Magazine article Real Estate Issues

Real Estate Counseling in Litigation: Illustrated by Eminent Domain

Magazine article Real Estate Issues

Real Estate Counseling in Litigation: Illustrated by Eminent Domain

Article excerpt


Increasing complexities of both law and real estate, including its valuation, created a growing need for real estate counselors in litigation, particularly in eminent domain or condemnation. This manuscript presents the perspectives and observations of a Counselor of Real Estate (CRE) who serves as an expert witness in support of real estate litigation.

As a profession, real estate counselors have responded to this increased real estate complexity in all aspects, not just litigation. Counselors of Real Estate are increasingly involved in high impact decisions and complex transactions. More high-profile and respected industry leaders have joined the ranks of The Counselors of Real Estate, further expanding the capabilities and network of its members. The Counselors of Real Estate was founded in 1953 by real estate leaders seeking to enhance the quality of respected professional advice available on real property matters. Their CRE Designation recognizes the invited counselor's demonstrated judgment, integrity, and experience in real estate.

There are many aspects of real estate subject to litigation which require the insights of experts. Eminent domain has been a dominant field for real estate counselors in support of litigation, usually as an expert witness, but also as a litigation consultant to the attorney and his or her client. However, other complexities of modern real estate, as they involve litigation, have also pulled upon the real estate counselor's talents and experience. Governmental regulations, tax increment financing, and regulatory takings are prominent current-day examples.

Typically, in eminent domain, the legal system relied upon the appraiser as the primary expert, usually testifying to value or changes in value. Primary disputes were over value itself, the ultimate determining factor of compensation for a taking. A traditional example would be the difference in values before and after a partial taking for highway right-of-way in order to determine just compensation. In an uncomplicated taking of an entire tract of ground, relying solely upon an appraiser may be satisfactory. Even then, highest and best use is always relevant and can complicate the valuation. Partial takings can become more difficult. Claimed changes from present use can drastically affect value. These and other complicating circumstances affecting valuation and analysis call for more innovative thinking in order to address the overall challenge, going beyond conventional appraisal and into the field of real estate counseling.1

Real estate counseling surfaced as an enlightened and encompassing approach to current real estate complexities. A determination of highest and best use serves as a foundation for valuation. The firmness of this foundation is a key. The real estate counselor can focus not only on an experienced and relevant approach to highest and best use but also on the many other factors affecting value. These factors include market and marketability, economic viability, developability, accessibility, traffic conditions, governmental regulations, and community wants and needs, just to name a few.

Attorneys, juries, and judges are often not satisfied with an over-simplistic approach, yet share a need for lucid and simple explanations to facilitate their understanding of the facts and the issues. The issues have broadened in perspective. For example, judges in Missouri have permitted juries to hear any testimony that a buyer or seller would consider or that clarifies factors affecting value. Real estate counseling has emerged as an answer. Increasingly, our complicated economic and real estate issues require complementary litigation consultants and testimony - from both appraisers and real estate counselors, as well as engineers, land planners, or architects, depending upon the issues involved.

While this manuscript relies upon eminent domain for its focus and illustrations, the same characteristics of a real estate counselor offer similar advantages for other real estate litigation. …

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