(A) – Rent
(i) Back Rents. The owner of the building should collect all his rents up to but not including the date of title vesting. The condemning authority or its agents will not attempt to collect any of the rents due prior to title vesting date. If the owner does not collect back rent himself, it will not be adjusted or collected by the condemnor.
(ii) Rents after Vesting. If any rent is collected by the owner for a period subsequent to the passing of title, the condemnor will demand a rebate of those rents. If unpaid, such rents will be a lien against the award to be made and will have to be paid or adjusted prior to the payment of the award. The property owner should make rent adjustments to the condemning authority as soon after title vesting as possible. Disputes can better be resolved while tenants are still available.
(iii) Continued Occupancy. The owner or a tenant can often occupy any of the space in the building after vesting, either as a commercial or residential tenant. The condemning authority will demand a rent to be paid for use and occupancy. The amount of this rent may be negotiated, and will not affect the determination of just compensation. If unpaid, such rent will be deducted upon payment of the award. Disagreements on the amount of the appropriate use and occupancy rental, are resolved by a judicial hearing or may be an issue in the trial itself. No written agreement as to rent should be entered until counsel has reviewed it. See EDPL §305.
(iv) Services/Utilities. Tenants should assume that the rental arrangement with the State, unless otherwise agreed, will be on a net basis (i.e., the tenant is responsible for insurance, maintenance, etc.). It is highly unlikely that the condemning authority will provide services or repairs to the premises or make arrangements for same after the taking. If the owner chooses to remain in occupancy, it is his or her responsibility.
(B) – Insurance
Even where the taking is total, liability insurance should be continued for a reasonable period after the title vesting date as protection against pre-existing physical defects or claims. If the owner of the property continues to occupy all or any portion of the premises, insurance should be continued on personal property. The owner should consult its insurance broker as to continuing protection for itself as a tenant with respect to fire and liability insurance.
(C) – Taxes
(i) Payment to Vesting. As a general rule, the owner is required to pay only the apportioned amount of the real estate taxes for that part of the tax year prior to vesting of title. However, if the owner is in title as of the tax status date, it is, as far as the assessor is concerned, still the owner and will be liable for the tax for the entire year although the condemning authority may vest title at some point in that tax year. Note, however, that this excess payment can be adjusted later see (iii) below.
(ii) Apportionment. Prior to the next tax status date, application should be made to the assessor for an apportioned bill to remove the property taken by the condemnor and adjust the tax bill accordingly. All real estate taxes should be paid promptly to avoid any interest and penalties.
(iii) Condemnor/State Refund of Apportioned Taxes. If the tax has already been paid for a period beyond title vesting, the condemnor, upon proper application, will pay an apportioned amount of the taxes.
(iv) Where the taking is partial, the above explanation applies, but there will be a further apportionment.
(D) – Water
If water taxes are paid by a frontage charge, the owner is liable for an apportioned water tax for the year in which title vested. If there is a water meter, a reading should be requested as soon after the date of title vesting as is possible to include up to the date of title vesting. If water frontage charges have already been paid, application should be made by the owner himself to the local tax collector for a refund.
Posted in: Condemnation