Eminent Domain

Hello landlords and tenants I’m going to discuss “eminent domain” and why it’s important in your commercial real estate lease. My name is Jenna Zebrowski and I am the attorney behind LawByJZ.com. Eminent domain means that a governmental authority can force the sale of private land for public use, like taking a shopping center to put a highway there instead.

The lease should definitely terminate if the location is no longer the right one for Tenant to operate in. Also, you should be compensated for this inconvenience by the taker of the land, so make sure you get any award that’s coming to you, instead of letting the landlord have it!

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Commercial Real Estate Case Study

Eminent Domain: Public Taking of Private Land

Gillian’s family owned several small convenience stores. They were really proud of creating good locations for their employees to work and knowing their regular customers by name and stocking the products the customers needed to grab and go during their workday.

The stores were located close to major highways, and the government finally decided to widen a highway and needed additional land to do it.  They condemned the land where one of the stores was located through eminent domain. 

Private property can be taken for government use in a complex and usually lengthy progress, known as eminent domain. There’s not much that can be done to stop it once it begins.  The landlord was compensated for the taking of the land, since they owned it, but Gillian and her family were told that they had to relocate the store so construction would start. They didn’t get any compensation from the landlord.

They were able to find another location, but since there was more competition for the remaining retail locations in the area, the rent was significantly higher.  The tenants had also remodeled the store through the years, and couldn’t take those improvements out to reuse them, so they had to pay again to make the new retail location the perfect one for their loyal customer base. 

Gillian called an attorney and asked for help understanding what their rights were. Eminent domain doesn’t call for the tenant to recover damages from the landlord, and the lease said that the landlord would get the award for the taking of the land.  Gillian and her family had to institute a separate proceeding against the governmental authority.  Since they had an attorney to help them, they were successful and because the land was taken under eminent domain, they were compensated for costs related to the relocation and the remodel of the new store, as well as the lost business while they were closed because they couldn’t operate.