Eminent Domain in Michigan: The Property Owner’s Guide

Michigan is the state where the condemnor’s opening offer costs it money. Every dollar you win above that written offer carries up to a third again in attorney fees, which changes the arithmetic of the entire case.

The law that governs takings in Michigan

Michigan’s condemnation procedure is the Uniform Condemnation Procedures Act, Act 87 of 1980, codified at MCL 213.51 through 213.77. Section 5, MCL 213.55, requires a good faith written offer. Section 6, MCL 213.56, governs the motion to review necessity, and MCL 213.56(6) addresses an order of the court upholding or determining public necessity or upholding the validity of the condemnation proceeding. MCL 213.58 covers payment by the escrowee of deposited money and defines principal residence by reference to the exemption under section 7cc of the general property tax act.

Michigan’s post-Kelo position is unusually strong because Michigan voters amended the state constitution in 2006 rather than merely passing a statute, and the Michigan Supreme Court had already rejected economic development takings in its own case law. Public Act 438 of 2006, effective December 23, 2006, implemented the enhanced compensation rules, including the 125 percent multiplier for a principal residence.

Who can take property in Michigan

The Michigan Department of Transportation, counties, cities, villages and townships, road commissions, drain commissioners, school districts, and utilities including electric, gas, and pipeline companies condemn under the UCPA. Because the Act supplies one procedure for nearly all condemnors, Michigan cases are procedurally consistent regardless of who is taking, which makes the good faith offer and the fee rule the dominant strategic considerations in almost every case.

The condemnation process in Michigan, step by step

Before filing a condemnation action, the agency must submit a good faith written offer to purchase the property it desires. That offer is not a formality. It becomes the benchmark against which the final award is measured for attorney fee purposes under MCL 213.66, so what the agency puts in writing before suit shapes its exposure for the rest of the case.

After the complaint is filed, the owner may bring a motion to review necessity, which is how the right to acquire and the legal sufficiency of the proceedings are tested. If the case proceeds, just compensation is determined at trial, and money deposited by the agency is handled through the escrow provisions of MCL 213.58.

Possession and deposits

The UCPA allows the agency to deposit its estimate of just compensation and proceed with the project while valuation is litigated. MCL 213.58 governs payment by the escrowee of money deposited, including circumstances in which funds may remain in escrow as security for remediation costs and the effect of the agency reversing an election under MCL 213.56a(1).

Where contamination or environmental remediation is in the picture, the escrow provisions matter considerably more than they first appear, because they determine whether and when you actually receive the deposited money. Those provisions should be reviewed by counsel before you rely on a deposit as available funds.

What just compensation includes in Michigan

Michigan compensates the fair market value of the property taken plus damages to the remainder in a partial taking, offset by benefits.

Michigan also provides enhanced compensation for a principal residence. The 125 percent multiplier applies where the individual’s principal residential structure is actually taken, or where the amount of private property taken leaves less property contiguous to the principal residential structure than the minimum lot size, if the local governing unit has implemented a minimum lot size by zoning ordinance. Principal residence is defined by reference to the exemption granted under section 7cc of the general property tax act, MCL 211.7cc, so whether you have claimed that exemption matters.

For partial takings on commercial property, remainder damage is the usual battleground: loss of access or frontage, parking counts, a relocated drive approach, and drainage or grade changes. Michigan does not provide a broad statutory right to lost business profits as a separate item, so business impacts are generally proven through their effect on real property value.

Relocation assistance and moving costs

Federally assisted projects trigger the Uniform Relocation Assistance and Real Property Acquisition Policies Act, and Michigan agencies follow parallel relocation practices on state work. Relocation benefits pay moving costs, business reestablishment expenses, and replacement housing supplements, and they are separate from just compensation for the property. The 125 percent principal residence premium is a compensation rule, not a relocation benefit, and the two do not substitute for each other.

Deadlines that protect your rights in Michigan

The deadlines that matter in Michigan are set by the UCPA and the court’s scheduling: the time to answer the complaint, and the time to file a motion to review necessity, which is the vehicle for challenging the right to take. A necessity challenge raised late is generally too late, and there is no substitute route for it once valuation proceedings are underway.

The other date to track is the good faith written offer under MCL 213.55, because everything about fee recovery under MCL 213.66 is measured from it. Preserve the written offer and the date it was made, and be careful about any informal communications that could be characterized as revising it.

How to fight a taking in Michigan

The motion to review necessity is Michigan’s principal tool for contesting a taking, and MCL 213.66 backs it with real money. If the property owner, by motion to review necessity or otherwise, successfully challenges the agency’s right to acquire the property or the legal sufficiency of the proceedings, and the court finds the proposed acquisition improper, the court shall order the agency to reimburse the owner for actual reasonable attorney fees and other expenses incurred in defending against the improper acquisition.

On the compensation side, the same section provides that if the amount finally determined to be just compensation exceeds the good faith written offer under section 5, the court shall order reimbursement in whole or in part of the owner’s reasonable attorney fees, but not in excess of one third of the amount by which the ultimate award exceeds the agency’s written offer. That structure means a well-supported valuation case can be economically viable in Michigan where it would not be elsewhere.

Before you sign anything

The good faith written offer is the most consequential document in a Michigan case, and not only because it is the agency’s opening number. It sets the baseline for your fee recovery, so an independent appraisal obtained before you respond has value well beyond the negotiation. If the property is your principal residence, confirm whether the 125 percent multiplier applies to your situation before discussing settlement. A signed deed or settlement release ends every claim, including remainder damages and the fee recovery that goes with them.

Frequently asked questions

Does Michigan pay my attorney fees in a condemnation case?

Often, in part. Under MCL 213.66, if the amount finally determined to be just compensation exceeds the agency’s good faith written offer under section 5, the court shall order reimbursement of the owner’s reasonable attorney fees, but not in excess of one third of the amount by which the ultimate award exceeds that written offer. A successful challenge to the agency’s right to acquire triggers reimbursement of actual reasonable attorney fees and other expenses.

What is a motion to review necessity in Michigan?

It is the procedural vehicle for challenging the condemning agency’s right to acquire the property or the legal sufficiency of the proceedings. MCL 213.56 governs it, and MCL 213.56(6) addresses an order of the court upholding or determining public necessity or upholding the validity of the condemnation proceeding.

Does the agency have to make me an offer before filing in Michigan?

Yes. Section 5 of the Uniform Condemnation Procedures Act, MCL 213.55, requires a condemning agency to submit a good faith written offer to purchase the property before filing a condemnation action. That offer is also the benchmark used to calculate attorney fee reimbursement under MCL 213.66.

What is the 125 percent rule for a principal residence in Michigan?

It is enhanced compensation for residential takings. It applies where the individual’s principal residential structure is actually taken, or where the amount of private property taken leaves less property contiguous to the principal residential structure than the minimum lot size, if the local governing unit has implemented a minimum lot size by zoning ordinance. Principal residence is defined by reference to the exemption under section 7cc of the general property tax act, MCL 211.7cc.

What governs eminent domain procedure in Michigan?

The Uniform Condemnation Procedures Act, Act 87 of 1980, codified at MCL 213.51 through 213.77. It supplies a single procedure used by nearly all condemning agencies in the state.