Receiving Just Compensation for North Carolina Temporary Takings

In North Carolina, government agencies (and some private parties) may take a landowner's property for public use if they pay just compensation for the taking. The power to take private property for public use is allowed by the law of eminent domain. Takings may also include temporary takings. For example, during a road widening, the North Carolina Department of Transportation ("NCDOT") might temporarily take a portion of land adjacent to the road for the purpose of construction staging like the placement of construction materials and storage of equipment. These are generally called "temporary construction easements" ("TCE"). North Carolina landowners are entitled to be paid just compensation for such temporary takings of their land.

Any sort of taking of land that is more than momentary is a "taking" for purposes of eminent domain. Indeed, the US Supreme Court has held that a temporary taking is no different than a permanent taking. A temporary taking requires just compensation for "the use of the land during th[e] period" of the taking. A temporary taking is defined as one where a landowner is denied the use of his or her property for any limited period.

Under North Carolina law, what is defined as "just compensation" for a temporary taking is generally the fair market rental value of the land actually occupied. This is typically considered to be the rental value that probably could have been obtained if the landowner had rented the land at issue on the open market. Sometimes the rental value is relatively "easy" to prove. But, most often, the rental value is something that must be proven through the use of expert witnesses like real estate appraisers and experts on the leasing of land and space.

Under some circumstances, though, a landowner is entitled to other forms of compensation in addition to the fair market rental value. For example, with a temporary construction easement, landowners can claim compensation for the following:

• Cost of removal of and/or replacing the landowner's improvements in the construction easement
• Cost of removal/destruction of trees, crops and similar
• Cost of constructing any necessary alternate entrance to remainder of the property
• The diminished value to the easement caused by changes made in the easement
• The diminished value to the remaining property resulting from use of the easement
• The length of time the easement was used
• Damages arising from the proximity of the easement to buildings and other improvement on the remaining property
• And more

See Colonial Pipeline Co. v. Weaver, 310 N.C. 93 (NC Supreme Court 1984); City of Charlotte v. Combs, 719 SE 2d 59 (NC Court of Appeals 2011).

Generally speaking, lost business income is not a form of damages that can be recovered in a condemnation proceeding involving a temporary taking. For example, if a temporary construction easement causes a loss of traffic into a road-side gas station, the NCDOT is not responsible for paying for that loss of business income.

As for rental income, the issue is legally complex. This is because rents are a form of income that are derived directly from the land. By contrast, business income is derived from the business, not the land. Consequently, rental income is allowed under North Carolina law to be used as a "proper consideration" in determining the fair market value of any property taken. The legal issue is tricky because the rental income cannot be a separate item of damages, but, rather, must be included as part of the evaluation of the fair market value of the property taken. Further, the rental income must be disentangled from the larger issue of business income (even though, of course, many businesses -- like a motel -- are in the business of renting).

For more information, and to schedule a confidential consultation with experienced and dedicated property law 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 Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.