Chapter III: Just Compensation Are business losses compensated?
California's Eminent Domain Law -- unlike the laws of most other states -- provides that a business
owner may be entitled to any loss of business "goodwill" caused by the taking of property on which the
business is located. Business "goodwill" is defined in the Eminent Domain Law as:
"The benefits that accrue to a business as a result of its location, reputation for dependability, skill
or quality, and any other circumstances resulting in the probable retention of old or acquisition of
new patronage."
Generally, goodwill is valued based on the sustainable income flow generated by the business. How that
income translates into goodwill value is determined through experienced eminent domain business appraisers.
Generally, value varies based upon factors such as length of time in the business, nature of the industry,
customer base, economic conditions, reputation, security of occupancy, nature of the business' fixed assets,
and risk associated with the business. Some businesses possess no goodwill value. Others may possess thousands
or even millions of dollars of goodwill value.
It is very important in eminent domain cases to work only with business appraisers who are experienced in eminent
domain valuations. Experienced eminent domain counsel, such as California Eminent Domain Law Group, can refer the
business owner to these appraisers with whom they work on a regular basis. Hiring inexperienced eminent domain
counsel or an appraiser inexperienced in eminent domain matters can be a very costly mistake.
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