In a hypothetical partial-taking analysis, the value contribution of the part taken is $80,000. Separate analysis identifies a further $30,000 loss in the market value of the remaining land due to impaired access. What does that $30,000 describe?
Correct Answer
B) Severance damage to the remaining land
The $30,000 describes diminution in the value of the property remaining after the taking, commonly called severance damage. It is distinct from the value of the part taken and from a cost-to-cure estimate. Whether and how it is legally compensable depends on the governing jurisdiction and assignment.
Why This Is the Correct Answer
Option B is correct because the $30,000 is a diminution in the market value of the land remaining after the taking, caused by impaired access. Such damage to the remainder is commonly called severance damage. It is distinct from the $80,000 value of the part taken.
Why the Other Options Are Wrong
Option A: An error in the appraiser's arithmetic
Option A, an error in the appraiser's arithmetic, is not supported by the facts. The $30,000 comes from a separate analysis of the remainder's lost value, not from a calculation mistake.
Option C: The cost to cure the physical damage
Option C, the cost to cure the physical damage, describes a cost estimate to remedy a condition. The $30,000 is identified as a loss in market value of the remaining land, not a cost of repair.
Option D: A premium paid for the early possession
Option D, a premium paid for early possession, has nothing to do with lost value from impaired access. The $30,000 measures damage to the remainder, not a payment for timing.
Severed parcel, damaged remainder
When a piece is severed, any value lost by what remains is severance damage.
How to use: Use this to name a loss in value to the remaining property after a partial taking.
Exam Tip
Separate the value of the part taken from any change in value of the remainder; the second is the damage element.
Common Mistakes to Avoid
- -Confusing severance damage with the value of the part taken
- -Equating severance damage with cost to cure
- -Assuming compensability rules are the same everywhere
Concept Deep Dive
Analysis
This question tests partial-taking terminology. The value of the part taken is one element, and a loss in market value of the remaining property is a separate element. That loss in the remainder's value is called severance damage.
Background Knowledge
In a partial taking, the appraiser considers the value of the part taken and any damage, meaning diminution in value, to the remainder. Severance damage must be supported by evidence of loss in market value to the remaining parcel. Whether and how it is compensable depends on the governing jurisdiction and assignment.
Real-World Application
A highway project takes a strip of frontage from a commercial parcel and eliminates its direct driveway access. The appraiser values the strip taken and separately measures, using market evidence, how much the loss of access reduces the value of the remaining parcel.
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