The State of New York needed a strip of the owner’s property for a “greenway” for walkers and bikers. The State and the owner agreed that if the owner believed that the advance payment of $300k was not enough, it could ask the Court of Claims for more. But they also agreed that if that court concluded the amount for the taking was less than advance payment, the owner would owe the State the difference, plus interest.

After trial, the claims court concluded that the advance payment exceeded the amount of compensation owed — indeed, was below the range of values testified to by each side’s expert — and the owner thus owed the State in the neighborhood of $18k. 

In Elpa Builders, Inc. v. State of New York, No. D66949 (July 14, 2021), the Appellate Division (Second Department) made typically short work of the owner’s claim that the statute which authorized the advance payment and the parties’ agreement was unconstitutional because it deprived the owner of just compensation. First, this was a contract, so there’s that. And second, “just” compensation means no less than the fair market value, but it also means no more than this amount.

Seems straightforward, no? Yes, but be careful. First, we don’t know on what basis the owner agreed on the amount of the advance payment. Was it an appraisal by the State which the State later lowered? That happens. Second, what about a court going below the evidence the State offered? Even though the Appellate Division here concluded that wasn’t a problem — see slip op. at 3 “(although the determination of the Court of Claims of the amount of damages to which the claimant was entitled was slightly outside the range of the expert testimony, it was supported by other evidence presented at trial and was adequately explained by the court”) — your jurisdiction’s mileage may vary.

Bottom line: agreeing to an advance payment or withdrawing a deposit comes with risk.

Elpa Builders, Inc. v. State of New York, No. D66949 (N.Y. App. Div. July 14, 2021)