Facing a condemnation action is one of the most time-sensitive legal situations a property owner can encounter. Chapter 40A of the North Carolina General Statutes contains different procedures depending on the type of condemnor. This alert focuses on the procedure that applies to public condemnors, including local governments and certain other public entities, which proceed under Article 3 by filing a complaint, a declaration of taking, and a deposit with the court.
The consequences of missing a deadline in this type of proceeding can be severe and irreversible. Owners are commonly surprised to learn that they may face several deadlines triggered by different events, leaving little room for delay or misstep. Fail to act in time, and you may permanently waive your right to seek additional compensation, leaving the condemnor's initial deposit as your only recovery. Importantly, the reach of this type of taking extends beyond property owners alone. If you have any interest in land subject to a condemnation action, including as a tenant, lienholder, or holder of another property interest, your rights may also be at stake. Do not wait. Upon learning of a potential condemnation action against a property in which you have an interest, contact experienced counsel immediately.
30-Day Notice Before Filing
Before a public condemnor files a condemnation action, the property owner is generally entitled to at least 30 days' notice of the condemnor's intent to take the property. This notice should identify the property at issue, describe the purpose of the proposed taking, and state the amount the condemnor is offering as compensation. While this 30-day period is described as a period of fair notice rather than a deadline that runs against the owner, it is the owner's first opportunity to evaluate the condemnor's offer, gather information about the proposed project, and begin consulting with counsel before the formal court proceeding begins.
120-Day Deadline To File an Answer
When the condemnor files its complaint and declaration of taking, it must simultaneously deposit with the court the amount it has estimated to be just compensation for the taking. Any person named in and served with the complaint has 120 days from the date of service to file an answer. This deadline carries serious consequences: if no answer is filed within that 120-day period, the law treats the owner's silence as an admission that the condemnor's deposit is adequate. The owner permanently loses the right to contest the amount of compensation, the judge enters final judgment in the amount deposited, and the proceeding is over. The government's initial estimate becomes the final word.
For good cause shown, and after notice to the condemnor, a judge may extend the time for filing an answer by 30 days at any point before final judgment is entered, but this extension is discretionary and is not automatic. An answer filed within the deadline allows the owner to admit or deny the allegations of the complaint, state the owner's interest in the property, raise affirmative defenses, and most importantly, request a determination of just compensation, preserving the owner's right to a jury trial on the amount of damages. Because failure to act within 120 days results in a complete waiver of the right to contest compensation, condemnees should treat this deadline as the single most important date in this type of proceeding and calendar it from the date of service, not the date of filing.
For many public purposes, title to the condemned property and the right to immediate possession vest in the condemnor upon the filing of the complaint and the making of the deposit. For certain other public-condemnor acquisitions, title and possession instead vest at the earliest of the following: when the owner files an answer requesting only a determination of just compensation; when the 120-day answer period expires without an answer being filed; or when the deposit is disbursed to the owner. Owners should confirm which framework applies to their proceeding, since it affects when title and possession actually transfer.
No Deadline To Seek Withdrawal of Condemnation Funds
Where there is no dispute as to title, the person named in the complaint may apply to the court at any time for disbursement of the money the condemnor deposited, or any part of it, while still preserving the right to pursue additional compensation. No notice to the condemnor is required for this application, and North Carolina law does not impose a fixed deadline by which the owner must apply for disbursement. The funds remain available upon application.
That said, owners should carefully evaluate two considerations before applying for disbursement. First, applying for disbursement of the deposit, by itself, generally does not waive the owner's right to continue pursuing a higher award of just compensation, but where title and possession vest based on the owner's answer or the disbursement of the deposit, applying for disbursement may itself be one of the events that causes title and possession to transfer to the condemnor. Second, because the deposit represents only the condemnor's estimate of just compensation, if the final judgment is less than the amount disbursed, the owner may be required to repay the difference along with the condemnor's costs, which can create a financial shortfall if the funds are no longer available.
No Fixed Deadline To Remove Personal Property and Improvements, but Don't Wait
This framework does not impose a fixed, universal deadline for removing personal property, fixtures, or structures from condemned land. Instead, the condemnor must, at the owner's request, allow the owner to remove any timber, building, permanent improvement, or fixture located on or affixed to the property, unless removal would be inconsistent with the purpose of the condemnation, and must specify a reasonable time within which removal may occur. The condemnor's complaint must state whether the owner will be permitted to remove all or a specified portion of any buildings, structures, permanent improvements, or fixtures on the property, so owners should look for this statement early in the proceeding.
If the value of property to be removed was deducted from the compensation award, with the cost of removal allowed as an element of damages, and the owner fails to remove that property within the time the condemnor specified, the condemnor may remove it itself. In that event, the cost of removal and storage becomes chargeable against the owner and constitutes a lien on any remaining property the condemnor did not acquire, recoverable in the same manner as any other debt or through foreclosure.
Because the reasonable time for removal is set on a case-by-case basis rather than fixed by statute, owners should not wait for a formal removal notice before planning to relocate personal property, fixtures, and improvements. As a practical matter, owners should raise the removal question as early as possible, ideally before or immediately after the complaint is filed, so the removal period specified by the condemnor accounts for the realities of relocating business operations, equipment, signage, and structures, and so the owner understands whether the value of items to be removed has been deducted from the compensation award.
For questions regarding condemnation proceedings, valuation disputes, or statutory deadlines in North Carolina, please contact Ivy N. Cadle, Kayla L. Pfeifer, or any member of Baker Donelson's Eminent Domain Group.