How Does The Government Take Property?

The method by which government actually takes title (i.e., vests title) to the property differs depending on whether the condemning authority is the State (or one of its agencies) or a local government. A specific distinction is made by the EDPL between State appropriations and appropriations made by local government such as county, town, city, or village. The different procedures applicable to a taking by the State in contrast to a taking by a local government are generally set forth in EDPL §402.

A) The State
EDPL §402(A) provides that the State appropriates property by filing a map in the Office of the Clerk of the County in which the property is located and with the “condemning agency” (usually the Department of Transportation). The State takes property simply by the filing of a map. Although the EDPL imposes a number of pre-vesting procedures upon the State and, as a general practice, the State will contact the property owner well before the taking and will hold informational hearings, it is obvious that actual vesting of title may often take place without the property owner being aware of the actual loss of title or the specific date that title is taken. Often, as noted below, it is not until the actual notice of appropriation that the property owner becomes aware of the taking.

(B) Local Governments
In contrast to the State, local governments or condemning authorities follow a more traditional procedure. Public hearings must be held to establish the “public purpose” or necessity for the taking. At the public hearings, comments will be invited from the affected property owners as well as the general public. Usually, there is little question that the purpose of the taking is in the public interest and a finding of public purpose will be issued. This can be challenged, but is rarely successful. See EDPL Article 2. Counsel for the local government will then file a notice of pendency and make a formal application before the Supreme Court in the county in which the property is located. This application is very similar to a plenary action or, for that matter, a special proceeding requiring service upon the property owner with at least twenty days notice in addition to newspaper notice. In most circumstances, there is no opposition to the formal notice to vest title and the application is unopposed. Upon the Court’s signing of the actual vesting order and its entry with the county clerk, title is deemed vested in the condemnor.

The property owner (including tenants) – be it residential or commercial property – is entitled to certain reimbursement and assistance to accomplish relocation. For a State taking, the relocation expenses can include:

(A) – Moving Expenses

(i) Professional Move – is based on the Agency obtaining two moving estimates. This is accomplished by doing an inventory of the claimant’s personal property which will be moved. Estimates must be obtained, and then confirm the amount of funds approved for the actual move. The State approves the lower of the two estimates that are obtained. The claimant will be provided with a copy of both estimates. The claimant may use any mover they want, but the State will not pay more than the lowest of the two estimates.

(ii) A Self Move – is based on the lowest of the two professional estimates with an additional deduction of 10%. However, the State will compensate in some cases for a foreman that is taken away from his normal duties to perform as an overseer of the move.

(B) – Storage

For necessary storage, the Department will reimburse the fees up to twelve (12) months. This must be approved in advance.

(C) – Tangible Loss of Personal Property

Actual direct losses of tangible personal property as a result of moving or discontinuing a business but not to exceed an amount equal to the reasonable expenses that would have been required to relocate such property.

(D)- Reestablishment Expenses up to $10,000

These are actual reasonable expenses necessary to reestablish a business at its new site. This is a “spend” to “get” benefit. Actual paid bills must be submitted. The expenditure is to make the business “whole” again. The business is to be placed back in a functional operational condition as prior to the move.

(E) – “Buy Back” or Salvage Value

If for any reason the relocatee wishes to take a trade fixture with them to the new location, they may purchase the item back from the Department for its salvage value. This is the probable sale price of an item, if offered for sale on the condition that it will be removed from the property at the buyer’s expense.

(F) – In Lieu of Moving Expenses

Any displaced business eligible for moving payment may elect to accept a fixed payment in an amount to be determined according to criteria established by the Department in lieu of moving expenses. Such payment will be determined by the last two Federal Income Tax Returns. Such payment shall not be less than $1,000 nor more than $20,000.

(G)- Searching Fees

The State will pay up to $1,000.00 searching fees. Again, this benefit is a “spend” to “get.” The claimant must document the dates, time, addresses and real estate agents that were seen and contacted for the search. However, the State takes the position that it will not pay real estate brokerage or reimburse for the security deposit required at the new site.

Also keep in mind that the extent of compensable relocation expenses varies depending on who is taking the property, – e.g., State or Federal or federally subsidized. It can also vary on the Agency of government which does the taking.

Different statutes of limitations will apply depending on whether the State or the local government takes title. For a State taking, the time in which to file a claim against the State is three years from the date of receipt of the Notice of Appropriation. This, however, is not simple as it appears since the State’s failure to serve the Notice of Appropriation in accordance with the EDPL may not actually toll the statute of limitations. If notice has not been given appropriately, claims can be filed after the three year period subsequent to the vesting of title. See EDPL §502(A) and §503(A).

In respect to the vesting of title by local governments, the date in which a claim must be filed is set by the Supreme Court vesting order and may extend anywhere from six months to three years. EDPL §503(B). Failure to file within that period of time can be excused for a good cause shown. Obviously, it is not recommended that a claimant wait until the last moment to file a claim. It is almost always in the property owner’s best interest to file a claim immediately so as to prevent any question of the timeliness of the claim. In fact, although in a State condemnation the claimant has three years to file, interest can be suspended if the claim is not filed within six (6) months after the Notice of Appropriation. See EDPL §514.

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.