CONDEMNATION OF REAL PROPERTY FOR PUBLIC USE IN TEXAS
What is the land owner entitled to when the government takes his or her property?
Under the Texas Constitution, governmental entities are required to adequately compensate landowners when real property is taken for public use. Tex. Const. art. I, § 17; Cnty. of Bexar v. Santikos, 144 S.W.3d 455, 459 (Tex. 2004).
When a governmental entity condemns real property,
the normal measure of damages is the fair market value of the land at the time
of the taking. Tex. Prop. Code Ann. § 21.042(b); Zwahr, 88 S.W.3d at 627. Thus,
the central issue in the typical condemnation case is how to measure the market
value of the condemned property. See City
of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182 (Tex. 2001).
Market value is “the price the property will bring
when offered for sale by one who desires to sell, but is not obligated to sell,
and is bought by one who desires to buy, but is under no necessity of buying.”
Id.
METHODS FOR DETERIMING FAIR-MARKET VALUE OF REAL PROPERTY
The three traditional approaches to determining
market value are the comparable sales method, the cost method, and the income
method. Id. Regardless of the appraisal method used by an expert, the goal of
the inquiry is always to find the fair market value of the condemned property.
Id. at 183. An appraisal method is valid only if it produces an amount that a
willing buyer would actually pay to a willing seller. Id.
Courts have long favored the comparable sales
method when determining the market value of real property: If the goal of an appraisal
is to ascertain market value, then logically there can be no better guide than
the prices that willing buyers and sellers actually negotiate in the relevant
market.
Under a comparable sales analysis, the appraiser finds data for sales
of similar property, then makes upward or downward adjustments to these sales
prices based on differences in the subject property. Id. Comparable sales must
be voluntary and should take place near in time to the condemnation, occur in
the vicinity of the condemned property, and involve land with similar
characteristics. Id. at 182.
Comparable sales need not be in the immediate
vicinity of the subject land, so long as they meet the test of similarity. See
City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808, 815 (1954). But if
the comparison is so attenuated that the appraiser and the fact finder cannot
make adjustments for differences, a court should refuse to admit evidence of a
“comparable” sale. See, e.g., Holiday Inns, Inc. v. State, 931 S.W.2d 614,
623-24 (Tex. App.-Amarillo 1996, writ denied) (remoteness in time); Urban
Renewal Agency v. Georgetown Sav. & Loan Ass'n, 509 S.W.2d 419, 421-22
(Tex. Civ. App.-Austin 1974, writ ref'd n.r.e.) (similarity of neighborhood).
Texas courts have long held it appropriate, in the
context of condemnation proceedings, for a jury to consider “all factors . . . which
would reasonably be given weight in negotiations between a seller and a buyer”
of the property. Cannizzo, 267 S.W.2d at 814, 815 (instructing the fact finder
to consider all uses to which the land is “reasonably adaptable and for which
it either is or in all reasonable probability will become available within the
reasonable future”). Courts should admit as market-value evidence “such matters
as suitability and adaptability, surroundings, conditions before and after, and
all circumstances which tend to increase or diminish” market value. Coble v.
City of Mansfield, 134 S.W.3d 449, 454 (Tex. App.-Fort Worth 2004, no pet.)
(citing State v. Carpenter, 126 Tex. 604, 89 S.W.2d 194, 200 (1936)). See also
State v. McCarley, 247 S.W.3d 323, 325-26 (Tex. App.-Austin 2007, pet. denied)
(jury determining fair market value in a condemnation proceeding may consider
current and reasonably probable future potential uses of the property, and
consequential damages that in reasonable foreseeability will result from the
condemnor's uses of the condemned property, “as such factors would ordinarily
be given weight by willing buyers and sellers and, therefore, would be
reflected in the property's fair market value.”). A jury hearing
opinion and “all testimony bearing on the issues of [condemned property's
market] value” is “enlightened to give weight to the evidence and render its
own conclusion.” Reeves v. City of Dallas, 195 S.W.2d 575, 579 (Tex. Civ. App.-Dallas
1946, writ ref'd n.r.e.). This Court noted an expert witness and a jury would
consider: [t]he location and environment of the property, the purchase and sale
price in an open market of similar property in the same or near-by vicinity,
the price that was voluntarily paid for the property taken, the availability of
the property for similarly zoned business, the kind and character of occupancy,
the encumbrances, contracts, liens, leases, etc., and many other elements . . .
.Id.
SOURCE: DALLAS COURT OF APPEALS - 05-10-00601-CV –
5/9/2012
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