When a condemnor takes a Florida business owner’s private property through eminent domain, the owner may be left wondering, “What about my business?” Fortunately, Florida law recognizes that a business may suffer compensable damages separate from the value of the real estate in an eminent domain taking. This article breaks down the essential concepts that business owners need to know about claiming business damages if they encounter a situation involving eminent domain.
What are Business Damages?
In the context of eminent domain, business damages refer to the economic harm a business suffers when the government condemns a portion of the real estate on which the company operates. Florida law acknowledges that taking real estate alone may not adequately compensate a business owner for their total losses.
More specifically, under Section 73.071(3)(b) of the Florida Statutes, business damages are recoverable when a partial taking of property for a right-of-way project causes probable damages to an established business, such as lost profits or increased operating expenses due to the loss of use of the condemned property.
Eligibility Requirements for Claiming Business Damages
Not every business impacted by an eminent domain taking will qualify for business damages. To be eligible, a business must check the following boxes under Florida law:
- Partial taking: The government must be acquiring only a portion of the property, not the whole property;
- Established business: The business must have operated on the property for at least five years before the taking;
- Direct damages: The claimed damages must directly result from the loss of the specific property being taken, not just general construction impacts; and
- Qualifying public purpose: The taking must be for a right-of-way purpose and carried out by the Florida Department of Transportation, a county, municipality, board, district, or other public body.
Types of Compensable Business Damages
If the eligibility test is met, a business may seek compensation for various types of economic damages, such as:
- Lost profits: The reduction in business income or value caused by the partial taking;
- Relocation costs: Expenses to move the business and increased rent or mortgage payments at the new location;
- Renovation expenses: Costs to modify or adapt the business facilities to the changed property configuration;
- Goodwill diminution: The loss of customer patronage or loyalty associated with the original business location; and
- Increased operating costs: Other increased expenses or business losses necessitated by the property taking.
For example, a restaurant that loses part of its parking lot to a road widening project may recover its probable lost income and any increased costs to provide alternative parking, in addition to payment for the actual real estate taken.
Consult with Counsel as Soon as Possible
For business owners facing an eminent domain acquisition in Florida, evaluating the potential for compensable business damages early in the process is crucial. Business owners should consult with experienced eminent domain counsel and business valuation experts to determine if their business meets the criteria to recover economic damages beyond the value of the real estate.
The next article in this series will delve into the details of calculating and proving the amount of business damages in a Florida eminent domain case.