We Represent Commercial and Retail Property Owners

We Represent Commercial and Retail Property Owners

When the government exercises its right of eminent domain, it can cause an adverse impact on commercial and retail property owners. They often have a large investment in the property beyond just the value of the land and/or buildings.

In addition to the actual worth of the property, the commercial and retail property owners must consider the expense of finding and moving to a new location. They may also be adversely affected by the eminent domain process through their reputation and customer base. They may have to establish a new customer base if they move very far from their current location. These businesses may also have the expense of moving inventory and equipment to the new location as well as the cost of setup, especially if they require any specialized technology or other alterations.

Landlords and Tenants

In many cases, the owner of the commercial or retail property is only the landlord. They may have leased the space to one or more tenants, who will be affected with eminent domain. This situation complicates matters for both parties. The owner of the property is losing rent income until such time as they can purchase a new property. However, there is no guarantee that the same tenants will move to the new location or that the rents will be the same.

The contract between the landlord and tenant does not affect the government’s ability to taking the land for eminent domain. The determination of the value of the actual property is considered as a single property rather than divided by lessee. However, there may be consideration for the number of tenants and income lost based on the number of leases in existence. Many of these leases are valid for a period of years, which would entitle the property owner to compensation based on the amount of total income lost.

The landlord is responsible for notifying the tenants of eviction because of the eminent domain process. How the issue is handled will be partially determined by what stipulations are included in the lease. The tenant may attempt to sue the landlord for breach of contract if a clause regarding the transfer of property ownership is not properly addressed in the lease.

The lease should stipulate who would receive compensation in the event of condemnation. The lessee is also at a loss in addition to the loss of rental income for the property owner/landlord.

Partial or Regulatory Taking

Not all condemnations result in complete loss of property. Regulations may cause increased restrictions on the property, which leads the tenant to seek a way out of the lease because of the loss of income. In other instances, they may seek a reduced rent to compensate for the expenses incurred as a result of the new regulations. Because of the complication of these situations and the complexity of the law in eminent domain, commercial and retail property owners need to seek out an experienced attorney who can help them navigate through the process and protect their interests.