What Is a Condemnation Clause?
Under the Fifth Amendment to the U.S. Constitution, the government has the terrifying power of Eminent Domain (also called condemnation). If the Florida Department of Transportation decides they need to widen a highway, they can legally force a commercial landlord to sell them the retail plaza sitting next to the road.
But what happens to the restaurants and stores leasing space inside that plaza? A condemnation clause in their commercial lease dictates the exact legal fallout when the government bulldozes the building.
Total vs. Partial Condemnation
A well-drafted condemnation clause handles two different disaster scenarios:
- Total Condemnation — The government seizes the entire building. The condemnation clause will state that the lease is instantly terminated on the day the government takes title. The tenant is freed from paying any future rent, but must immediately vacate the premises.
- Partial Condemnation — The government only seizes 20% of the parking lot. The building is untouched, but the business is crippled because customers can't park. A strong condemnation clause gives the tenant the absolute right to cancel the lease if they lose more than 15% of their parking. A weak clause forces the tenant to stay, but grants them a slight reduction in rent.
The Battle Over the Money
When the government condemns a property, they must pay massive damages (a condemnation award). The landlord gets paid for the real estate, but the tenant's business was also destroyed. Who gets the money?
Most landlord-friendly leases contain a predatory provision stating that the tenant waives all rights to the government's money, giving 100% of the multi-million-dollar award to the landlord. Sophisticated tenants negotiate the condemnation clause to ensure they are legally allowed to claim their own separate compensation from the government for their destroyed business fixtures and relocation expenses.
Related Terms
- Eminent Domain — The overarching governmental power that triggers the clause
- Commercial Lease — The document containing the condemnation clause
- Eviction — A scenario entirely different from government condemnation
Barnes Walker Eminent Domain Defense
Barnes Walker's eminent domain litigators fiercely negotiate condemnation clauses in commercial master leases, ensuring major Florida tenants retain their constitutional right to claim massive compensation from the government when their businesses are destroyed by highway expansions. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. Ch. 73–74
Governs the power of government entities to acquire private property for public use, including the requirement of full compensation and the order-of-taking process.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC