011).
2. Extentofexistingright‐of‐way.N.C.StateHighwayComm’nv.Nuckles,
271N.C.1,155S.E.2d772(1967).
3. Extentofpropertytakenindedication.N.C.Dep’tofTransp.v.ElmLand,
Co.,163N.C.App.257,593S.E.2d131(2004).
4. UnityofOwnership.N.C.Dep’tofTransp.v.AirliePark,Inc.,156N.C.App.
63,576S.E.2d341(2003).
26
5. Properandnecessarypartyandjoinder.N.C.Dep’tofTransp.v.
StagecoachVillage,360N.C.46,619S.E.2d495(2005).
6. Adversepossessionandamendmenttomap.CityofCharlottev.
Williams,210N.C.App.257,707S.E.2d710(2011).
Itwouldtakemehourstogothrougheachoftheselistedabove.Ihave,however,
selectedtheonewhichcancreateconfusiontodiscussinthispaper.ThatbeingtheUnity
ofOwnershipissuewhichwouldalsoencompasstheExtentofpropertytakenorwhich
shouldbereflectedonthemap.
Thestatutesoundsverysimplebutsomeoftheissuesthatyoumaybecalledupon
inwhatiscommonlyreferredtoasa108hearingcansometimesbecomplexandrequirea
greatdealoftimeandstudyonyourbehalf.Forexample,a108hearingmightconsistof
thefollowingissuesregardingthemap.TheDepartmentofTransportation,byvirtueofNC
G.S.136‐106issupposed,withinninety(90)daysofthereceiptoftheAnswer,tofileaplat
ofthelandtakenandsuchadditionalareaasmaybenecessarytoproperlydetermine
damages.ThisisprobablythemostignoredrequirementofChapter136asmaps
sometimestakeayearorlonger.People,includingattorneys,refertothesemapsas
surveys.Theyarenotsurveys.Ifyouwilllookcloselyatanymap,youwillnotethatitdoes
notcontainthecertificatenecessaryorrequiredbyalicensedsurveyorinNorthCarolina
statingthatthemapisasurvey.Portionsofthepropertyorright‐of‐wayareinfact
surveyedbuttheentiretractoflandisnotsurveyedbytheDepartmentofTransportation
andthiscanleadtoissuesthatyouwillbecalledupontoresolve.Forexample,the
DepartmentofTransportationwilloftentimescontendthatithasanexistingright‐of‐way
andwillshowsuchpurportedexistingright‐of‐wayonthemap,thusexcludingthearea
27
fromconsiderationofjustcompensation.Untilthepropertyownerreceivesthemapfrom
theDepartmentofTransportationandtheirattorneyhasanopportunitytoreviewit,they
arenotinapositiontoagreeordisagreewiththeDepartmentastoanyexistingright‐of‐
way.ApropertyownermayfileamotionforhearingpursuanttoG.S.136‐108contending
thattheplatdoesnotaccuratelyreflectthepropertyaffectedbythetaking.Ifthisoccurs,
youwill,ofcourse,behearingfromsurveyorsonbehalfofbothpartiesandperhaps
attorneystestifyingastothechainoftitle.
Inthepast,itwascommonpracticebytheNorthCarolinaDepartmentof
TransportationandformerlytheStateHighwayCommissiontoacquireeasementsofright‐
of‐wayandsometimesnotrecordthoseeasements.N.C.Dep’tofTransp.v.Auten,106
N.C.App.489,417S.E.2d299(1992)heldthattheDepartmentofTransportationwasnot
requiredtorecordtheright‐of‐wayandthatanypurchaserstooksubjecttotheunrecorded
right‐of‐way.Unfortunately,theattorneysinAutendidnotappealthatdecisionandfor
severalyearsthisappearedtobethelawofNorthCarolina.Fortunately,forproperty
owners,N.C.Dep’tofTransp.v.Humphries,347N.C.649,496S.E.2d563(1998),was
decidedandheldthattheDepartmentofTransportation(formerlytheStateHighway
Commission)wasrequiredtorecordtheireasementsinordertobebindingonthirdparty
purchasersforvalue.HumphrieswasacasewheretheDepartmentofTransportation
underanunrecordedeasementforanoldright‐of‐way,reducedtheamountoflandfor
whichtheywouldhavetocompensatetheowner.Humphries’attorneyshada108hearing
andwereruledagainstonthebasisofAuten.Thecasewasappealedandultimatelythe
NorthCarolinaSupremeCourtheldthattheDepartmentofTransportationwasnodifferent
thananyoneelseandiftheyfailedtorecordtheireasementsofright‐of‐way,thusfailingto
28
putapurchaserforvalueonnotice,thentheDepartmentofTransportationcouldnot
asserttheclaimagainstathirdparty.
Anotherissuethatoftenariseswitha108hearingiswhatpropertyshouldbe
includedinthemap.Manytimes,youwillfindpropertieswhicharecontiguoustoone
anotherbutforsomereasontheDepartmentofTransportationhasnotincludedinthemap
orinthedescriptionofthepropertytobeaffected.TheBibleforthisissuecanbefoundin
Barnesv.N.C.StateHighwayComm’n,250N.C.378,109S.E.2d219(1959).Ifyouare
tryinganyhighwaycasesatall,IrecommendthatyoureadBarnesseveraltimes.Barnes
involvedthetakingofpropertyinForsythCountyforwhatisnowknownasInterstate
Highway40(Business40)andU.S.Highways158and421.Thelandofthepetitioner
(Barnes)contained46.86acresbeforethetaking.Therespondent(StateHighway
Commission)took12.19acresfortheexpressway(BusinessInterstate40).Allofthe
petitioner’sproperty,atthattime,wasundevelopedandconsistedofopenfieldsand
woodlands.Abranchorcreekranfromeasttowestthroughthepropertywithabout
three‐fourthsofthepropertytothenorthofthecreek.KnollwoodStreet,atthetimeofthe
taking,traversedthepropertyrunninginanorth‐southdirectioninapproximatelythe
middleoftheland.ThepropertylyingwestofKnollwoodStreetcontained15.92acres.
ThepropertylyingeastofKnollwoodStreetandnorthofaneasementtotheThruway
ShoppingCentercontained24.22acresandtheremainingportionofthepropertywas
situatedeastofKnollwoodandsouthoftheeasementtotheshoppingcenterandcontained
6.72acres.Therewerevariouszoningdistrictsassignedtotheportionedpropertyranging
from“ResidenceA‐1”(single‐familydwellings)to“BusinessB”(retailtrade,general
business,andoutlyingshoppingareas)and“ResidenceA‐2”(singlefamilyandmulti‐family
29
dwellings).TheSupremeCourtheldinBarnesthatwhethertwoormoreparcelsofland
constituteonetractforpurposesofassessingdamagesforinjurytotheportionnottaken
oroffsettingbenefitsagainstdamagesisoneoflawfortheCourt.TheCourtstatedthatthe
factorsgenerallyemphasizedareunityofownership,physicalunity,andunityofuse
(Barnes,250N.C.at384,109S.E.2dat224‐25).However,pleasenotethatundercertain
circumstances,thepresenceofalltheseunitiesisnotessential.Usually,unityofuseis
giventhegreatestofemphasis.
UnityofOwnership
Whiletheparcelsclaimedasasingletractmustbeownedbythesamepartyor
parties,itisnotarequisiteforunityofownershipthatapartyhavethesamequantityor
qualityofinterestorestateinallofthepartsofthetract.Tysonv.HighwayComm’n,249
N.C.732,107S.E.2d630(1959).
ForadetaileddiscussionofunityofownershipseeDep’tofTransp.v.Roymac
P’ship,158N.C.App.403,581S.E.2d770(2003),holdingthataparcelownedbya
partnershipandanadjacentparcelownedbyasecondpartnershipwasthegeneralpartner
couldnotbetreatedasaunifiedtractforthepurposeofassessingcondemnationdamages.
However,unityofownershipdidexistfortwoparcelsownedbydifferentpartnershipsfor
purposesofdeterminingwhetherbothparcelsmustbetreatedasoneforcondemnation
purposes,where11of13partnersinbothpartnershipswerethesame.Dep’tofTransp.
v.NelsonCo.,127N.C.App.365,489S.E.2d449(1997).Also,seeCityofWinston‐Salem
v.Tickle,53N.C.App.516,281S.E.2d667(1981)foranexcellentdiscussionofunityof
ownership,unityofuseandphysicalunity.
30
PhysicalUnity
Thegeneralruleisthatparcelsoflandmustbecontiguousinordertoconstitute
themasasingletractforseverance,damagesandbenefits.Butinexceptionalcases,where
thereisanindividualuseofunity,ownershavebeencommittedtoincludeparcelsin
condemnationproceedingsthatarephysicallyseparateandtotreatthemasaunit(Barnes
at384‐385).
UnityofUse
Theunityofuseisdeterminedbywhetherthevarioustractsoflandarebeingused
asanintegratedeconomicunit.CityofWinston‐Salemv.Slate,185N.C.App.33,647
S.E.2d643(2007).Thefactthattheparcelsoflandarephysicallyseparatefromone
anotherdoesnotnecessarilymeanthattheownercannottreatthemasasingleunit.
Dep’tofTransp.v.Rowe,138N.C.App.329,531S.E.2d836(2000)rev’donother
grounds,353N.C.671,549S.E.2d203(2001).
Howaboutplannedfutureuses?Generally,presentuseofthetractsasoneis
required.However,ifaparcelorparcelshavebeensurveyedandplattedfordevelopment
priortonoticeofcondemnation,thelandownerwillmeettheunityofusetest.Townof
Hillsboroughv.Crabtree,143N.C.App.707,547S.E.2d139(2001).
EvidenceRelatingtoValuation
OneofthemostdifficultareasforevenexperiencedJudgesandattorneysintrying
condemnationmattersiswhatevidenceshouldbeadmittedduringthepresentationofthe
trialontheissueofjustcompensation.Rule701statesthatifthewitnessisnottestifying
31
asanexpert,histestimonyintheformofopinionsorinferencesislimitedtothoseopinions
orinferenceswhichare(a)rationallybasedontheperceptionofthewitness,and(b)
helpfultoaclearunderstandingofhistestimonyorthedeterminationofafactinissue.It
isrumoredthatsomefolksarenowtakingtheapproachthatonly“expertwitnesses”can
testifyastothevalueofpropertyinvolvedinaneminentdomainproceeding.Inthis
writer’sopinion,thatisincorrect.
Awitnesswhohasknowledgeofvaluegainedfromexperience,information,and
observationmaygivetheiropinionofthevalueofspecificrealproperty.Brandisand
BrownonNorthCarolinaEvidence,7thEdition,Section180,citingRedevelopment
Comm’nv.DennyRollandPanelCo.,273N.C.368,159S.E.2d861(1968),State
HighwayComm’nv.Conrad,263N.C.394,139S.E.2d553(1965).
Inaddition,ownershavealwaysbeenabletotestifyastothevalueoftheirproperty
eventhoughtheirknowledgeandexperiencewouldnototherwisequalifythemtodoso.
N.C.StateHighwayComm’nv.Helderman,285N.C.645,207S.E.2d720(1974).In
addition,thewitnessofferingsuchtestimonymaybecross‐examinedabouttheir
knowledgeofthevalueorpriceofdissimilarneighboringland,thoughnotordinarilyabout
thevalue,saleprice,orofferingpriceofsuchland.DukePowerCo.v.Winebarger,300
N.C.57,265S.E.2d227(1980).Dep’tofTransp.v.Burnham,61N.C.App.629,301S.E.2d
535(1983)heldthat,whileawitnessmaybeaskediftheyarefamiliarofthepricesofsales
ofsimilarordissimilarproperties,theymaynotbeaskedaboutthespecificprice,unless
theJudgeconductsahearingoutsideofthepresenceofthejury.
Ifthewitnesstestifiestheyarefamiliarorarenotfamiliarwithsuchsalesprice,
thentheimpeachmentprongissatisfied.Counselshouldnotbeallowedtoaskaboutthe
32
specificsalesprice,unlessyouconductavoirdireandmakespecificfindingstosupportits
admission.If,atanytime,anypartyinacondemnationproceeding(propertyowneror
condemnor)attemptstointroduceevidenceofspecificsalespricesduringthedirectexam
orcross‐examinationofanywitness,IwouldsuggestthatyoureadDukePowerCo.v.
Winebarger,300N.C.App.57,265S.E.2d227.Ihaveattachedacopyofthatcaseforyour
conveniencetothistranscript.TheWinebargercasewaswherethelandowner’switness
wascross‐examinedaboutspecificsalespricesinattemptingtoimpeachthewitness’s
credibilityafterthewitnesshadopinedastovalue.TheSupremeCourt,inreversingthe
trialcourt,heldthattherewasnoshowingthatanyofthepropertiesreferredtointhose
questionswereinanywaycomparabletorespondent’sproperty.Therefore,therewasno
foundationfortheuseofsuchstatementsoftheirvaluesorsalespricesascompetent
circumstantialevidenceofthevalueofrespondent’sland.Despitethetrialcourthaving
givenalimitinginstructiontothejurynottoconsiderthetestimonyassubstantive
evidenceforthepurposeofevaluatingthelandowner’sproperty,theSupremeCourtheld
thattheadmissionofsuchtestimony,evenwithsuchlimitinginstruction,resultedinerror
prejudicialtotherespondents(landowners).Infact,theCourtwentontosay
“…that,whileawitness’sknowledge,orlackofit,ofthevaluesandsales
pricesofcertainnon‐comparablepropertiesintheareamayberelevantto
hiscredibility,thespecificdollaramountofthosevaluesandpriceswill
rarely,ifever,besorelevant.Theimpeachmentpurposeofcross‐
examinationissatisfiedwhenthewitnessrespondstoaquestionprobingthe
scopeofhisknowledge.Anyfurtherinquiry,whichstatesorseekstoelicit
thespecificvaluesofpropertydissimilartotheparcelsubjecttothesuit,isat
33
bestmeresurplusage.Atworst,itrepresentsanattemptbythecross‐
examinertoconveytothejuryinformationwhichshouldbeexcludedfrom
theirconsideration.”Winebarger,300N.C.App.at64‐65,265S.E.2dat231‐
32.
JusticeExumthenwentontoreiteratethelawofNorthCarolina,whichprovided
thatthepricepaidatavoluntarysaleoflandsimilarinnature,location,andconditionof
thelandinvolvedinthesuitisadmissibleasindependentevidenceofthevalueoftheland
inquestion,ifthesalesarenottooremoteintime.Whethertwopropertiesaresufficiently
similartoadmitthesalespriceofoneascircumstantialevidenceofthevalueoftheotherin
questionistobedeterminedbythetrialjudge,usuallyonvoirdire.Statev.Johnson,282
N.C.1,191S.E.2d641(1972),RedevelopmentComm’nofHighPointv.DennyRolland
PanelCo.,273N.C.368,159S.E.2d861.
Asapracticalmatter,Ihaveneverseentwoparcelsofrealestatethatareidentical.
ThisisespeciallytrueinthemountainsofWesternNorthCarolinawheretopographycan
varygreatlyonadjoiningparcelsofrealestate.Therearegenerallyotherdissimilarities
betweenpropertiessuchasroadfrontage,availabilityofutilities,zoning,the
improvementslocatedthereon,trafficcounts,conditionoftheimprovementslocated
thereon,topographyandthelistgoeson.Anyonewhohastriedaneminentdomain
proceedingknowsthatappraisersgenerallymakeadjustmentstothesalesusedintheir
marketorsalescomparisonapproach.Theywillgenerallymakeadjustments,whichare
basedonnothingmorethantheirexperienceandtheirsubjectivedecisionastohowmuch
apropertyshouldbeadjustedupwardordownwardbaseduponthefactorbeing
considered.Ifalawyerforanypartyisattemptingtoelicitspecificsalespricesevidence,
34
eitherondirectexaminationoroncrossexamination,youshouldimmediatelysendthe
juryoutoftheroomandconductavoirdireasWinebargersuggests.
Followingtheconclusionofthevoirdire,youmustthenmakefindingsoffactto
determinewhetherornotthesaleorsalesinquestionaresosimilartothesubject
propertythattherewillnotbeprejudicetotheopposingpartyoftheadmissionofsuch
salesprice.In37yearsofpracticinglaw,Ihaveneverattemptedtointroduceinto
evidence,eitherbydirectorcross‐examination,salespricesofpropertiesconsideredby
thewitnessthatIamexamining.
“Itiswithinthesounddiscretionofthetrialjudgetodeterminewhether
thereissufficientsimilaritytorendertheevidenceofthesaleadmissible.It
isthebetterpracticefortheJudgetohearevidenceintheabsenceofthejury
asabasisfordeterminingsuchadmissibility.”Barnes,250N.C.at394,109
S.E.2dat232.
InN.C.StateHighwayComm’nv.Privett,246N.C.501,99S.E.2d61(1957),a
witnesswasaskedoncross‐examinationwhetherheknewthevaluesofanyotherproperty
intheareaorthepriceswhichsuchpropertieshadbeensoldandheansweredinthe
negative.JusticeBobbitstated,
“Thetestimonysoelicitedwasrelevantsolelytothecredibilityofthewitness
andtheweight,ifany,tobegiventohistestimony.Letitbenotedthatnone
ofthequestionsundertooktoelicittestimonyastothevaluationsorsale
pricesoftheproperties,thequestionsbeingdirectedtowhetherthewitness
hadopinionsorknowledgewithreferencethereto.”Privett,246N.C.at506‐
07,99S.E.2dat65.
35
Rule702anditsrecentamendment,havecreatedagreatdealofconfusioninthe
trialofeminentdomaincases.Itisrumoredthatsomejudgesbelievethatonlypersons
whoqualifyas“experts”pursuanttoRule702canopineastothevalueoftheproperty
bothbeforeandafterthetakingbytheDepartmentofTransportation.Ifthatisthecase,
thenlandownersareingreattrouble.
Rule702statesapersontenderedasanexpertmaytestifyifqualifiedby
knowledge,skill,experience,trainingoreducation,ifallofthefollowingapply:
1. Thetestimonyisbaseduponsufficientfactsordata.
2. Thetestimonyisaproductofreliableprinciplesandmethods.
3. Thewitnesshasappliedtheprinciplemethodsreliablytothefactsofthe
case.”
TwoqualifiedMAIcertifiedappraiserscanbeappraisingthesamepieceofproperty
andeachonemayselectfoursalesthattheyconsiderappropriatesalesforcomparisonand
neitherhasselectedthesamesale.Theseappraisers,ifquestionedunderoath,wouldsay
thatthereisnowayofdeterminingwhoisrightorwrongastheselectionofthesalestobe
usedforthecomparisonmarketapproachisstrictlyleftuptotheappraiserbaseduponhis
orherexperienceandtheirsubjectivedecisionmakingprocess.Inaddition,evenifthetwo
appraisersselectthesamepropertyforacomparisonsalesapproach,theadjustmentsthat
theymaymaketosuchsalescanvarydrasticallyandagainthereisnotesttoresorttoto
determinewhoisrightorwhoiswrong.Inshort,appraisingismoreofanartthana
science.Mysuggestion,withallduerespect,istoallowthelawyersforboththe
condemnorandthepropertyowner,todotheirjobsandpointoutshortcomingsofany
personwhoisopiningastovalue,whetheritisbaseduponthesalestheyhaveselectedfor
36
marketcomparisonortheadjustmentstheyhavemadetosuchsales,whetherornotthey
arebiasedforanyreason,andwhetherthereareinconsistenciesintheirappraisal.
Inaddition,manytimes,thesalesusedbytheappraisersarebypurchasersand
sellerswhoareactuallywhatIcall“marketmakers.”Thesearealsocommonlyreferredto
astradersorpeoplewhospeculateandbuyandsellrealestateforaliving.Oftentimes,
thesearethemostknowledgeablewitnessessincetheydonothavetogotothecourthouse
togettheirinformationonsalesprices,theyknowitbecausetheyliveitandtheyputtheir
ownmoneyatriskinmakingsuchpurchasesandsales.Thefactthatawitnessdoesnot
carrythenamecertifiedappraiserdoesnotprecludethewitnessfromopiningastovalue.
Whocantestifyaboutvalue?
Landowner–Generallyspeaking,alandownerisallowedtogivehisorheropinion
ofvalue.ResponsibleCitizensinOppositiontoFloodPlainOrdinancev.Cityof
Asheville,308N.C.255,302S.E.2d204(1983),LeaCo.v.N.C.BoardofTransp.,308N.C.
603,304S.E.2d164(1983),N.C.StateHighwayComm’nv.Helderman,285N.C.645,207
S.E.2d720.Therearenumerousothercasesthatalsostatewithoutequivocationthatthe
ownerofthepropertyisentitledtoexpresshisorheropinionastothevalueofthe
propertyinquestioneveniftheirknowledgeandexperiencewouldnototherwisequalify
them.SeeN.C.StateHighwayComm’nv.HeldermanandResponsibleCitizensin
OppositiontoFloodPlainOrdinancev.CityofAsheville.Inaddition,whilethe
Commissionersmaybecalledtotestifyastotheiropinion,thereportbythe
Commissionersisnotcompetentasevidenceuponthetrialofjustcompensationnorshall
evidenceofthedepositbythecondemnorbecompetentuponthetrialissueofjust
compensation.NCG.S.40A‐48(d),NCG.S.136‐109(d).
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AppraisalWitnesses–Clearly,anyappraiserattemptingtotestifymustuseoneof
theacceptablemethodsofappraisalinmakinghisorherappraisalofthesubjectproperty
bothinitsbeforeandaftervalue.Appraisersgenerallyusethreemethodsofappraisal,
whicharereferredtoasthecostapproach,marketcomparisonapproach,and
capitalizationofincomeapproach.
Thecostapproachiswheretheappraiserattemptstolocateparcelsofunimproved
realestatewhicharesimilartothesubjectpropertyandtowhichtheappraiserwillmake
adjustmentsfortopography,zoning,utilities,frontage,trafficcount,marketconditions
(timeofsaletodateoftake)aswellasotheradjustmentstotrytocomeupwithavalueof
therawlandbasedonapersquarefootpricetodeterminethevalueofthesubject
property.Theywillthen,usuallyusingMarshall&Swift,orsometimesinconsultationwith
anindependentthirdparty,getthecostofreproducingthebuilding.Theywillthen
depreciatethecomponentsofthebuildingbasedupontheirobservationofthecondition
andusingtheirsubjectivedeterminationastotheusefullifeofthatportionofthebuilding
tocomeupwithavalueofthestructure(s).
Thesalescomparisonormarketcomparisonapproachiswheretheappraiserwill
attempttolocateactualsalesofpropertythatheorshedeemstobesimilartothesubject
propertybutagainmakingadjustmentsforsizeofthetract,configurationofthetract,
zoning,roadfrontage,access,topography,marketconditions,etc..Theywillgenerally
comeupwitharangeofvaluesandfromwhichtheywillselect(atrandom)avaluetobase
theiropinionupon.
Thecapitalizationofincomeapproachisanapproachthatismostoftenusedwhere
propertyisgeneratingincome.Pleasenotewiththeoneexceptionofadairyfarm.Cityof
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Statesvillev.Cloaninger,106N.C.App.10,415S.E.2d111(1992),theincomeofa
businessbeingoperatedonthepropertyisnotadmissible.Dep’tofTransp.V.Fleming,
112N.C.App.580,436S.E.2d407(1993).Theincomereferredtoistherentthatproperty
iscapableofgenerating.Inotherwords,theappraiserwilldeterminebyexaminingother
propertiesthatarebeingrentedtodetermineasuitablerentalrateforthesubjectproperty
andthenselectacapitalizationrate,whichheorshedeemsappropriateforthetypeof
investmentandthetimeofthetaking,todetermineavalue.Example:Anappraiser
determinesthatapieceofpropertybeingacquiredbytheDepartmentofTransportation
couldberentedfor$120,000peryear.Theappraiserdeterminesthattheappropriate
capitalizationrateis6%.Assumingthatitisatriplenetlease,thatisalloftheincome
goingdirectlytotheownerofthepropertyandthetenantpayingtaxes,insuranceand
othercosts,thenthevalueofthepropertywouldbe$2,000,000,whichisdeterminedby
taking$120,000anddividingitby.06($120,000÷ .06=$2,000,000.00).Youwillmost
oftenseethisapproachbeingusedoncommercialpropertiesthatareeitherbeingrented
orcapableofbeingrentedtogenerateincome.Donotconfusethiswithallowing
introductionoftheevidenceoftheincomegeneratedbythebusinesslocateduponthe
property.Dep’tofTransp.v.Fleming,112N.C.App.580,436S.E.2d407.Theonly
exceptiontotheincomeisstatedintheCloaningercase,althoughotherjurisdictionshave
madeotherexceptions,butnotNorthCarolina.
Realtors–Somecondemnorattorneyswilltaketheapproachthatarealtorisnot
qualifiedtotestifyandexpresshisorheropinionastovalue.Thisisnotcorrect.Priorto
2012,theNorthCarolinaAppraiser’sActrequiredthatpersonsperformingappraisalsfor
feetohaveanappraisallicenseorcertificatefromtheNorthCarolinaAppraisalBoard.An
39
exceptionwasprovidedforlicensedrealestatebrokersprovidingaCMA(Comparative
MarketAnalysis)forperspectiveoractualbrokerageclientsorforrealpropertyinvolved
inanemployeerelocationprogram.Thiscreatedanobviousproblemsincerealtorsdidnot
wanttodothestudynecessarytodeterminethevalueforapieceofproperty,gotocourt
andtestifyandbebeatenupbytheotherlawyer,andreceivenocompensationforsame.
ThisproblemwasaddressedintheNorthCarolinaGeneralAssemblyin2012andinSenate
Bill521,whichwasenacted.Brokerpriceopinionsarenowauthorizedforthefollowing:
1. anexistingorpotentialsellerofaparcelofrealestate;
2. anexistingorpotentialbuyerofrealproperty;
3. anexistingorpotentiallessorofaparcelorinterestinrealproperty;
4. anexistingorpotentiallesseeofaparcelorinterestinrealproperty;
5. athirdpartymakingdecisionsorperformingduediligencerelatedtothe
potentiallisting,offering,sale,option,leaseoracquisitionpriceofaparcelor
interestinrealproperty;
6. anexistingorpotentiallienholderorotherpartyforthepurposeother
thanasthebasistodeterminethevalueofparceloraninterestinreal
propertyforamortgageloanorigination,includingfirstandsecond
mortgages,refinances,orequitylinesofcredit.Theprovisionsofthis
subsectiondonotprecludethepreparationofbrokerpriceopinionor
comparativemarketanalysistobeusedinconjunctionwithorinadditionto
anappraisal.
Inshort,abrokercannowtestifyforafeeinacondemnationcasebutmaynotdoa
comparativemarketanalysisthatwillbeusedbysomelenderinconjunctionwithany
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mortgageloan.Inotherwords,theappraisersprotectedtheirturfinsofaraslending
institutionswereconcerned.TheNorthCarolinaRealEstateCommissionadopted,in21
NCAC58A.2202,thestandardsthatabrokermustadheretoinperformingabrokerprice
opinionorcomparativemarketanalysisforafee.Ihaveattachedthatportionofthe
AdministrativeCodetotheappendixhereto.
LayWitnesses–Finally,anyonewhoisfamiliarwiththesubjectpropertyandreal
estatevaluesshouldbeallowedtotestifysubjecttocrossexamination.Some“traders”
havemuchmoreknowledgeofvaluesandsalespricesincertainlocalesthanappraisers.
Theycantellyouwhatpropertiessoldfor,theapproximatedateofsuchsaleaswellasany
conditionsofthesaleanddifferencesbetweenthesubjectpropertyandthepropertywhich
sold.Thesepeopleclearlyhavetheknowledgetoassistthejuryindeterminingtheissueof
justcompensation.RememberRule701providesthatapersonnottestifyingasanexpert
maytestifyintheformofanopinion(s),whichare:
(a) rationallybasedontheperceptionofthewitness;and
(b) helpfultothedeterminationofafactissue.
Surelyapersonwhoisfamiliarwiththesubjectproperty,salesandsalespricesof
similarpropertyacquiredthroughhisorherexperienceand/orpersonaldealingscan
testifyandtheirtestimonywillassisttheissueoffact.
Awitnesswhoestablisheshisfamiliaritywiththelandinquestionandstateshehas
anopinionsatisfactorytohimselfastoitsvalueatthetimeinquestioniscompetenttogive
hisopinionastoitsvalue.Harrelsonv.Gooden,229N.C.654,50S.E.2d901(1948).
41
APPENDIXA
§ 40A-40. Notice of action.
(a) Not less than 30 days prior to the filing of a complaint under the provisions of G.S. 40A-
41, a public condemnor listed in G.S. 40A-3(b) or (c) shall provide notice to each owner (whose
name and address can be ascertained by reasonable diligence) of its intent to institute an action to
condemn property. (The notice shall be sent to each owner by certified mail, return receipt
requested. The providing of notice shall be complete upon deposit of the notice enclosed in a
postpaid, properly addressed wrapper in a post office or official depository under the exclusive
care and custody of the United States Postal Service. Notice by publication is not required.
Notice to an owner whose name and/or address cannot be ascertained by reasonable diligence is
not required in any manner.)
The notice shall contain a general description of the property to be taken and of the amount
estimated by the condemnor to be just compensation for the property to be condemned. The
notice shall also state the purpose for which the property is being condemned and the date
condemnor intends to file the complaint.
(b) In the case of a condemnation action to be commenced pursuant to G.S. 40A-42(a), the
notice required by subsection (a) of this section shall substantially comply with the following
requirements:
(1) The notice shall be printed in at least 12 point bold legible type.
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(2) The words "Notice of condemnation" or similar words shall conspicuously appear on the
notice.
(3) The notice shall include the information required by subsection (a) of this section.
(4) The notice shall contain a plain language summary of the owner's rights, including:
a. The right to commence an action for injunctive relief.
b. The right to answer the complaint after it has been filed.
(5) The notice shall include a statement advising the owner to consult with an attorney
regarding the owner's rights.
An owner is entitled to no relief because of any defect or inaccuracy in the notice unless the
owner was actually prejudiced by the defect or inaccuracy, and the owner is otherwise entitled to
relief under Rules 55(d) or 60(b) of the North Carolina Rules of Civil Procedure or other
applicable law. (1981, c. 919, s. 1; 1981 (Reg. Sess., 1982), c. 1243, s. 3; 1999-410, s. 1.)