Minnesota'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 of Minnesota holds the power to condemn as an inherent attribute of sovereignty, as do other political subdivisions of the state to which this power has been or may be delegated. Municipalities are provided a broad grant to use eminent domain under Minnesota law. Other private entities have been delegated the power of eminent domain including electrical utilities, common carrier pipelines, railroad corporations, public service corporations, and others. All entities holding the power of eminent domain are subject to the provisions of Chapter 117 of the Minnesota Statutes.

• What Are the Legal Requirements for Exercising the Power?

  Under Minnesota law, property can only be condemned for a lawful public use or purpose by an entity authorized to condemn. The condemning authority must follow the processes in Minnesota Statutes Chapter 117, including that the condemning authority obtain an appraisal of the property and negotiate in good faith to acquire the property by direct purchase prior to presenting a condemnation action. The condemnation petition must identify the lands affected and the lands to be taken and a hearing on the petition must be held. At the hearing on the petition, the district court for the county in which the property is located determines whether the condemnor has shown authority to condemn and satisfied relevant statutory requirements of public purpose and necessity for the particular taking at issue.

• What Limitations or Defenses Exist?

  Generally speaking, defenses as to the public purpose and necessity of the taking may be presented. These defenses must be presented at the initial hearing on petition. However, deference is generally given to the condemning authority and the ability to successfully challenge a condemnation action may be limited.
  
  No appeal will be allowed from a district court order approving the condemnation unless such appeal is brought within sixty days of the original order. Special discovery limited to matters relevant to the challenged issues may be allowed at the discretion of the court, and failure to allow such discovery where essential to the proof of challenged issues may constitute error.

• What Constitutes a Public Purpose?

  “Public use” or “public purpose” are defined under Minnesota law as either (1) the possession, occupation, ownership, and enjoyment of the land by the general public or public agencies, or (2) the creation or functioning of a public service corporation, or (3) the mitigation of a blighted area, remediation of an environmentally contaminated area, reduction of abandoned property, or removal of a public nuisance. In response to the Kelo decision and Walser Auto Sales decision, the legislature revised the definition of “public use” under Minn. Stat. § 117.025 to limit the use of eminent domain to acquire property for redevel- opment. “Economic development” by itself can no longer provide the required public use. Minnesota also has certain limitations on “mitigation of blight” or “environmental contamination” being used as public purposes.

• How is Just Compensation Determined

  In Minnesota, just compensation is first determined by a panel of commissioners appointed by the Court. The court at its discretion may appoint an attorney knowledgeable in eminent domain matters; all other persons must be persons engaged in the occupations of real estate sales or appraising or persons knowl- edgeable in real estate values. The commissioners’ hearing on valuation is gov- erned by Minn. Stat. § 117.085, which vests the commissioners with broad discretion as to the conduct of the hearing. In commissions chaired by an eminent domain lawyer, this proceeding may resemble a bench trial; in other instances where a lawyer is not appointed as a commissioner, the proceeding may be more informal, and evidentiary rules may be permissive. Thus, it is helpful to have a lawyer who is familiar with the commission hearing process and the likely commissioners.
  
  Any party that is unsatisfied with the commissioners’ award may appeal that award to the district court possessing jurisdiction of the case. While most actions are resolved at the commissioner hearings, some will proceed to trial; both the owner and the petitioner are entitled to a jury trial if such is sought.

• How Is Fair Market Value Defined?

  While fair market value is typically the measure of “just compensation” under Minnesota law, it is “just compensation” that is the legal requirement. Under Minnesota law, because a constitutional provision for just compensation was inserted for the protection of the citizen, it ought to have a liberal interpretation. The amount of just compensation must give the property owner a full and exact equivalent for the property taken. When determining value, neither the property owner’s use of the property nor the condemnor’s planned use is dispositive; instead suitable uses, including the highest and most profitable use for which the property is adaptable and needed must be considered.
  
  Any competent evidence concerning any factor which would affect the price a purchaser willing but not required to buy the property would pay an owner willing but not required to sell it will be considered as part of the determination.
  
  The just compensation is valued as of the date of taking of the property. In some instances, where an owner must relocate as a result of the taking, an owner may be entitled to additional damages under Minnesota’s “minimum compensation” statute.

• What About Recovering Damages to Remaining Property?

  The condemning authority does not always take entire tracts of land. In “partial takings,” the owner of the condemned property is also entitled to compensation for the diminution in value of the remainder of the property after the taking. This is commonly referred to as “severance damages.” Severance damages are measured using the “before and after” rule, by which the measure of damages is the difference between the fair market value of the entire piece of property immediately before the taking and the fair market value of the remainder of the property after the taking.

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

  Minnesota law provides for attorneys’ fees and a broad range of litigation costs, codified under Minn. Stat. §117.031. If the final award or judgment exceeds the condemning authority’s last written offer before the filing of the petition by more than 40 percent, these fees and costs are mandatory, subject only to a finding of reasonableness. If the final award or judgment exceeds the offer by less than 40 percent but more than 20 percent, fees and costs are discretionary. The Court’s analysis follows a “lodestar approach.” Costs known to have been paid to date under this statute include fees from appraisers, brokers, planners, and engineers. Some eminent domain actions are exempt from payment of fees.