North Carolina'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?

  North Carolina law permits state and local governments, and their instrumentalities, as well as certain private condemnors, such as public utility and railroad companies, to take private property by eminent domain. North Carolina General Statute §40A-3 lists the various entities that can take property and the specific uses for which each entity can exercise the power of eminent domain. Additionally, Chapter 136 of the North Carolina General Statutes authorizes the North Carolina Department of Transportation to take property, whereas Chapter 146 authorizes the Department of Administration to take property on behalf of the State.

• What Are the Legal Requirements for Exercising the Power?

  Under North Carolina law, property can be condemned only for a public use. An entity seeking to take property must demonstrate that the General Assembly has granted it the power of eminent domain and has authorized that entity to take property for the specific purpose for which it seeks to condemn an owner’s property. See North Carolina General Statute § 40A-3.
  
  The procedural requirements vary greatly depending on whether the entity seeking to take property is a private condemnor, local public condemnor, or other public condemnor. These procures are specified in Chapters 40A and 136 of the North Carolina General Statutes.

• What Limitations or Defenses Exist?

  Once a condemnor establishes that the General Assembly has (1) delegated the power of eminent domain to it and (2) authorized that entity to take property for a use authorized in the North Carolina General Statutes, the defenses to the taking are limited. At that point, the owner is typically limited to constitutional defenses beyond any defense against the condemnor’s authorization to take the property.

• What Constitutes a Public Purpose?

  Any use specified in North Carolina General Statute § 40A-3 constitutes a valid public use for purposes of exercising the power of eminent domain. Additionally, the North Carolina Department of Transportation can take property for those uses specified in Chapter 136, and the Department of Administration can likewise take property for the uses specified in Chapter 146.

• How is Just Compensation Determined?

  When the North Carolina Department of Transportation or Department of Administration take property, just compensation is determined by the difference between the value of the entire property before the taking and the value of the property remaining after the taking.
  
  When other entities take property, just compensation is determined by the greater of the following two amounts: (1) the value of the property taken or (2) the difference between the value of the entire property before the taking and the value of the property remaining after the taking.
  

• How Is Fair Market Value Defined?

  At its core, fair market value is defined by the price that would be negotiated between a willing buyer and willing seller if each were acting knowledgeably and voluntarily. Courts seek to replicate the market when determining just compensation in a forced condemnation sale. In order to ensure owners are made whole when forced to sell their property, fair market value is determined based on the highest and best use of the property in condemnation cases.
  
  While there are a variety of ways to measure fair market value, appraisers most often use the three standard approaches to value: sales, income, and cost approaches.
  

• What About Recovering Damages to Remaining Property?

  Owners are constitutionally entitled to damages to any property remaining after the taking. As just compensation is determined based on the difference between the value of the entire property before the taking and the value of the property remaining after the taking, damages are a vital part of determining what the owner is constitutionally due. Any analysis of just compensation in a partial taking case must include consideration of the damages, i.e., the depreciation in the value of the property remaining after the taking.

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

  Unlike the law in many other states, attorney’s fees, expert witness fees, and other litigation expenses and costs are generally not recoverable under North Carolina law. There are three exceptions to this general rule. First, owners are entitled to reimbursement if they are forced to file the lawsuit to recover just compensation (i.e., inverse condemnation). Second, if the court determines a condemnor does not have authority to take the owner’s property, the owner is entitled to reimbursement. Third, if a condemnor abandons the taking, which is permitted only in certain circumstances, the owner is entitled to reimbursement. North Carolina General Statutes §§ 40A-8 and 136-119 address these exceptions.