Eminent Domain Report

Last month, the California Supreme Court’s decision in Property Reserve v. Superior Court provided long-awaited certainty for public agencies after a court of appeal determined the often-used right of entry statutes failed to provide adequate Constitutional protection for pre-acquisition investigations and testing.  In summary, the Supreme Court held the right of entry process constitutional, with one reform:  the property owner is entitled to a jury trial on the amount of compensation. 

The decision preserves a significant tool for public agencies to keep their projects on schedule and comply with the environmental laws that govern their approval. The government cannot acquire property for its project until it has received environmental clearance.  But to receive environmental clearance the agency must investigate project impacts.  And to investigate projects impact, the agency must enter property.  That is simple enough where the owner agrees, but often property owners are reluctant to have the government enter their property, especially to do invasive testing and inspections.

Now that Property Reserve has spotlighted the right-of-entry procedures, agencies may find themselves facing owners who are more knowledgeable about the process, and in particular the ability to force the agency to the time and expense of a jury trial on compensation.  If nothing else, Property Reserve may give owners leverage to negotiate with agencies over terms and, of course, money.  Negotiating a right-of-entry agreement will be even more important.

Pre-planning for rights of entry will go a long way and it is crucial to have a written document that provides certainty. And even if voluntary, rights of entry should comply with statutory requirements.  For example, advance notice is required in California and should be included in a right of entry agreement.  Advanced notice protects both parties involved by giving the agency and the owner certainty of when the right of entry will take place.

A right of entry agreement should also contain specific and certain parameters for the scope of work. At a minimum, the agreement should set out the purpose of the entry, whether entry is needed to conduct visual inspections, photographic documentation, and /or environmental testing.  Agencies should try to be as specific as possible, without overly restricting the ability to get the information they need.  Remember, compensation for the entry may be determined by a jury.  The broader the scope of work, the more compensation may be owed to the property owner.

Other details to include are:

• Who may enter the property?

• What is the time and place of the entry?

• How many entries are allowed?

• Where is the access point?

• Must the agency restore the premises after the right of entry?

• How much compensation is owed?

• Indemnity and / or insurance provisions?

After Property Reserve, a property owner may seek a jury determination of the amount of compensation.  It is in the best interest of the agency (and potentially the property owner) to finalize the amount of compensation in a right of entry agreement to avoid having to argue compensation before a jury trial.