The Law

Free Bonus by Ron Davis Claims of a Missouri shopping center tenant to a major share of his landlord’s condemnation payments have largely gone unanswered. The shopping center, located in the Kansas City suburb of Riverside, is set for demolition to make room for a public park. And that means the tenant, who has operated a restaurant there for several years, must move out, as must the center’s other tenants. But at the time of condemnation, the restaurant tenant had more than four years remaining until his lease expired. So he argued that he is due a large portion of the condemnation proceeds (totaling $185,000) that the city of Riverside owes to the shopping center owner. Specifically, the tenant wants “relocation assistance.” In condemnation cases such as this one, the measure of relocation assistance for a tenant is the so-called bonus value of the unexpired term of the lease. And condemnation awards that are apportioned between a tenant and a landlord will all go to the landowner unless the tenant can actually prove the existence of that bonus value. Unfortunately for the tenant, however, he relied on an appraisal made on behalf of the shopping center owner. That appraisal determined that, based on valuations of comparisons and other factors, that the bonus value of the remainder of the tenant’s lease is only $6,263. A Missouri court agreed with that appraisal and ruled that the tenant must settle for that amount. The tenant appealed, arguing that the shopping center’s appraiser did not make a thorough inquiry into the facts concerning comparable leases. The tenant contended, for example, that the appaiser did not include in his analysis any rents on local restaurants, used an unknown source for information about comparable leases, and was unfamiliar with the dimensions and lease terms of properties used to form his opinion. A Missouri appellate court upheld the ruling of the lower court, however. Explained the judges, “The evidence revealed that the appraiser made careful inquiry into the facts concerning the comparable leases upon which he based his valuation opinion. His testimony was, therefore, admissible and constituted substantial evidence to support the decision regarding apportionment of the condemnation award.” (45 S.W.3d 905 [Mo.App. W.D. 2001]) Decision: June 2001 Published: July 2001