Property type
Rental and income producing property is valued for what it earns. A taking that changes the income also changes the value, and the lease decides who is paid what.
An income property is bought for its return, so the appraisal usually rests on the income approach as well as on comparable sales. Rent rolls, vacancy history, operating expenses and the terms of each lease all feed the number. Where the taking changes what the property can earn, the effect belongs in the valuation.
The condemnation clause in each lease determines how proceeds are apportioned between landlord and tenant, whether the lease terminates on a taking, and who has the right to claim for improvements. Read those clauses before negotiations begin rather than after a number is agreed.
A landlord claim for the real property and a tenant claim for a leasehold interest, fixtures or business goodwill can both arise from the same taking. They are proved separately.
Residential and business tenants displaced by a public project may be entitled to relocation assistance under Government Code sections 7260 to 7277. Those benefits belong to the occupant rather than the owner, and they are separate from just compensation for the property.
Losing parking spaces, a loading area, signage or convenient access can reduce achievable rent even when the building is untouched. That reduction shows up as severance damages to the remainder, and it is proved with market evidence rather than assertion.
Start with your situation
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Questions owners ask
Usually by combining comparable sales with an income approach that reflects the rent roll, vacancy, expenses and lease terms.
The lease condemnation clause governs apportionment. A tenant may also have separate claims for fixtures, a leasehold interest or business goodwill.
Displaced occupants may be entitled to relocation assistance under Government Code sections 7260 to 7277, separate from compensation for the property.
Because it can reduce achievable rent and therefore value. That loss is claimed as severance damages to the remainder.
Next step
Check how the taking affects the income the property produces.