Mortgage Issues in Eminent Domain Cases
Many North Carolinians whose property is being taken by the state or a utility ask us, “What if I have a mortgage? How does it affect my eminent domain case?”
Mortgages and Eminent Domain: How Does It Work?
When a condemnor takes all or a portion of your property you’re entitled to just compensation. Just compensation is based on the difference in market value of your property before and after the taking. However, if you have a mortgage on your property, the lienholder may be entitled to some of the proceeds from the condemnation.
Essentially, this means that if your property is taken under eminent domain and you have a mortgage on the property, you are responsible for paying off the mortgage with the settlement that you receive.
Factors Affecting Mortgages in Eminent Domain Cases
When the property value is lessened…
When a bank or other lienholder depends on a property as collateral, they become concerned when the value of that collateral is lessened because of an eminent domain taking. If the property owner defaults on the loan, they would be able to recover less of their money because the property has decreased in value.
When the property is no longer useful…
Further, if the taking makes the property useless for a particular purpose of the owner, the owner may be unable to repay the debt owed to the mortgage holder. It is for these reasons that the division of funds between an owner and lienholder regarding an eminent domain case can be difficult to determine.
“How much do I have to pay on the mortgage from an eminent domain settlement?”
Many times the division of the money between you and the bank or mortgage holder depends on how much equity you have in the property. The more equity you have, the more likely the lienholder is to release a higher amount or even all of the funds to you. If you have less equity, they may wish to apply more of the proceeds to the loan to increase the security.
The deed of trust applicable to your mortgage should govern how the compensation from an eminent domain case may be distributed. A lienholder should not recover more than the balance owed on the debt. In most cases, a lienholder will negotiate the amount of funds they are entitled to under the deed of trust.
“My property is being taken under eminent domain? What can I do?”
If your property is being taken with eminent domain, you are entitled to just compensation.
“We are committed to doing everything we can to get our clients the maximum compensation possible for property taken with eminent domain.”
–Gene Riddle, attorney, Riddle & Brantley
For a FREE consultation with an eminent domain lawyer handling cases throughout North Carolina, please call 1-800-525-7111 or complete the short form below.
We don’t get paid anything unless we get you compensation greater than the government’s initial offer.
Projects we are currently handling include:
- I-40 widening in southeast Raleigh to Candler
- US-70 improvements in James City / Craven County
- “Complete 540” – Southeast Extension in southeast Raleigh
- I-26 connector and improvements in Asheville
Don’t wait — call 1-800-525-7111 to speak with an experienced North Carolina eminent domain attorney today. You deserve just compensation for your property, but the government is going to throw everything it can at you to try and pay as little as possible.
We are ready to help however we can.
Justice Counts for North Carolinians losing property due to eminent domain. Let us help if we can. Call 1-800-525-7111 today and let’s talk.