South Dakota'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, or any of its instrumentalities or political subdivisions, acting under statute or ordinance, may take private property for public use. This includes counties, municipalities, and certain utilities.

• What Are the Legal Requirements for Exercising the Power?

  Under South Dakota law, property can only be condemned for a lawful public use or purpose. Additionally, condemning authorities must possess the proper delegation of eminent domain authority from the State to condemn property. In all situations, if the right to condemn exists, just compensation must be paid for the property being taking. In all cases where a taking has occurred, the landowner is entitled to have a jury determine the amount of just compensation owed.
  

• What Limitations or Defenses Exist?

  Once the decision to proceed with a public project is made and the acquisition of property necessary for the project is determined by an authorized governmental entity, the grounds to challenge the condemnation are limited under South Dakota law. Defenses can, however, be raised as to whether a proper public use exists for the condemnation or whether the prerequisite legal authority to condemn is present. In such situations the Court will review the submitted evidence and rule on the defenses.
  
  Generally, the government’s finding of necessity for a public use is binding on all persons unless it can be proven that the finding was based on fraud, bad faith or an abuse of discretion. SDCL § 21-35-10.1. South Dakota courts have stated: “A choice to condemn must grossly violate fact and logic or be wholly arbitrary to support a finding of abuse.” Considerations of alternative routes, project costs, environmental factors, and safety concerns may indicate that the decision was not arbitrary but within the range of reasonable discretion.

• What Constitutes a Public Purpose?

  Like the U.S. Constitution, South Dakota’s Constitution limits the use of eminent domain to “public use,” a term which over time has come to include public purpose as well. Typical uses that satisfy a public use or purpose can include roads, parks, schools, other public buildings, or other projects or undertakings that serve a public good or need. By statute, municipalities have the right to acquire by condemnation any interest in real property, which it may deem necessary for an urban renewal project. SDCL § 11-8-50.

• How is Just Compensation Determined?

  The South Dakota Constitution Article VI, § 13 states: “Private property shall not be taken for public use, or damaged, without just compensation . . .” In South Dakota, a landowner is entitled to have a jury determine the amount of just compensation he or she is owed. At the jury trial, an owner may give an opinion as to the value of his or her own land. The owner is presumed by law to be qualified to testify to the unique value of the owner’s land.
  
  To determine just compensation, a jury is first instructed to determine the best and most profitable use and purpose (sometimes called the “highest and best use”) to which the entire tract of land is adapted; and if it is adaptable to a particular purpose in the near future, the jury must consider that purpose. This includes the adaptation of the use of the property for any legitimate purpose or business even though it has never been previously used for such purpose and the landowner had no present intention of devoting it to such use. However, the use must not be remote, speculative, or uncertain.
  
  If an entire parcel of land is taken, a jury is instructed to award the “fair market value” for the parcel as just compensation. “Fair market value” is the highest price for which property can be sold on the open market by a willing seller to a willing buyer, neither acting under compulsion, and both exercising reasonable judgment. It does not mean the amount which would be obtained on a forced sale. Nor does it mean the amount which might be obtained from a buyer who is under peculiar or unusual pressure to purchase this particular property.
  
  To determine the fair market value of the entire tract, a jury may consider its location, the highest and best use and purposes for which it is suitable or adaptable considering such location, the existing business wants of the community in which it is located, and such uses as may be reasonably expected in the near future. A jury may also consider bona fide sales of property in the immediate vicinity that are similarly located.
  
  In those situations where only a portion of a tract of land is taken, South Dakota law uses the “before and after” formula to determine the just compensation. Under this formula the jury must first determine the “before value,” which is the fair market value of the entire property as of the date of taking immediately before, and unaffected by, the taking. The jury must then determine the “after value,” which is the fair market value of the residue, or remaining parcel, as of the date of taking, immediately after, and as affected by, the taking. The difference between the “before value” and “after value” will be the just compensation to which the property owner is entitled.

• How Is Fair Market Value Defined?

  In South Dakota, “fair market value” is the highest price for which property can be sold on the open market by a willing seller to a willing buyer, neither acting under compulsion, and both exercising reasonable judgment. It does not mean the amount which would be obtained on a forced sale. Nor does it mean the amount which might be obtained from a buyer who is under peculiar or unusual pressure to purchase this particular property.
  
  To determine the fair market value of the entire tract, a jury may consider its location, the highest and best use and purposes for which it is suitable or adaptable considering such location, the existing business wants of the community in which it is located, and such uses as may be reasonably expected in the near future. A jury may also consider bona fide sales of property in the immediate vicinity that are similarly located.

• What About Recovering Damages to Remaining Property

  Under South Dakota law, just compensation also includes any diminution in value (i.e. damages) to an owner’s remaining property. Thus, when a condemning authority takes a portion of a landowner's property, it is obligated to pay compensation not only for the part taken, but also for any loss in value to the property not being taken. Unfortunately, in South Dakota a landowner is not entitled to claim damages for business loss caused by the public project on the theory that the business itself can be relocated. However, business losses may be factored into the value of any temporary easement taken by the government.

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

  If the amount of just compensation awarded to a landowner is 20% greater than the government’s final offer, the landowner may recover reasonable attorney fees and compensation for not more than two expert witnesses. SDCL § 21-35-23. If the landowner is the prevailing party, the landowner may also recover expenses necessarily incurred in gathering and procuring evidence or bringing the matter to trial. Such expenditures include costs of telephonic hearings, costs of telephoto or fax charges, fees of witnesses, interpreters, translators, officers, printers, service of process, filing, expenses from telephone calls, copying, costs of original and copies of transcripts and reporter's attendance fees, court appointed experts, and other similar expenses and charges. SDCL § 15-17-37.