Can a property have a negative value?

[Zoe]

They will be paid just compensation per the US Constitution.

Just comp is generally the value before - the value after. If the entire footprint of the house is now a drainage easement, the value after is likely $0, a total take. The owner should be compensated for the approximate value of the property when it was unaffected by the flooding. There are court cases that speak to this exact issue. As far as any demo cost...that will be on the condemning authority after they pay for the dwelling. The cost of demo should not be an issue for the owner or for this particular situation.

Some court will order an appraisal or two, average them, maybe, and require the municipality to compensate the owner.

I've done a lot of R/W work involving easements and total takes and continue to work for the local courts. It might take a while, but the owner will be compensated for the entire property.

Not rocket science, not a negative value.

Exactly and if a mortgage is on the property, then the lender is somewhat the client also. Both owner and lender could be the client.

Lender would probably be the client with mortgage but not necessarily. Lawyers will be involved.

 

[Mark K]

Exactly and if a mortgage is on the property, then the lender is somewhat the client also. Both owner and lender could be the client.

Lender would probably be the client with mortgage but not necessarily. Lawyers will be involved.

No, not really.

If/when the municipality purchases the property, the lender(s) will be included in the title work and paid off at closing, just like any other sale. If there is an appraisal or two ordered by the court, the court is the client. If a municipality hires the appraiser, they are the client. If the owners obtain their own appraisal, the owners are the clients. The lender is never the client unless they obtain their own appraisal for their use, which I have never encountered. Not to say it couldn't happen, but I've never seen it. Maybe on a large commercial property with a lot of $$ at stake.

If it goes to condemnation, the lender(s) will be included as defendants in addition to the property owner. See below for an old case in the public records. Owners and lender are both defendants, both are legally notified.

 

[shrubberyvaluation]

Look at owners that want to be foreclosed on in ny city because of rent control.

 

[JTip]

Do you know the definition of the drainage easement? What do the words say?

That is the FIRST place you start.

 

[WyattD]

They will be paid just compensation per the US Constitution.

Just comp is generally the value before - the value after. If the entire footprint of the house is now a drainage easement, the value after is likely $0, a total take. The owner should be compensated for the approximate value of the property when it was unaffected by the flooding. There are court cases that speak to this exact issue. As far as any demo cost...that will be on the condemning authority after they pay for the dwelling. The cost of demo should not be an issue for the owner or for this particular situation.

Some court will order an appraisal or two, average them, maybe, and require the municipality to compensate the owner.

I've done a lot of R/W work involving easements and total takes and continue to work for the local courts. It might take a while, but the owner will be compensated for the entire property.

Not rocket science, not a negative value.

Florida's Constitution requires "full " compensation not "just" compensation. Basically , as a non lawyer, payment for more than the difference market value can be considered. The municipality has shown no interest in a total take or demolition of the house which they could not do unless they did a total take which hasn't happened.

 

[WyattD]

Do you know the definition of the drainage easement? What do the words say?

That is the FIRST place you start.

Excellent question as we value property rights. The Court did not include any such decision on the rights of the two estates that now exist. Just a sketch of the permanent easement and legal description of the sketch.

 

[JTip]

The municipality has shown no interest in a total take or demolition of the house which they could not do unless they did a total take which hasn't happened.

That is the only option if the easement definition says the underlying owner cannot 'build anything' on top of the easement.

 

[Mark K]

We obviously don't have all of the facts but on its face, the property owner would have a good claim for inverse condemnation if the city refuses to adequately compensate.

In any case, this likely won't be settled for at least a couple of years the way the courts move.

 

[psines]

I have an appraisal assignment of a three-story residential home in a central Florida community. The local municipality resurfaced and altered the grade of the street which resulted in continuous flooding of a portion of the subject property’s yard, driveway and whole first floor of the home which includes a garage, two bedrooms, bathroom and a den. This has been ongoing for several years.

Recently, a local judge ruled that the local municipality has taken a permanent drainage easement from the subject property which includes not only exterior areas of the property but also the entire first floor of the home.

Interviews of local real estate agents have confirmed that given the circumstances with repeated flooding and a permanent drainage easement encumbering part of the property and the entire first floor of the home, the home is not marketable. In addition, there is no way for the homeowner to correct the problem based on detailed engineering analysis.

A diagram of the area of the home layout is shown below with the drainage easement indicated with blue crosshatch lines. It is not possible to assemble the lot with any adjoining owner and, as a result, the drainage easement creates a u-shaped unbuildable lot.

View attachment 107885

Mathematically, when considering demolition costs of the home and the unbuildability/sellability of the lot as vacant, the resulting valuation results in a negative value if demolition costs are deducted from the nominal lot value that remains.

Is it possible to have a negative value? I know this has been discussed on this forum and other places but wanted to get the groups opinion.

you bet when it costs to remove the debris and tear down the improvements, then deduct it from the site value it sure can be negative.