Banks are Entitled to Recover Compensation in Condemnation Actions

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Eminent domain or condemnation is the process by which the government is permitted to acquire a citizen’s private property for public use, after paying just compensation. Typically, property is acquired by the government through the use of eminent domain for public projects such as highways, bridges, parking structures, public utilities, public buildings and railroads.

Often, a property acquired by eminent domain is encumbered by one or more loans. Lenders are required to be joined as parties in condemnation actions under Washington law. The lender has the right to obtain counsel and participate in the case along with the property owner and any other parties who have an interest in the property. Condemnation cases have three phases: (1) adjudication of public use and necessity, (2) determination of just compensation to be awarded to the owner and all other parties with an interest in the property, and (3) payment of just compensation and transfer of title.

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