The success of any business depends heavily on the location and the infrastructure built around it. So, when the government targets a property for condemnation, it puts the property owner or the industrial factory operating on it under serious threat. The fallout can be disruptive enough to pause production and destabilize the entire business operation.
Let’s paint a hypothetical scenario:
The government has delivered a notice to your industrial property with clear intentions to condemn it for a highway and utility project. What happens next?
You Need a Lawyer
The local, state, and federal governments all have the power to exercise what is called eminent domain on any private property for public use. This means your business could be functioning normally on any given day, only to be hit with a notice on your industrial property targeted for condemnation by the government. It could be for road expansion, a rail line, a power plant, or a redevelopment plan.
But the real issue is not that you received it; it is what happens after you receive it:
While an early response gives you leverage, you need an independent valuation. This ensures that the operational losses are not overlooked, as the government’s evaluation is mostly focused on the property alone. In this case, there are industrial property valuations and business valuations, since the condemnation also affects the business’s success.
This is where you need to engage the services of a lawyer with experience in cases like this. Experience in civil engineering is also a plus for the lawyer.
Why Industrial Property Condemnation Is a Bigger Deal
Industrial factories aren’t retail shops, which are easier to move around in. There is a lot more at stake. You can’t just pack up your factory and move on. Industrial properties usually involve things like
- High-power electrical system
- Storage for raw materials and finished goods
- Safety and ventilation infrastructure
- Loading trucks, access routes or rail connections
You are not only losing land but also an entire ecosystem you have built to support your business operations. Read https://www.investopedia.com/terms/e/eminent-domain.asp to learn the types of property seizure in an eminent domain rule.
Industrial Facilities That Get Targeted
Industrial companies with light or heavy manufacturing facilities have a high risk of being targeted by the government. In addition, refineries, tank farms, processing facilities, industrial showrooms, and cold storage facilities are also at risk of that.
This happens because industrial properties often sit on strategic land that is ideal for public projects.
These facilities spend a lot of time and research on finding sites that suit their needs with regard to on-site circulation for large vehicles, location and access to nearby highways.
These factors often get overlooked by the government’s appraisers at the point of taking the property.
Here’s What to Do the Moment Your Industrial Property Is Marked for Condemnation
- Document Everything
Once the condemnation notice is received, it is important to act quickly and wisely. As the business owner, you will need to document and present machinery and installation costs. You would also need to have the production schedule in your arsenal.
This documentation would help your legal representative get better compensation, whether it is a partial or complete condemnation.
- Independent Valuation
Because of how the government’s appraisers overlook important facilities and operational actors at the outset of a taking, you need to get an independent appraiser. An independent appraiser will not only help you assess the land and structure, but also the specialized equipment, production setup, plus the cost of relocation.
You can work with a certified real estate appraiser or an industrial valuation expert to help you get an accurate picture of what your claim should be.
Click here to read about the different types of property value and the main approaches to follow.
- Consult an attorney
After the independent appraisal, your attorney or lawyer can help put the valuation results in your compensation demand. As stated in the first heading, a lawyer with experience in civil engineering also helps your case as they understand the technical aspect of construction layouts and industrial architecture.
It also allows them to challenge inaccurate valuations.
How Condemnation Value Is Calculated When Machinery Is Involved
When heavy machinery is involved in a condemnation case, the appraisal method is calculated differently. The first step to this is determining the nature of the machinery.
This is usually done by the appraisers. They need to confirm whether the machinery qualifies as a fixture. That is, they are integrated into the facility and are difficult to remove without causing permanent damage. In this case, machinery is a part of the industrial property. Its value is calculated together with the property.
On the other hand, the machinery can be personal property. What that means is that it is movable and not affixed to the property. As a business owner, you’d need to provide your value and possibly demand separate compensation, including other equipment for relocation expenses.
Wrapping Up
Industrial property condemnation hits hard because industrial operations are heavily tied to space, location, systems, and continuity. What is at stake goes beyond the land; the production setup, heavy-duty equipment and other infrastructure that have been put in place get lost.
However, what is most important in the case of a condemnation is demanding full compensation that covers the land and business loss.
An experienced lawyer can help with this recovery.
