Can someone help explain Eminent Domain given my situation below as if I’m a 5 year old? I’m severely confused how to navigate and hoping someone can help me understand.
Our city is widening the highway next to our house. To do this, they need to take a sliver of our backyard.
-
They told us that our fence needs to move, and to provide a quote as to how much it would cost to do so.
-
The city quoted us a price, and we countered with an estimate from a local fence company that happened to be working on a house down the road.
-
City accepted new quote for fence to be moved. This kicked off the discussions with the title company and our mortgage company. Total amount is $7k.
-
Had to submit letters to do a partial release, and the title company provided specifics of the land eminent domain, how much land the city is taking, etc.
Now onto the current situation:
-
My husband asked the fence company if they can do the work. He told them that we’re still going through paperwork and do not have the money yet.
-
The fence company came in and did it anyway, telling us we can pay them whenever. This is where I worry we went wrong, but at this point, we still have not paid the fence people back.
-
We get the approval from our mortgage company for the partial release, but they tell us that we need to pay the mortgage company the $7k so that they can do the partial release within 14 days; otherwise we have to start over. The statement is “the investor approved the partial release on the condition that $7k is paid toward the unpaid principal balance”.
Here’s what I’m really not understanding, and please be kind – I swear I’m educated but this situation is making me question my sanity and what I actually know about how things work:
-
If the City is taking a portion of our land, why would I have to pay our mortgage company out of pocket $7k if that is the amount the City agreed to pay us for the land?
-
I have to pay my mortgage company $7k for partial release, but am I supposed to expect a check from the City? I initially thought that the City would pay the lender hence the partial release request…
Please help me understand – what am I missing?
Eminent Domain – need help understanding how we get compensated by the City?
byu/itsmofosho inpersonalfinance
Posted by itsmofosho
7 Comments
You need to talk to a real estate/title lawyer now. You should have done this before giving a counter offer to the city which was then accepted.
If you already submitted a letter of partial release with no compensation it might be too late.
> If the City is taking a portion of our land, why would I have to pay our mortgage company out of pocket $7k if that is the amount the City agreed to pay us for the land?
The value of the collateral has declined. Since you mention investor, is this a jumbo loan?
> have to pay my mortgage company $7k for partial release, but am I supposed to expect a check from the City? I initially thought that the City would pay the lender hence the partial release request…
You’ll likely get a check made out to you and the lienholder that you’ll need to sign then send to the lienholder
You need a lawyer. Your mortgage company is probably asking for money because your property is getting smaller. As such, your loan to value is changing. But I’m not a lawyer.
Also, have you been offered money for the land they are taking or only the fence relocation? Typically you would get compensated for the land. I’d have assumed moving the fence would be something negotiated after the value of the land was determined.
I went through an eminent domain taking and [wrote about the experience here](https://www.reddit.com/r/personalfinance/comments/gx8tmp/eminent_domain_my_experience/).
>1. If the City is taking a portion of our land, why would I have to pay our mortgage company out of pocket $7k if that is the amount the City agreed to pay us for the land?
Your mortgage company owns your land – it’s common to say things like “I own a home”, but really the lender owns it until the mortgage is paid off. Your lender is losing land — they want to be compensated for it.
> `2`. I have to pay my mortgage company $7k for partial release, but am I supposed to expect a check from the City? I initially thought that the City would pay the lender hence the partial release request…
In my case, the state mostly paid me, but since my lender wanted some money (for the same reason as you – some land was taken and they want to be compensated), some of the money went to our lender. The lender got their money directly from the state (so 2 checks issued by the state).
I will say this – our lender didn’t get all the money (which was a lot – six figures). They only got the amount the property value went down. What should happen (at least in my case) is you do an assessment of the loss (so appraisal with the slice gone, compare that to original appraisal, inflation is kind of wishy-washy) and the lender only gets reimbursed that amount.
What in the world? How did you not hire a lawyer the moment they told you they needed to encroach on your property.
Hire one yesterday.
The basic idea of eminent domain is that your property can’t be taken for public use without paying you the market value of the portion of your land taken. Assuming the property is being taken for public use, the fight is over what the property being taken is worth. Getting paid for the fence doesn’t compensate you for the value of the land being taken. You need to hire a lawyer with a background in eminent domain to assist you before you finalize any kind of a settlement.
You already signed the partial release? This essentially relinquish your right to land in question.
The good news is the mortgage owner refuse to accept this, meaning you have some wiggle room to re-negotiate the amount with the city.
I’d gather all the paperwork you have, and call around to lawyer up. In your consultation ask about the possibility of having the city pay the lawyer fees.