Download Eminent domain through negotiation

Deed Tax:
Eminent Domain through Negotiation
A deed tax is due on the execution of a deed conveying legal ownership of real
property sold in lieu of condemnation by eminent domain.
Eminent domain can be defined as the power to take private property for a public
purpose. This power is granted by Minnesota law to state and local governments, to
railroads, and to public service corporations, such as electric utility companies. Minn.
Stat., Chap. 117.
Eminent domain involves a court action initiated by a public or private authority to
acquire either legal ownership or easement rights to real property. If the court action
is completed and judgment is awarded to the condemning authority, a court decree
will order either the transfer of legal ownership or the granting of the easement. No
deed tax is due on the decree. Op. Atty. Gen., 474K, 8/20/69. Op. Atty. Gen., 474-K,
9/3/75.
However, if a property owner decides to sell his or her real property to the
condemning authority before court action is completed, the court case would be
canceled. In this case, the transaction would not technically involve the power of
eminent domain. The transaction would not be the result of a court decree. It would
involve the negotiated execution of a deed between a grantor and grantee in lieu of
condemnation through eminent domain. In short, it would be a sale and not a
judgment.
When the negotiated transaction in lieu of condemnation conveys legal ownership of
real property, the executed deed is subject to deed tax. When the negotiated
transaction in lieu of condemnation grants easement rights, the document is exempt
from tax because documents that create, modify or terminate an easement are
exempt. M.S. 287.22(13).
Special Taxes Division
Mail Station 3331
St. Paul Minnesota 55146-3331
(Posted 1-2010)
651-556-4721
TTY: 711 Minnesota Relay
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