Minnesota Eminent Domain Law

Eminent Domain Law in Minnesota Explained

Few issues evoke such strong opposition as the taking of private land through eminent domain for a public use. Whether you are impacted by eminent domain in Minneapolis or other parts of the state, there are some things you should be aware of as you go through the process. In most cases, you won’t be able to prevent the government from acquiring your land, but you are entitled to just compensation under eminent domain law. Learn more about eminent domain generally and what you’re entitled to receive and your rights as a property owner and hiring a Minnesota eminent domain attorney.

We are an eminent domain law firm that only represents property owners. Our central office is located in Minneapolis which allows us to ‘get into the field’ and shake hands with property owners more frequently than we do in other states. While most eminent domain attorneys in Minneapolis prefer to handle cases in the Twin Cities metro area, we maintain a successful eminent domain practice throughout the state with clients throughout.

Did you know that most eminent domain attorneys work on a contingent fee basis? With this fee structure, the attorney assumes the risk of earning a fee. Also, Minnesota law requires the government or condemning authority to pay the property owner’s attorney’s fees and costs when certain criteria are met.

Minnesota Eminent Domain Process

In the state of Minnesota, the eminent domain process can only be stopped if the proposed taking does not meet the requirements for public purpose or public necessity. If you have determined that the proposed taking does meet these requirements, then you should learn more about the Minnesota eminent domain process.

Remember, even if the government has the right to condemn your property, they cannot dictate the price they are willing to pay; compensation is determined by the highest and best use laws for your property.

The majority of eminent domain cases in Minnesota meet the requirement for public purpose and necessity. Examples of cases that meet these criteria are: property acquisition for highway improvement projects, and acquisitions for utility projects such as installation of power lines and sewer systems.

If the taking of your property meets the requirements for public purpose or public necessity, then continue reading to learn more about the eminent domain process in the state of Minnesota. Please be aware that the flow chart and explanations are simply an overview of the process and should not be used as a tool to take matters into your own hands.

1. Government Announced Project and Properties Affected
Typically during project development, the condemning authority (whether that agency is the Department of Transportation, or a City/County Planning Division, etc.) will hold public meetings to inform the public of the upcoming project and how this project will affect private property.

2. Property Owner Hires Attorney
Depending upon the complexity of the case and the amount of additional damages done to the property, it may be necessary to allow condemnation to occur in order for the property owner to receive just compensation.  If this is the case, an eminent domain lawyer must be hired to assist the property owner with their claim.

3. Government Inspects and Values Property
Before commencing an eminent domain proceeding, the condemning authority must obtain at least one appraisal for the property in question. While creating the appraisal report, the appraiser must make a reasonable effort to confer with the property owner. The acquiring authority must then provide the owner with a copy of any and all appraisals they have obtained at the time an offer is made. This can be no later than 60 days before the petition for eminent domain is presented. They must also inform the property owner of the right to obtain a second appraisal. (Minn. Stat. § 117.036(2)(a)).

4. Government Makes Offer to Property Owner and Provides Appraisal
The appraisal must be provided to owner at the time the offer is made. (Minn. Stat. § 117.036(2)(a))

5. Attorney Evaluates Offer
After the condemning authority makes an offer, the property owner’s attorney will evaluate the appraisal and offer to determine if it represents just compensation. If the attorney finds errors in the condeming authority’s valuation, then they will determine how best to proceed.

6. Determine Negotiation Strategy
The condemning authority must make a good faith attempt to personally negotiate with the property owner, or the property owner’s eminent domain lawyer, to acquire the property through a direct purchase before initiating an eminent domain proceeding. (Minn. Stat. § 117.036(3))

7. Select Appraiser to Determine True Property Value
If the property owner is not satisfied with the acquiring authority’s appraisal, a second appraisal may be obtained by a qualified appraiser, with reimbursement from the condemning authority. For single-family and two-family residential properties, the owner may be reimbursed up to a maximum of $1,500. For other types of properties, the property owner may be reimbursed up to $5,000. To obtain reimbursement, the property owner must submit necessary materials to the acquiring authority, including a copy of owner’s appraisal. The appraisal must be submitted at least 5 days before the commissioners hearing, and reimbursement for the appraisal will be paid to the property owner or appraiser within 30 days of submission. (Minn. Stat. § 117.036(2)(b))It is highly recommended to consult with an eminent domain attorney prior to obtaining a second appraisal. An eminent domain attorney will thoroughly review the initial appraisal and determine its strengths and weaknesses. Based on this information, the attorney will indicate a selection for the most qualified appraiser to value the property in question and determine the damages to any remaining parcel. Remember, selecting an appraiser not qualified to value the property in question can negatively impact the amount of compensation the property owner is owed. Visit our Resources page, under Why Act Now to read an example of how hiring the wrong appraiser can hurt your claim. Make sure you consult with an eminent domain attorney before hiring an appraiser on your own.

8. Property Owner Settles with Government
If the property owner signs the final settlement papers, they waive their right to pursue additional damages and the case is complete.  The property owner should only take this step if they are satisfied with the amount of compensation offered by the condemning authority.

9. Deed is Transferred
Once the final settlement papers are executed by the property owner, the deed is transferred to the condemning authority.  It is at this time that ownership is transferred from the property owner to the condeming authority.

10. Owner’s Case is Done
The owner is paid in full, the condemning authority owns the property, and the owner’s case is completely done. The property owner can no longer file a claim to challenge the taking or to receive additional compensation.

11. Property Owner Does Not Agree with Offer
If, after negotiations, the property owner is not satisfied with the amount offered by the condemning authority, they can refuse the offer and allow condemnation to occur.

12. Property Owner Must Not Sign any Settlement Papers
If the property owner is not satisfied with the offer, they must not sign any settlement papers.  By signing these documents, they are accepting the offer and their case is done.  They must wait for the government to initiate the eminent domain proceeding.

13. Government Initiates Eminent Domain Proceeding
If the condemning authority needs to take control of the property before the commissioners have made an award, the government may pay the owner, or deposit with the clerk of courts, the full amount of the acquiring authority’s appraisal. After payment, and upon giving the owner 90 days notice, the government may then take title and possession of the property in question. (Minn. Stat. § 117.042)

14. Property Owner Pursues Claim for Additional Damages in the Eminent Domain Proceeding
If negotiations can not be reached, the government will initiate the eminent domain proceeding in order to acquire the property.  A hearing or trial will be scheduled to allow the property owner’s attorney to present their case to determine the amount of just compensation owed to the property owner.

15. Court Appoints 3 Commissioners to Determine Amount of Claim
The court will appoint 3 commissioners to hear evidence of the additional damages claim, none of whom may have any relationship, business or otherwise, with the property owner or any other interested party. All of the commissioners who are appointed must be actively engaged and knowledgeable in real estate values and appraisals. The court may in its discretion appoint an attorney familiar with eminent domain proceedings. (Minn. Stat. § 117.075(3)) After their appointment, the commissioners meet and hear both parties’ evidence and proofs regarding the additional damages claim. After hearing both parties, the commissioners must file a report within 90 days of their appointment, which will contain the amount of the award for the property owner. (Minn. Stat. § 117.105(1))

16. Either Party may Appeal Commissioners Award to District Court
Within 40 days of the commissioners’ report being filed, either party may appeal with the district court by filing a notice with the court administrator, and also by mailing the notice to all respondents and other interest parties in the case. (Minn. Stat. § 117.145)

The eminent domain process in the state of Minnesota is complicated, and if you are undergoing eminent domain and want to make sure you are justly compensated, you should speak to an eminent domain attorney.  Speaking to an eminent domain attorney regarding your case will keep you informed of your rights, the eminent domain process, and whether or not your attorney’s fees will be paid for by the state of Minnesota.

Minnesota Property Rights

The eminent domain abuse dialogue often centers on policy issues involving the right to take property for economic development and blight. Since the landmark case of Kelo v. City of New London in 2005, many states have taken measures to help curb eminent domain abuse. Some states were very successful at passing meaningful reform, and other states failed to pass any legislation at all. Most states fall in the middle by passing legislation that looks good on paper but does little to level the playing field between property owners and the government.

Since the decision by the United States Supreme Court in Kelo v. City of New London many states across the country have taken measures to help protect the rights of private ownership.  The controversial Kelo decision held that a local government can take the private property of one person and give it to another private entity.  While the Court’s ruling was seen by many as a serious blow to citizen’s constitutionally protected rights of private property ownership, the decision prompted a number of states to initiate legislative reform to help curb eminent domain abuse.

The Castle Coalition has released a report, grading each of the states based on their efforts to protect private property owners and their rights based on changes in their respective state laws.  The Castle Coalition is the Institute for Justice’s nationwide grassroots property rights activism project that teaches home and small business owners how to protect themselves and stand up to abuse by governments and developers who seek to use eminent domain to take private property for their own gain.  The Castle Coalition gave the state of Minnesota a letter grade of a B for property rights in the state.

In 2006, bipartisan legislative reform was put in place, and a new bill was signed by the Minnesota governor. This bill, titled Senate File 2750, protected homes, small businesses and farms from eminent domain abuse in the state. The law requires properties to be blighted in order to be condemned, proving actual danger to the public or a public threat to health.

If a property is non-blighted, then the condemning authority can only proceed with eminent domain if the property is near a blighted area and there is no alternative (not condemning would turn into an inverse condemnation case). The law also prohibits municipalities from using eminent domain to transfer property from a private owner to a commercial developer or development. As stated in the bill, property owners who contest condemnation will be entitled to recovery fees if the court found that the property did not satisfy the requirements of condemnation, or if the final damage award was more than 40 percent greater than the last written offer from the condemning authority, an attorney fee award would be mandatory.

Unfortunately, this bill exempts more than 2,000 Tax Increment Financing (TIF) districts from the bill. A TIF district is a public financing method that is used in re-development and for economic improvement projects, and TIF districts are often the finance tools for municipalities. This means that local municipalities using an exempt TIF district are not required to abide by the newly tightened definition of a blighted area. Many of the TIF districts that are exempt are located in the heart of the Twin Cities, where many larger, higher priority and costly projects occur.

“Although the reform legislation should cover all Minnesota properties, the legislature has since carved out two new exemptions for sports stadiums in downtown Minneapolis. One law, House Bill 2480, authorized Hennepin County to seize land to make way for Target Field, a new ballpark for the Minnesota Twins. The second exemption, House Bill 2958, deemed a new stadium for the Minnesota Vikings a “public use,” and authorized the Minnesota Sports Facilities Authority to condemn and acquire property for the stadium.”

Castle Coalition

Hiring an Eminent Domain Attorney in Minnesota

If your instincts tell you that the offer from the government is low, then it probably is. However, determining just compensation often requires an attorney to identify damages and help guide you through the Minnesota eminent domain process. Additionally, other experts are needed such as an appraiser and maybe an engineer or planner to provide evidence and expert testimony on your behalf.

Most eminent domain attorneys work on a contingent fee basis. With this fee structure, the attorney assumes the risk for earning a fee. Property owners are generally only responsible for paying costs, with the primary cost being the appraiser who values the property. Because of the contingent fee structure, most eminent domain attorneys will conduct a free case evaluation for property owners prior to recommending representation.

Are Attorney’s Fees Recoverable in Eminent Domain in Minnesota?

Fortunately for Minnesota land owners, the government is required to pay your attorney’s fees and costs when certain criteria are met. A Minnesota state statute pertaining to the recovery of attorney fees and costs for property owners undergoing eminent domain was passed in 2006.  The statute allows for property owners to recover their attorney’s fees and costs if the final judgment or award of damages is more than 40 percent greater than the last written offer made by the condemning authority. If the final judgment or award is at least 20 percent, but no more than 40 percent greater than the last written offer, the court may award attorneys fees and costs. (MN ST § 117.031)

In May 2010, the MN Court of Appeals filed a decision involving the first case concerning the attorney fee recovery statue.  The particulars of this case were fairly unique and revealed very little in regards to how MN courts will interpret the language of the statute.

The question that remains unanswered is how MN Courts will define “reasonable attorney fees, litigation expenses, appraisal fees, other expert’s fees, and other related costs.”  Minnesota Courts will hopefully interpret the language of the attorney fee recovery statue similar to how neighboring state Wisconsin has interpreted its own attorney fee recovery statute.  Wisconsin Courts have consistently interpreted their statute liberally in favor of property owners.  A Wisconsin appellate court has held:

The legislative intent in drafting their attorney fee recovery statute was (1.) to discourage the condemnor from making inequitably low jurisdictional offers, and (2) to force the condemnor to indemnify the condemnee for attorney’s fee incurred by an appeal. Standard Theatres, Inc. v. Department of Transportation, 118 Wis.2d 730, 741, 349 N.W.2d 661, 668 (1984).  In allowing condemnee to recover litigation expenses, the legislator sought to provide just compensation by ensuring that part of the award would not have to be used to pay for litigation expenses.  Green Bay Redevelopment Authority v. Bee Frank, Inc, 120 Wis.2d 402, 412, 355 N.W.2d 240, 245 (1984).

Wisconsin courts not only liberally construe the statue on behalf of property owners, they also are mindful of the statute’s purpose, which is to make a property owner ‘whole’ by compensating the owner for the value of the land taken and for attorneys fees incurred in pursuing the land owners constitutional right for just compensation.  Standard Theatres, 349 N.W.2d at 670.

Moreover, the US Supreme Court has consistently held in condemnation cases, that the government’s obligation is to “put the owner in as good a position pecuniary as if the use of their property had not been taken” Monongahela Nav. Co. v United States, 148 U.S. 312 (1893); Phelps v. United States, 274 U.S. 341 (1927); Olson v. United States, 292 U.S. 296 (1934). That is, property owners should receive fair and just compensation and not be at any financial loss resulting from the government’s action to seize their property.  We believe that in order for this to be possible, property owners should be entitled to quality legal representation at the expense of the condemning authority if the difference between the condemning authority’s offer and the final award falls within the statutory threshold.

When the government acts to condemn property, legal representation is often required to ensure owners actually receive the fair and just compensation they are entitled to under the law.  Without attorney fee recovery, property owners with smaller claims who hire an attorney on an hourly basis will see little financial gain, or perhaps be at a loss after fighting in court and paying for appraisals and attorney fees.  Additionally, for larger cases where attorneys are hired on a contingent fee basis, where the typical fee is 1/3 the difference, property owners lose 1/3 of their additional damages compensation if fees are not paid by the government.

While this Minnesota law concerning attorney fee recovery, and the recent improvements to this law concerning public utility companies, are welcome, the Courts need to follow the intent of the law in protecting property owners’ rights.  By including the option of recovering fees on a contingent fee or hourly basis in the definition of reasonable attorney fees, and by ruling liberally within the discretionary threshold amount of 20-39%, Minnesota would go a long way in leveling the playing field between the property owner and the government in eminent domain proceedings.

Summary

Although the state of Minnesota has seen some reform and further protection for private property owners, the state still has some ground to cover in order to protect the rights of private property owners.