What is a Property Owner Entitled to Replace

Recently, I had a discussion with a metro area condemnation/relocation practitioner about the necessary scope of a minimum compensation study.

In that particular case we discussed a property owner that owned a business on their property that needed to relocate so there was no question regarding their eligibility to make a minimum compensation claim under Minnesota Statute 117.187. However, the property owner's business only occupied about 75% of the building, while they leased out the remaining 25% of the building to another business.

The practitioner wanted to know what kind of comparable replacement property he needed to find that could serve as the basis of the acquiring authority's offer. He needed to know whether the comparable replacement property had to be similar in size to the property being taken or if it only had to be similar in size to the 75% of the property that the business actually occupied.

I told the practitioner that while I could understand his confusion given the phrase "when an owner must relocate" in 117.187, it would seem contrary to the purpose of the statute that the building owner only be able to replace 75% of what they owned at their displacement site. If that were to occur it would mean they would be worse off following the taking of their property, which is what the legislature was trying to avoid when it adopted this statute.

Additionally, I noted to him that 117.187 has a different definition of "owner" than is used elsewhere in Chapter 117 and that might provide additional explanation as to why the property owner would be entitled to a minimum compensation claim based upon 100% of their property rather than just the 75% their business occupied.

Minnesota Statute 11.025, Subd. 3 defines an owner as "all persons with any interest in the property subject to a taking, whether as proprietors, tenants, life estate holders, encumbrances, beneficial interest holders, or otherwise." However, 117.187 defines an owner "as the person or entity that holds fee title to the property." The specific use of the phrase "the person or entity that holds fee title to the property" seems to indicate that the owner is entitled to replacement of whatever constitutes "the property" that they owned. If the Minnesota legislature wanted to limit that to whatever the property owner used and and occupied they would have used an even more restrictive definition of the word owner. The legislature could have gone further and defined an owner as "the person or entity that holds fee title to the property and the part of the property they occupy" but it did not do so.

When you look at the actual definition of the word "owner" in the statute and the reason why the legislature adopted 117.187 it seems clear that an owner is entitled to a minimum compensation claim based upon not just upon what they owned and occupied, but the entirety of what they owned.