Eminent domain is the power of the government to take private property for public use. The government is obligated to pay the property owner appropriate monetary compensation for their property, in a process called “condemnation.” Eminent domain can be a confusing and complex area of law. One of the more confusing aspects of eminent domain is something called “prejudgment interest.”
Since courts cannot immediately award compensation to property owners for eminent domain cases (these cases often take years to settle), most jurisdictions allow for interest to be added on to the original compensation amount from the time of the offer to the time of judgment. This interest is called "prejudgment interest" and is applied to the difference between what was offered to you by the government as its "good faith" offer of compensation and the value of your property (or partial property, including severance damages) as determined by trial for the time period between when your property was taken and the final trial date (after all appeals, if any). But what is actually included in this prejudgment interest?
Prejudgment interest is a legal concept employed across the United States, but varies from state to state. For example, the Florida Supreme Court decided the question of prejudgment interest (which it considered to be "of great public importance") in Boulis v. Florida Department of Transportation. According to the Court, the question hinges on the language that "full compensation is determined 'by reference to the state of affairs that would have existed absent any condemnation proceeding whatsoever'" and by the statutory requirement that interest is applicable to all expenses incurred as a result of the eminent domain proceedings. But what exactly does this mean? Essentially, this means that interest applies not only to the full difference between the condemning authority's "good faith" offer and the trial decision, but also to any "reasonable" expenses incurred by the property owner during the proceedings.
But this language can be deceiving. It is important to note two caveats.
In the precedent case, Boulis was billed by an expert he employed for $35,308, but the court determined that only $16,200 of that was considered "reasonable." So Boulis was responsible for nearly $20,000 out of pocket, a reminder that it is good to know what constitutes "reasonable" fees in the eyes of the court.
Thus, determining prejudgment interest and what expenses the court will accept can be a tricky proposition.
As shown in the Boulis case, even those who seemingly know the law can end up with exorbitant expenses due to eminent domain. Navigating the intricate pathways of eminent domain law, such as prejudgment interest, requires expert legal counsel.
If you live in Florida and would like to learn more about eminent domain, or if you find yourself entangled in a complex eminent domain case involving prejudgment interest, visit the website of the Florida Property Rights Law Firm, P.A. for more information.