It is typical in most condemnations that the property owner (if they are an occupant or lessee) will continue in possession of the property even after the State (or any other governmental entity) formally takes title to the property. In these circumstances, the property owner’s status is converted to that of a tenant. In such circumstances, whoever is occupying the property now becomes the tenant of the state and is responsible for a reasonable use and occupancy charge. The State will initially set this charge, but the amount of the charge can be challenged. It is not unusual for the property owner and/or prior tenant to stay on as the State’s tenant for months and in some cases even years.
Keep in mind that to the extent that a rental is not paid for this period of time between the formal vesting date and the date of the award, the State can claim a deduction from the total award equivalent to the accumulated use and occupancy charges due. Therefore, it is always good practice to challenge the use and occupancy charge early on so that it does not become a major deduction from either the ultimate award (if after trial) or a significant factor in the overall settlement.
Posted in: Condemnation