In the U.S., states and the federal government have the right of eminent domain, allowing them to condemn property, transferring the title from private to public ownership. The most straightforward examples of condemnation involve land and buildings that governments may seize to make way for a project they believe will serve the public good. This may be a highway but it may also be a hotel expected to attract business and generate tax revenue.
In every case where eminent domain is exercised, the condemning authority must provide “just compensation” to the owner to offset the value of the property taken. If the property owner considers the amount inadequate, they can pursue the matter in court.
This calculation—and certainly the court process—is often a long and arduous one.
For Credit Tenant Lease lenders, the uncertainty of the amount and the timeline create excessive real estate risk into what is supposed to be a credit-based transaction. To mitigate the lender’s concerns, Condemnation Insurance is available.
Highlights of the policy:
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