Eminent Domain Report

In California, the primary governing structure for condemnation suits is set forth within Title 7 of the California Code of Civil Procedure (CCP 1230.010, et. seq.), otherwise known as the Eminent Domain Act, which was enacted in 1975. In 2006, a few modest updates were made, including the addition of an appraisal reimbursement provision that requires a public entity to pay the reasonable costs, not to exceed $5,000, for a property owner facing condemnation to secure its own appraisal. Now, about twenty years later in 2025, new legislation, AB 1033, has been introduced to the California legislature to increase the appraisal reimbursement amount.

Currently, Section 1263.025 of the Code of Civil Procedure provides a $5,000 maximum reimbursement to property owners that a public entity offers to purchase under threat of eminent domain. The statute clarifies that “under threat of eminent domain” means an offer to purchase property pursuant to eminent domain, following the adoption of a resolution of necessity, or following a statement that the public entity may take the property by eminent domain. The reimbursement offer must be made at the same time as the offer to purchase. Additionally, this requirement only applies to “public entities,” not necessarily all entities with the power of eminent domain.

AB 1033 seeks to update the reimbursement amount associated with this statute. Specifically, the bill proposes to not only raise the reimbursement cap, but also create a distinction on the reimbursement amount depending on the type of property acquisition. First, it would raise the reimbursement cap to $8,000 for full-take property acquisitions. Second, it would create a higher reimbursement amount of $15,000 for partial property acquisitions. This distinction is a result of the fact that partial acquisitions tend to be more complicated to appraise, as additional analysis is needed on various valuation components and possible damages and benefits.

The original $5,000 appraisal reimbursement cap was established nearly 20 years ago and inflation alone suggests appraisals are more expensive now than they were in 2006. Moreover, property owners typically spend much more than $5,000 on eminent domain appraisals and if owners can secure qualified appraisals early on, it may lead to more early resolutions. These factors support increasing the appraisal reimbursement cap. 

However, on the flip side, increasing the appraisal reimbursement cap will make public projects / property acquisitions more expensive. Additionally, for small, nominal acquisitions, property owners typically use the appraisal reimbursement as an opportunity to force public agencies to shell out additional money to resolve a matter (i.e., on a $2,500 appraisal, the owner may demand $7,500 to settle, stating that if the agency does not agree, the owner will go spend $5,000 on an appraisal that the agency will be responsible for, thereby resulting in a $7,500 acquisition expense). Finally, some owner eminent domain attorneys use the appraisal reimbursement statute not to encourage early resolution, but instead to fund an appraisal for litigation purposes, thereby defeating the purpose of the statute. These factors negate the value in increasing the appraisal reimbursement cap. 

Perhaps there is a middle ground to address the pros and cons (such as increasing the appraisal reimbursement cap on appraisals over a certain value and that such reimbursement can only apply if it is used within 90 days of the public agency’s offer).  

The proposed bill is in the very early stages, so stay tuned for updates.

[Note: The above is supported by the Appraisal Institute and Assemblyman Lackey.]