Several months ago, we discussed the interplay between the "Buy the Farm" rule and the "Minimum Compensation" rule. These are two rules that apply to certain condemnation matters. The interplay between these rules has been a topic of interest to the real estate community in light of the utility easement condemnations being conducted for the "CapX 2020" power line project.
The "Buy the Farm" rule was enacted in 1973 in response to protests by farmers concerning the construction of high voltage electrical transmission lines across their land via utility easements acquired by eminent domain. The rule allows farmers whose land is affected by these transmission lines to elect to require the utility to literally "buy the farm" – that is, to purchase the entire contiguous parcel of land over which the proposed easement lies.
The "Minimum Compensation" rule was enacted in the wake of the United States Supreme Court's opinion in Kelo v. City of New London. It defines an alternative measure of compensation for property owners whose property is subject to a complete taking in a condemnation matter.
Until recently, there was a question whether an owner making a "Buy the Farm" election was entitled to "Minimum Compensation", among other damages. Recent legislative amendments and a decision by the Minnesota Supreme Court have clarified this question.
1. The legislature passed an amendment to the "Buy the Farm" statute. The main portion of the revision states: "(b) All rights and protections provided to an owner under chapter 117, including in particular sections 117.031, 117.036, 117.186, and 117.52, apply to acquisition of land or an interest in land under this section."
It has been assumed that this legislation was intended to fix the question outlined above. However, it is interesting that the revised legislation does not specifically call out 117.187 (the "minimum compensation" rule). This issue may be moot, however, in light of the court decision discussed below.
2. The Supreme Court issued its opinion in NSP v Aleckson. In its opinion, the Supreme Court specifically reversed the Court of Appeal on the question whether the "minimum compensation" rule applies to utility easement takings, basing its analysis on the timing of the property owner's election vis-à-vis the timing of the actual taking. Since at the time of the actual taking, the property owner "must relocate" because of the taking, the Supreme Court held that the "minimum compensation" rule applies.
Lindquist Gets Real is a periodic publication of Lindquist & Vennum LLP and is intended to provide tips and basic information about real estate law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.