Severance Damages: Uneconomic Remnants

Severance damages play an important role in the valuation process because they are not always obvious and they can produce a significant amount of just compensation for a property owner. As a reminder, severance damages relate to the loss of value to the remainder (portion of property left after the taking) above and beyond the value of the land and structures taken by the government.

The uneconomic remnant is the portion of property leftover in a partial taking situation that cannot be developed on its own.  This remainder parcel is either too small to be developed, or the configuration of the property is such that does not allow for development.  Or, a property owner might be left with a piece of property that they no longer want because it has no value in the marketplace.

In this situation, the property owner has several options.  In some states, statutes exist that allow an owner to sell the uneconomic remnant to the condemning authority, although we would never recommend doing this.   The owner can also keep this property and still recover damages from the condemning authority during the eminent domain proceeding.  If the owner elects to keep the property and the uneconomic remnant really has zero or very little value, then the value of the damages in the eminent domain proceeding will not only include the value of the property acquired, but also include the value of the uneconomic remnant prior to the taking.

I frequently educate owners about this to make sure they understand that they can get compensation for an uneconomic remnant without being forced to turn over the title of that property to the condemning authority.