Selling home near potential freeway

[bryan45419]

What is the name of your state? IN

My father-in-law is just about to put his house on the market, but this week he received a memo from his Homeowner's Association stating that the government is weighing several alternative routes for freeway construction. One of these routes potentially runs very near his home (through his backyard). The HOA indicates that they have heard this is the route likely to be chosen.

A Draft Environmental Impact Study has been sumbitted to the Department of Transportation, but no final decision has been made. If approved, freeway construction could start in 4-6 years.

Questions:
1) If the house goes up for sale, must this issue be disclosed to potential buyers? I think maybe it should be, but given that a final decision has not been made, maybe not. I assume that if a final decision is made, he must disclose, correct?

2) If something like this is approved, is it typical for compensation to be provided to homeowners whose homes are not purchased as part of the project for reduced property values?

3) If my father-in-law's land/property were to be acquired by the government, are the selling prices usually fair or equitable? Is the local Assessor's property valuation a decent ballpark estimate of how much would be offered? Currently, the Assessor's valuation is $75k less than what the bank has appraised the property at.

4) Is it possible that the government could plan to acquire the property, but because the project does not start for 4-6 years, my father-in-law would need to wait several years before he could actually sell to the government?

Thanks for any insight you can provide!

I believe HG is still here (as well as Jet and IAAL) and if so one of them will be along shortly to either disagree with what I put here or offer more insight.

1) If the house goes up for sale, must this issue be disclosed to potential buyers? I think maybe it should be, but given that a final decision has not been made, maybe not. I assume that if a final decision is made, he must disclose, correct?

He must disclose even the possibility of the construction. If not, and the house sells, the buyers could make a case against him for non-disclosure.

2) If something like this is approved, is it typical for compensation to be provided to homeowners whose homes are not purchased as part of the project for reduced property values?

In an action like this it is 'typical' for the government entity to offer a lowball figure based on average home values in the area. However, you do not have to take it.

What will happen is the particular government entity will file an "Eminent Domain" action and gain possession of the land through the courts. This does not, however, delete your father's right for fair and just compensation. In most of these cases, to forward the project without delay, the final decision will usually have a clause to the effect of "...we hold the matter of compensation for later discussion" or something to that effect.

And all it means is that although the government entity has the land, what they will be required to pay for it has yet to be decided.

3) If my father-in-law's land/property were to be acquired by the government, are the selling prices usually fair or equitable? Is the local Assessor's property valuation a decent ballpark estimate of how much would be offered? Currently, the Assessor's valuation is $75k less than what the bank has appraised the property at.

That depends on what you think is fair and equitable. I recently completed just such a case and was awarded $67,000 for 1/2 acre the Tennessee Department of Transportation required for an off-ramp.

4) Is it possible that the government could plan to acquire the property, but because the project does not start for 4-6 years, my father-in-law would need to wait several years before he could actually sell to the government?

Not only possible but more than likely. Once the projet has been approved and a definate location has been decided upon, all relevant information will be available to the public. In construction such as this, there will be an engineer assigned by your state's Department of Transportation. There will also be specific dates published for bid letting, land acquition and every other phase of the project.

The chief engineer will have all that information, along with the contractors' who have won bids, sub-contractors, exact maps and surveys, etc. Call the DOT office in your area and ask who the chief engineer is and keep in touch. Once a month is plenty.

[bryan45419]

Thanks for the information!

It sounds as if my father-in-law might be stuck in a tricky situation. First, he may not be able to sell at the value he wants because he has to disclose, or he may not be able to sell at all. Second, he may need to wait several years before getting an offer (potentially low) from the government, even though he has built a new house and wants to sell now.

What May happen no one can tell you. However, if he doesn't sell these cases are usually (but not always) settled with offers before trial.

Most dealings I've had with TDOT (tennessee) have been fair and reasonable. Just make sure that you get enough information.

One strategy I would suggest is to visit your county recorder's office and find recent (last two years) sales in your area (don't go further than about three or four blocks in any direction).

This will give you a good yardstick of what the current sq. ft. value is for like sales in the area. You can also ask several real estate agents how they would value the home in the current situation.

In other words, gather as much information as you can before making a decision. Then proceed from that point. It may not be so bad.

[HomeGuru]

For the most part, I agree with hexy.

[FarmerJ]

Bryan just because they talk about it doesnt mean for sure they are going to do it . in some places department of transportation officials blow air for years and years and years before they actually do anything , good example for you is in minnesota state highway 100 from what is now 394 on up to 694 had been the subject of discussion and planning for damn near 30 years . they were yacking about it when I was in junior high and it took them forever to find the money to do it first let alone start buyouts . All while they did that 1 business closed prematurely rather than ignoring the blowhards at Mndot . some people wouldnt spend anything extra on there houses and ended up losing when they had to sell as they got older . should any attempt be made to forcibly buy property lawyers can help make sure a homeowner doesnt get trampled . Make plans to sell and disclose as you were told , no sense in worrying about something that still might not happen if funding drys up .

[HomeGuru]

So writer, what did you learn here?

[bryan45419]

Thanks to everyone for their insights on this topic!

My father-in-law will probably try to proceed with the sale of his home and see what happens. We have been told that a decision on the freeway is imminent (INDOT has been mulling this over for 10 years), but I guess you never know anything for sure until a final decision is officially made.

After looking at the freeway plan they are considering, it appears that the freeway will be built directly through the house! Maybe we can advertise "convenenient access to freeway". eh, eh, eh...

We will probably contact a real estate lawyer to make sure we are dislosing everything we need to.

I'll update you on what happens!

Thanks very much!

[HomeGuru]

Ok great and good luck to him.