Can I Recover My Land Taken by Eminent Domain if the Public Project is Canceled?

In North Carolina, governmental agencies, local governments and some private parties (like utility companies) can take private land through the use of the power of eminent domain. To be legal, taking of private land via eminent domain requires that the taking be for "public use/benefit" and that "just compensation" be paid for the land taken. For example, a lawful "public use" that justifies use of eminent domain is the widening of a North Carolina road or highway by the North Carolina Department of Transportation ("NCDOT").

However, what happens if the public project is canceled or abandoned? Can the landowner recover the land taken by eminent domain?

The answer is legally complex. However, in general, likely, the landowner will have the opportunity to BUY back land that was taken through eminent domain. The purchase price will be set by the governmental agency per the relevant North Carolina statute, generally will not be less than the "just compensation" that was paid by the condemning authority and often is based on the current market price for the land. The answer is also legally complex because there are slightly different rules depending on which type of governmental agency or private party took the land through eminent domain. Here is a brief explanation.

To begin, it must be noted that there does not appear to be any legal mechanism for compelling a condemning authority to return land taken by eminent domain to the original owner. As discussed below, all of the statutory provisions use permissive language.

Generally speaking, Chapter 136 of the North Carolina General Statutes governs use of eminent domain by the NCDOT. More specifically, subsection 136-19 covers what happens if the NCDOT determines that land taken is no longer needed for a public infrastructure project. Under the statutory provisions, the NCDOT MAY sell land that is no longer needed, but "shall give first consideration to any offer to purchase the property made by the former owner." This "first-consideration" rule only applies if a full lot, block or tract of land was taken. If only a portion of the former owner's land was taken, then the former owner must still own the remainder of the land to be entitled to "first-consideration."

In terms of price, the NCDOT can base the price on the then-current market value of the property when selling to a person or company that is not a former owner. However, when former owners are required to be given "first consideration," the price must be based on the price paid to the former owner when the property was taken plus the cost of any improvements added after the taking plus interest at the legal rate on the money paid at the time of the taking. See N.C. Gen. Stat., § 136-19(a) and (b). See also Ferrell v. Department of Transportation, 435 SE 2d 309 (NC Supreme Court 1993) (NCDOT required to reconvey unneeded property previously condemned to the former owner at a price equal to the condemnation award plus interest and the cost of any improvements made to the property by DOT which, in that case, was $845,000 instead of then-current appraised market value estimate of $1.8 million).

North Carolina General Statutes Chapter 40A governs eminent domain proceedings by local governments (called "local public condemnors") and by private parties. Section 40A-70 sets out a similar rule for local public condemnors as discussed above for the NCDOT. However, a local public condemnor is NOT required to give the former owner "first-consideration." The statute is permissive allowing a local public condemnor to reconvey the land to the former owner. If that is done, then the price rule is the same as the one set forth above for the NCDOT. That is, the price must be based on the price paid to the former owner when the property was taken plus the cost of any improvements added after the taking plus interest at the legal rate on the money paid at the time of the taking.

As noted, some private parties -- like a utility company or a railroad -- have the authority to use the power of eminent domain. Chapter 40A also governs eminent domain proceedings by these private local condemnors. There does not, however, appear to be a specific statutory provision for return of land taken by a private condemnor when the land is no longer needed. Section 40A-70 discussed above does not reference "private condemnors." Likely, North Carolina courts would apply the same set of rules to private condemnors as discussed above.

For more information, and to schedule a confidential consultation with experienced and dedicated eminent domain and condemnation attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our “Contact” page or give us a call at 704-370-2828. We handle land use, zoning and condemnation legal matters in federal court, in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.