Tuesday, September 04, 2007, 8:16 PM

COA Decides Condemnation Case Involving Townhome Development's Common Area

Today the NC Court of Appeals (COA) held that the state must pay more money than the state intended when it condemned a townhouse community's common area. The case is DOT v. Ferwood Hill Townhome Homeowners' Ass'n, Inc.

DOT initiated a condemnation action to acquire (for a highway project) a portion of the common area of a townhouse development. DOT estimated just compensation would be only $5,300, representing just the portion of the common area. The common area is contiguous to the lots with the individually-owned residential units (which DOT didn't seek to acquire).

The homeowners argued that the condemned tract was part of a larger, unified tract -- the individual townhome lots. The COA agreed, holding that the common area and the individual lots have sufficient "unities" (unity of ownership, physical unity, and unity of use) to render them part of a unified tract. Even though the owners of the individual lots didn't own the common area (instead the common area was owned by their homeowner's association), the COA found substantial "unity of ownership," because each individual townhouse owner held not only a fee simple estate in his or her unit, but also (1) an interest in the common area by virtue of a general easement in the entire common area and (2) an interest in the other individual townhouses by virtue of restrictive covenants. The easement and restrictive covenants provided the townhouse owners with sufficient interest in the entire tract to support a substantial unity of ownership. So DOT will now have to pay more in just compensation.

This case obviously could have a significant impact in other condemnation actions involving common areas.

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