PAYMENT OF AN ADVANCE PAYMENT: THE NEW YORK RULE

          On May 28, 2019, the United States Supreme Court declined to grant certiorari to review a case which arose out of southeast Pennsylvania.  The 72-acre parcel was owned by Gary and Michelle Erb who intended to build their residence and also have their sons build homes on the land as well.  But the Erbs’ dream was destroyed when the Transcontinental Gas Pipe Line Company (Transco) applied to the Federal Energy Regulatory Commission (FERC) for authorization to build its Atlantic Sunrise Project – a natural gas pipeline running through Pennsylvania, Maryland, Virginia and the Carolinas.  The lower courts granted Transco the power to install its pipeline before ever paying the Erbs for the taking, even though that is what Congress demands of these private companies.  Now, two years after the pipeline was forced through their property, the Erbs have still not received any compensation from the Transcontinental Gas Pipe Line Company.

          The property owners were represented by the Institute for Justice.  This is not an isolated instance.  Many states allow the taking of land without requiring payment of compensation in a reasonable time as a condition precedent.

          New York law is different.  In fact, as characterized long ago by the In Matter of Mayor of City of NY, 99 NY 569, 577 (1885) the Court of Appeals wrote: While it is not necessary, in advance of the taking, to pay to the land-owner his [or her] compensation, it is necessary that the act which invades his [or her] ownership shall provide for certain and definite and adequate source and manner of payment…This necessity is vital and of the most essential character, since if unheeded or disregarded, it transforms the right of eminent domain into a legalized plunder of the citizen.  (Citation omitted.)

          Thus, pursuant to the Eminent Domain Procedure Law (“EDPL”), the condemnor is required to appraise the real property taken, to make an advance payment, and to do so, making “every reasonable and expeditious effort.”  See EDPL §§ 101, 301, 302, 303 and 304.  Of great importance is “[protecting] the interests of property owners and [ensuring] that their property is taken only in accord with proper procedure and for just compensation.”  East Thirteenth Street Community Assoc. v New York Sate Urban Dev., 84 NY2d 287, 296 (1994).

          The advance payment is “mandatory and seek[s] to alleviate the hardship imposed on owners in financing the purchase, rental or replacement of the property taken by eminent domain.”  In re William Cullen Bryant Park & Preserve, 87 Misc2d 1004, 1005 (N.Y. Sup. Ct. 1976); see City of New Rochelle v Sigel, 65 Misc2d 962, 965 (N.Y. Sup. Ct. 1970) (“the property owner should be placed in a position where at the time the title is divested he receives some moneys to enable him to do what is necessary to compensate him for his loss”); see also, e.g., Whitehall Corners Inc. v State, 210 AD2d 398, 399 (2d Dept 1994) (“as stated by the Court of Appeals over 30 years ago, a condemnor is obliged to pay for the trade fixtures installed by a tenant on the basis that they are part of the real property being appropriated”).

          Federal law provided by the Uniform Relocation Assistance Act of 1970 also prohibits delay in payment of just compensation. “[W]hen a condemnor avails itself of the formidable power of eminent domain, which is so often directed against people who, if it were up to them, would insist that the condemnor go elsewhere…the condemnor should do everything possible to reduce the adverse effects of the condemnation.”  See 1974 Report of the State Commission on Eminent Domain and Real Property Tax Assessment Review, Comment § 304, p. 27 (emphasis added).

Posted in Advance Payments, Pipeline Takings, Uncategorized
No comments yet.

Leave a Reply