LESSOR AND LESSEE -- APPORTIONMENT OF AWARD IN CONDEMNATION PROCEEDINGS

THE BEFORE AND AFTER RULE IS DISCUSSED REGARDING APPORTIONMENT OF THE AWARD BETWEEN THE LESSOR AND THE LESSEE. THIS RULE FIXES THE TOTAL DAMAGES TO THE FEE, AND THEN APPORTIONS THAT AMOUNT BETWEEN THE LANDLORD AND THE TENANT ACCORDING TO THEIR RESPECTIVE INTERESTS. AMONG THE ALTERNATIVE APPROACHES, ONE APPLIES THE BEFORE AND AFTER RULE THAT GIVES THE LEASE A SEPARATE VALUE IN DETERMINING THE DAMAGES TO THE FEE. ANOTHER ALTERNATIVE COMPENSATES THE POSITIVE INTERESTS OF EACH PARTY SEPARATELY. IN THESE APPROACHES, THE APPORTIONMENT OF THE AWARD DEPENDS UPON THE EXTENT TO WHICH THE CONDEMNATION CONTRAVENES THE RELATIVE RIGHTS AND OBLIGATIONS OF THE LESSOR AND LESSEE, AND DEPENDS TO A GREAT EXTENT ON WHETHER OR NOT THERE IS AN ABATEMENT OF THE RENT. THE KENTUCKY COURT OF APPEALS ENCOUNTERED THESE PROBLEMS IN THE CASE OF COMMONWEALTH DEPARTMENT OF HIGHWAYS V. SHERROD. THIS CASE INVOLVED THE PARTIAL TAKING OF A LEASED TRACT THAT WAS USED FOR COMMERCIAL PURPOSES AND THE CONDEMNOR TOOK PART OF THE LEASED PREMISES. THE COURT APPLIED THE BEFORE AND AFTER RULE AND INDICATED THAT THIS RULE WOULD BE APPLICABLE IN EVERY CONDEMNATION OF A LEASE-HOLD INTEREST. HOWEVER, IT IS POINTED OUT THAT THE BEFORE AND AFTER RULE MAY PLACE THE LESSEE IN AN UNSATISFACTORY POSITION AS A DIRECT RESULT OF THE APPLICATION OF THE FAIR MARKET VALUE CONCEPT. FAIR MARKET VALUE COMPENSATES THE CONDEMNEE (AND LESSEE) ONLY FOR THE LOSS OF THE PHYSICAL PROPERTY, AND DOES NOT RECOMPENSE FOR THE INCIDENTAL BUSINESS DAMAGES. WITHIN THE FRAMEWORK OF THE MARKET VALUE CONCEPT, THAT RULE SEEMS BEST WHICH DISCOUNTS THE VALUE OF THE LEASE ENTIRELY IN THE INITIAL CONDEMNATION AWARD, THUS AVOIDING AN UNFAIR BURDEN ON THE CONDEMNING AUTHORITY.

  • Supplemental Notes:
    • No 10, pp 39-46
  • Authors:
    • Drumm, B C
  • Publication Date: 1965-11

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Filing Info

  • Accession Number: 00238773
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jul 14 1970 12:00AM