More Right of Way Agent Chicanery Involving Appraisal Fees and Attorney Expenses

Notwithstanding what a right of way agent may tell you, Michigan law recognizes your right to obtain an independent appraisal at the agency’s expense and attorney consultations are generally handled on a contingency fee basis.

I recently learned from some clients that a right of way agent told them that they had no choice but to accept the appraisal undertaken by that agency. The clients were also told that they should not consult an attorney due to the expense. Finally, they were told not to speak with their neighbors.

At the outset, when somebody negotiating against you and representing the other side tells you not to talk to a lawyer, consult with an expert, or gather additional information from people in a similar situation, you should have significant questions about whose interests they are representing. Surprise – it is probably not yours.

In Michigan, the Uniform Condemnation Procedures Act (“UCPA”) applies every eminent domain case in state court. That statute gives agencies the right to expedite the acquisition of property. But importantly, it gives property owners some very important substantive rights.

MCL 213.66(5) states “expert witness fees provided for in this section shall be allowed with respect to an expert whose services were reasonably necessary to allow the owner to prepare for trial. For the purpose of this section, for each element of compensation, each party is limited to 1 expert witness to testify on that element of compensation unless, upon showing of good cause, the court permits additional experts. The agency's liability for expert witness fees shall not be diminished or affected by the failure of the owner to call an expert as a witness if the failure is caused by settlement or other disposition of the case or issue with which the expert is concerned.” Practically speaking, this means that the agency must pay the cost to have an independent appraisal done on behalf of the property owner. A property owner should not retain an appraiser without consulting with an attorney specializing in eminent domain to ensure that this statute is effective at the time of hiring. Further, while there are many appraisers, the number of them that understand the special rules applicable to condemnation is limited. But for the right of way agent in question to have told my clients that they were required to accept the agency’s appraisal where the UCPA contemplates that agency paying for the owner’s appraisal was not truthful.

Similarly, MCL 213.66(3) contemplates that an agency reimburses a contingent fee incurred by an owner. “If the amount finally determined to be just compensation for the property acquired exceeds the amount of the good faith written offer under section 5, the court shall order reimbursement in whole or in part to the owner by the agency of the owner's reasonable attorney's fees, but not in excess of 1/3 of the amount by which the ultimate award exceeds the agency's written offer as defined by section 5. The reasonableness of the owner's attorney fees shall be determined by the court.” Essentially, the statute contemplates that if an owner is offered $2 and settles for $5, the agency will reimburse a fee of $1 or 1/3 of the $3 increase. This rule is not absolute. Some complicated statutory rules could offset reimbursement and the fee must be deemed reasonable by the Court. But from a practical perspective, the standard attorney fee relationship in condemnation is based on a contingent fee with the owner paying 1/3 of any additional compensation secured by the attorney. This is my standard arrangement. 

Of course, before legal services can be performed by me or Clark Hill, a formal legal relationship must be created. But generally speaking, there is no out of pocket cost to initially contact an attorney and the standard arrangement is contingent.

Condemnation is an intimidating process. Sometimes, right of way agents try and use false scare tactics to intimidate property owners to make bad deals. Do not fall for those tactics. 

If you have been contacted by a right of way agent, please feel free to contact me.