M Civ JI 90.07 Special Purpose Property

There are certain kinds of properties for which the market value standard is, for one reason or another, inappropriate. These properties are referred to as “special purpose” properties.

The adaptability of the property sought to be taken in eminent domain for a special purpose or use may be considered as an element of value. If the property possesses a special value to the owner which can be measured in money, the owner has a right to have that value considered in the estimate of compensation and damages.

While market value is always the ultimate test, it occasionally happens that the property taken is of a class not commonly bought and sold, such as a church or a college or a cemetery or the fee of a public street, or some other piece of property which may have an actual value to the owner but which under ordinary conditions the owner would be unable to sell for an amount even approximating its real value. As market value presupposes a willing buyer, the usual test breaks down in such a case, and hence it is sometimes said that such property has no market value. In one sense this is true; but it is certain that for that reason it cannot be taken for nothing. From the necessity of the case the value must be arrived at from the opinions of well-informed persons, based upon the purposes for which the property is suitable. This is not taking the “value in use” to the owner as distinguished from the market value. What is done is merely to take into consideration the purposes for which the property is suitable as a means of ascertaining what reasonable purchasers would in all probability be willing to give for it, which in a general sense may be said to be the market value.

If you determine that a property is, in fact, a “special purpose” property, you should consider that fact in determining the value of the property.

The value of a “special purpose” property is to be determined by what a purchaser who desired to buy such a “special purpose” property, but did not have to have it, would be willing to give for it, and what a seller who had such a “special purpose” property and desired to sell it, but did not have to sell it, would be willing to take for it.

Comment

See In re Grand Haven Highway, 357 Mich 20; 97 NW2d 748 (1959).

History

M Civ JI 90.07 was added February 1, 1981.