What Does “Highest and Best Use” Mean?

The concept of “highest and best use” plays a significant role in determining the amount of money that owners should receive when their property is taken through eminent domain. Our eminent domain attorneys explain the meaning of highest and best use in eminent domain cases and how it can affect the amount of compensation an owner receives for their property.

How Is the Concept of Highest and Best Used Applied to Eminent Domain Takings?

Highest and best use refers to the use of the property that will result in the highest value, both financially and socially. This means that the value of the property is not simply based on its current use but rather on the potential use that would generate the greatest value for the owner. For example, if a property is zoned for residential use, but its location and amenities would make it more valuable as a commercial property, then its highest and best use would be as a commercial property.

In eminent domain cases, determining the highest and best use of the property is crucial to determining the amount of just compensation owed to the owner. The government must consider all potential uses of the property and weigh their benefits and drawbacks to determine the value of the property. This can be a complicated process and often requires the input of experts such as appraisers and land use consultants.

What Are Some of the Factors Used to Determine the Highest and Best Use of a Property?

There is no definite rule to determine the highest and best use of a property. In general, real estate appraisers may look at a variety of factors to determine a property’s highest and best use and calculate how it affects the property’s overall market value. Each appraiser may have different methods to accomplish this task.

Some of the factors an appraiser may consider include (1) zoning restrictions; (2) the acreage, lot shape, and topography of the property; (3) natural resources, and (4) the market demand for similar properties. For instance, if the property is located in an area with high demand for residential development, the appraiser may determine that the highest and best use of the property is for residential development. The appraiser may also consider the estimated cost of development and the likely sale price for the developed property.

Why is Determining a Property’s Highest and Best Use Important in Eminent Domain Cases?

In an eminent domain case, the government or a condemning authority must provide just compensation for the property owner, which means paying the owner for the fair market value of the property taken. This is where determining the highest and best use of a property can greatly impact its value.

What often happens is that a government appraiser may calculate the value of a property without fully considering its highest and best use. For example, the government may make an offer for agricultural land that could be transformed into a profitable commercial development due to being close to a major highway and a large suburban area. However, the government appraiser calculates the property value based on its current use instead of considering its value after it is developed, resulting in a low offer that can be challenged by the property owner.

How Can You Challenge the Government’s Valuation of Your Property?

If you believe the government is not offering you fair compensation for your property, you have the right to challenge that offer and seek a higher amount that better reflects the property’s highest and best use and its fair market value. An attorney can assist you with this process by helping you gather the necessary evidence to show that you deserve to receive higher compensation for your property. Your attorney may also suggest hiring an independent appraiser to conduct a thorough analysis of your property and present an adequate valuation.

Remember, if you have been notified that the government intends to acquire your property, doing nothing and hoping it all goes away is not the right approach. Finding a skilled eminent domain attorney to protect your interests is best. Contact the legal team at Hansen, Howell & Wilkie, PLLC, at 919-256-5266.