Recent North Carolina Law Will Likely Cost Property Owners Who Have Compensation Claims Millions


On Monday, November 18th, Gov. Roy Cooper signed legislation that will likely cost landowners who have claims against the North Carolina Department of Transportation millions of dollars. The law will restrict how much interest the government must pay to landowners whose property values were depressed by NCDOT’s road building activities related to the Interstate 540 Outer Loop in Wake County and the Interstate 295 Outer Loop near Fayetteville.

The law applies to compensation claims that property owners file on or after January 1, 2020. Landowners who file Map Act claims before that date will not be subject to the law’s restricted interest rate.

Background on the Law

Some quick background. In 1996, the North Carolina legislature passed the “Map Act”. This law allowed NCDOT to file “corridor maps” that identified potential routes the Outer Loop highways might be built, and placed significant restrictions on how landowners with property in the corridors could develop or use their property.

Although NCDOT publicly acknowledged that a primary purpose of the “corridor map” restrictions was to depress property values, it refused to pay property owners any compensation. This made it cheaper for NCDOT to acquire the property, if it later decided to build a road along any of the corridors it had identified.

Despite the fact that these restrictions were indefinite, NCDOT told landowners they were not entitled to any compensation for the decreased value of their properties. Several landowners sued NCDOT, arguing that they had a constitutional right to be paid for the decreased value of their properties. These lawsuits have become known as “Map Act” claims.

In 2016, the North Carolina Supreme Court declared that landowners had a constitutional right to be paid “just compensation”, and directed NCDOT to pay landowners for the diminished value of their property. The Court also directed NCDOT to pay landowners interest on the money it owed to them, but did not specify what interest rate should apply or whether interest should be simple or compounded.

Since the Supreme Court’s decision, NCDOT has been fighting with property owners and their attorney over the applicable rate of interest and whether it should be a simple interest rate or compounded interest rate.

How Does the Legislation Affect Landowners?

To reduce the amount of compensation NCDOT has to pay landowners NCDOT spending on Map Act claims, Governor Cooper signed a law on Monday that says the interest rate that applies to what NCDOT owes affected landowners will be calculated as simple, rather than compounded interest.

Payment of simple rather than compounded interest will make a huge difference in how much landowners will receive for the decades of diminished property values. For example, say a jury determines that a landowner is entitled to $50,000. If an 8% simple interest rate is used to calculate the interest due over 23 years, the landowner will be entitled to $92,000 in interest. If an 8% compounded rate is used, the landowner will be entitled to $243,570.00 in interest. That is a difference of more than $150,000.00.

This new law will undoubtably face constitutional challenges from property owners around the state. But the surest way for property owners with Map Act claims to avoid this most recent interest rate restriction altogether by filing their claim before January 1, 2020, when the law goes into effect.

Our eminent domain attorney in Raleigh, NC are here to answer your questions and help you fight for what’s yours and make your claim before the law goes into effect. Call (919) 373-3390 to contact the attorney of Thorp Law.