Senate Bill 18: Important Changes for Texas Landowners in Condemnation

Recently enacted Senate Bill 18 (“SB 18”) takes effect September 1, 2011, and alters the Texas property, education, government, local government, transportation, and water codes.  Among the provisions of SB 18 are new procedures emphasizing the importance of the offer process in condemnation and affording landowners additional rights with respect to property access and repurchase.

Offer Process Emphasized

 Texas law has long required condemning authorities to make offers to purchase property before initiating formal condemnation proceedings.  Much debate in the Texas Legislature has transpired over the fairness of the offer process to landowners facing a condemnor’s exercise of its “super power” to take land for public use.  For example, debate has circled around landowners’ concerns about receiving “lowball” offers, being unable to truly negotiate with condemnors in the offer process, and being unable to recover any attorneys’ fees if condemnors do not negotiate in good faith.

 Although SB 18 does not fully assuage all landowner concerns, it does put in place new requirements with a renewed emphasis on the “good faith” offer process.  For example, Texas law requires a “bona fide” offer by the condemnor, which SB 18 defines to require, among other things, written initial and final offers delivered by certified mail/return receipt requested, at least 30 days between offers, minimum limits for final offers, and additional time (14 days) for landowners to respond to final offers.  In addition, landowners are now entitled to 20 days notice (rather than the prior 11 days) before a condemnation hearing, giving the parties further time for purchase negotiations after a final offer has been made.  The new requirements give the offer process more structure, a slightly longer timeline, and more standards for assessing fairness in the amounts of offers and the manner in which offers are made.

To further emphasize the importance of the offer process, the Texas Legislature has now given landowners the right to recover some attorneys’ fees in condemnation lawsuits, albeit under only limited circumstances.  For example, if a court determines that a condemnor did not make a bona fide purchase offer conforming with all of the new statutory requirements, the court is required to abate the condemnation suit, order the condemnor to make a bona fide offer, and order the condemnor to pay reasonable attorneys’ fees and other professional fees (e.g., appraiser fees) that the landowner has incurred up to that point in the condemnation proceedings.  Attorneys’ fees are also now recoverable for compelling a condemnor to produce various documentation, such as appraisals, that the condemnor is required to provide to the landowner in the offer process.

These new limited rights to recover attorneys’ fees do not go as far as the law in some other states, where a successful landowner can recover all attorneys’ fees in a condemnation case.  Likewise, SB 18 may not protect landowners from final offers based on “lowball” appraisals.  But the new law does afford landowners in Texas more protection than they previously had and should hopefully incentivize condemnors to heed the Texas Legislature’s clear call for the offer process to be carried out more fairly to landowners.

Property Access and Repurchase

 In addition to emphasizing the offer process, SB 18 also puts in place new protections for landowners’ access to their property.  For example, in partial takings cases where the landowner will continue to own a remainder tract, SB 18 requires a landowner be paid for damage to the remainder where there is a “material impairment” to access between the landowner’s property and adjoining public roads.

SB 18 also impacts landowners’ ability to repurchase property a condemnor has previously taken.  While a repurchase right previously existed, SB 18 adopts additional circumstances under which the right to repurchase may be exercised.  At the same time, however, SB 18 imposes a short, 1-year statute of limitations to exercise the repurchase right once it arises, which can be triggered by actions the landowner has to take.  The new law thus broadens landowners’ repurchase rights in certain respects, but at the same time imposes burdens on landowners when seeking to exercise their rights.

Although the above-discussed changes to Texas condemnation law and others under SB 18 are a step in the right direction, there is still more to reform in Texas condemnation law for private landowners.  In addition, private landowners should be careful navigating the new law in order to protect their rights.

 by J. Allen Smith and Michael R. Steinmark

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