Heads, I win — Tails, You Lose. It’s the Law in California

Imagine a situation in which a property owner has decided to improve his vacant land in accordance with its existing zoning. So he gets financing, hires engineers, architects and planners, gets them to do their thing, lines up contractors and is ready to pull his permit when — whammo! — a condemnation action is filed to take his land. What now?

The condemning authority takes the position that there are no improvements on the subject property and it should therefore be valued as vacant land, allowing for its highest and best use as suitable for development. But the owner responds by arguing “Wait a minute! What’s this ‘vacant land’ business? Sure enough,” says he, “my land is unimproved but I have complete plans for its development with no need for any discretionary approvals, and surely that fact increases the market value considerably since buyers in the market will pay extra for land that’s ready for development, and not have to start from scratch with raw land.”

That makes sense to us, and maybe to you, readers, but not to California judges.

California law holds that “[e]vidence as to what the owner intended to do with the land cannot be considered.” People etc. v. LaMacchia, 264 P.2d 15, 24-25 (Cal. 1953)  Thus, owners with realistic, imminent development plans get screwed by receiving “just” compensation that does not take those plans into account in spite of the fact that they add to market value.

But what happens when the shoe is on the other foot? In City of Fremont v. Fisher, 160 Cal.App.4th 666, 687 (Cal.App. 2008) the owner claimed temporary severance damages, but the court denied them, holding that their availability depends on whether the owner had imminent plans to develop his property. In Fisher, he did not, so the court denied temporary severance damages.

So here is California law, folks. Where the owner does have imminent development plans, he may not present them in evidence because they are irrelevant. But if he doesn’t have such plans, they abruptly become relevant, their absence may be considered, and it becomes a basis for denial of temporary severance damages.

Heads, I win — tails, you lose. It’s the law, you know. California law.

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