Kentucky's Eminent Domain Laws and Property Rights

The following responses are intended to provide general information about eminent domain laws in the featured state. Such information does not constitute legal advice. Anyone interested in learning more about eminent domain law and the impact it may have on a given set of facts should consult with an OCA attorney or another attorney experienced in handling eminent domain cases.

• Who Can Exercise Eminent Domain Laws?

  The state has the inherent power of eminent domain and that power is not subject to abridgement or impairment. See Duerson v. East Kentucky Power Coop., Inc., 843 S.W.2d 340, 343 (Ky. App. 1992). The state may delegate the power to other political subdivisions, as well as to corporations using the power in furtherance of a public purpose. See Craddock v. University of Louisville, 303 S.W.2d 548, 550 (Ky. 1957). For example, the following entities have the power to exercise eminent domain in Kentucky: water districts (KRS 74.090); sewer districts (KRS 76.110); municipal housing authorities (KRS 80.150); cities (KRS 82.082(1)); the Department of Highways (KRS 177.081); counties (KRS 178.120); the Transportation Cabinet (KRS 181.120(1) and KRS 183.490 (vesting Transportation Cabinet with power to condemn property for airport facilities)); oil and gas utilities (KRS 278.502); telephone companies (KRS 278.540); railroads (KRS 416.0101); and electric companies (KRS 416.130).

• What Are the Legal Requirements for Exercising the Power?

  The authority to condemn is subject to the constitutional restriction that the taking be for “public use” and the owner of the private property being taken receive “just compensation.” Kentucky Constitution, § 13.
  
  Before instituting an eminent domain case against the owner of private property, the condemnor must negotiate, in good faith, with the owner to acquire the property by private sale at a reasonable price. See Eaton Asphalt Paving Co. v. CSX Transp., 8 S.W.3d 878, 883 (Ky. App. 1999). Thus, a “single take-it-or-leave-it offer of a manifestly inadequate amount could well evidence a failure to make a reasonable effort to acquire the land by contract of private sale.” Id.

• What Limitations or Defenses Exist?

  Defenses available to the owner of private property subject to an eminent domain proceeding will vary depending on the facts of the particular case. But in all such cases, the following questions must be addressed at the outset of the case: Does the condemnor possess the authority to condemn? Is the proposed condemnation in furtherance of a public use? Did the condemnor negotiate with the owner in good faith? Does the petition filed by the condemnor with the court state precisely what is to be taken from the owner? Did the condemnor comply with all statutory prerequisites before filing the case? Is the taking limited to that which is necessary for the public use alleged by the condemnor?
  
  If the answer to any of these questions is “no,” the owner may be able to mount a successful defense against the taking.

• What Constitutes a Public Use?

  Public use generally means the following: (a) ownership of the property by the Commonwealth, a political subdivision of the Commonwealth, or other governmental entity; (b) the possession, occupation, or enjoyment of the property as a matter of right by the Commonwealth, a political subdivision of the Commonwealth, or other governmental entity; (c) the acquisition and transfer of property for the purpose of eliminating blighted areas, slum areas, or substandard and insanitary areas; (d) the use of the property for the creation or operation of public utilities or common carriers; or (e) other use of the property expressly authorized by statute. KRS 416.675(2).

• How is Just Compensation Determined?

  “When private property is condemned for public use, the measure of just compensation is the difference between the fair market value of the property immediately before the taking and the fair market value of the remainder immediately afterwards.” Commonwealth v. R.J. Corman R.R. Co., 116 S.W.3d 488, 491 (Ky. 2003) (citing KRS 416.660).
  
  The owner of private property which is the subject of an eminent domain proceeding has the right a jury determination of the amount of just compensation; however, the owner may waive that right by failing to make a timely demand for a jury trial pursuant to the Kentucky Rules of Civil Procedure. See Louisville & Jefferson Co. Metro. Sewer Dist. v. Bischoff, 248 S.W.3d 533, 535-36 (Ky. 2007).

• How Is Fair Market Value Defined?

  Fair market value is “the price that a willing seller will take and a willing buyer will pay for property, neither being under any compulsion to sell or buy and both being in possession of all relevant information regarding the property.” Commonwealth v. R.J. Corman R.R. Co., 116 S.W.3d 488, 491 (Ky. 2003). Changes to fair market value prior to condemnation which are substantially due to the general knowledge of the imminence of condemnation or the construction of the project are disregarded. KRS 416.660(2).
  
  Notably, the determination of fair market value should take into consideration all uses for which the property is suitable, not merely the present use of the property. The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future is to be considered to the full extent that the prospect of demand for such use affects the market value while the property is privately owned. See Paducah Indep. School Dist. v. Putnam & Sons, LLC, 520 S.W.3d 367, 376 (Ky. 2017).

• What About Recovering Damages to Remaining Property?

  In Department of Highways v. Sherrod, 367 S.W.2d 844 (Ky. App. 1963), Kentucky’s highest court abolished the practice of determining taking damages and resulting damages in highway condemnation cases: “there should be no separate determination and fixing of takingand resulting damages in any condemnation case, whether involving leased property or not.” Id. at 852 (emphasis retained from original). Instead, “the measure of damages where part of a tract of land is taken has always been the difference in market value of the tract before and after the taking[.]” Id. (emphasis retained from original).
  
  The Court then set forth its rationale for rejecting any consideration of taking or resulting damages:
  

  
  
  • As to taking damages, it causes the jury to attempt to put sale values on things that are never sold voluntarily, such as a 50-foot strip across the front of a farm, or, as in the instant case, a 25-foot strip across the front of a drive-in restaurant. As to resulting damages, it results in valuations based on costs of restoration or on vague considerations of the harm that has been done to the particular owner in his particular use of the property.
  
  

  
  Id. at 852-53 (emphasis retained from original).

• Is the Landowner Entitled to Recover Reasonable Attorney Fees? Expert Fees? Litigation Costs?

  Generally, an owner is not entitled to recover reasonable attorney fees in an eminent domain case. See Commonwealth v. Knieriem, 707 S.W.2d 340, 341 (Ky. 1986). However, there is an exception to this general rule which permits an award of attorney fees in an eminent domain proceeding under certain circumstances, i.e., “after the successful defense of a condemnation proceeding, a trial court may award attorney fees if the court determines that the condemnor has acted in bad faith or caused unreasonable delay.” See Golden Foods, Inc. v. Louisville & Jefferson Co. Metro. Sewer Dist., 240 S.W.3d 679, 683 (Ky. App. 2007).
  
  An owner is not entitled to recover expert fees in an eminent domain case. See Commonwealth v. Wireman, 714 S.W.2d 159, 162-63 (Ky. App. 1986).

• Can the government take possession of the landowner’s property before final compensation is paid?

  Generally, the government may take possession of the landowner’s property before final compensation is paid. Thus, in most cases, the condemnor will obtain an interlocutory judgment shortly after the condemnation action is initiated which allows the condemnor to take possession of the condemned property upon payment to the owner or the clerk of court the amount of compensation determined by three independent commissioners at the outset of the case. The ultimate amount of just compensation is then determined at trial. This procedure is detailed at KRS 416.610 and KRS 416.620.