Why is pre-condemnation planning important?

Planning for the imminent domain lawsuit is very important. If you wait until the lawsuit is filed, it’s too late. There are many nuances in imminent domain, which may not make common sense, but nevertheless, it’s the law. I will give you an example.

Let’s say you and your spouse own a piece of property, as ABC LCC. You and your spouse also own a business known as XYZ Corporation. Of course, you and your spouse will allow your corporation to stay on the property as long as it wanted to. In imminent domain, the company must have a lease. The company entity must have a lease with the land owning entity, even though both entities are owned by the same person. Failure to obtain that lease between the company and the land owner would result in the company failing to meet the qualifications for a business damage claim. That could result in a loss of millions of dollars.

In addition, if it is income producing property, where the land owner has tenants, it’s very important to set the leases up with what’s known as condonation clauses. Otherwise, the lease, which under the law, the tenant is considered a owner, may actually be able to claim part of the land owner’s recovery. This is a very simple fix. You just need to insert a condonation clause in your lease, and both parties will be well protected.

In addition, there’s many other things … many other nuances that must be taken care of. This is done in the pre-condonation planning stage.


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