What happens when the government takes HOA common area by eminent domain?
By OurHOA · General information · Revised
Who gets paid when a road project condemns HOA common area, how the award splits between the association and owners, and whether members get a vote.
The association is usually the property owner in the case
In most planned communities the association holds title to the common area, so when a city, county, state department of transportation, or utility condemns part of it, the association is the property owner the condemning authority has to deal with and pay. The government's power to take is not in question. What is in question is the price, the exact boundaries of the taking, and what the project leaves behind. The Fifth Amendment requires just compensation, which in practice means an appraisal fight, not a veto. Owners rarely receive individual checks for a common-area taking, because they did not individually own the strip of land that was taken.
Condominiums split the money differently
Condominium owners hold undivided interests in the common elements, so the statutes have to say where the money goes. Under the Uniform Common Interest Ownership Act and the state acts modeled on it, the portion of an award attributable to common elements is paid to the association, while an award for a limited common element, a balcony or an assigned parking area serving particular units, is divided among the owners of the units it served. If an entire unit is taken, the award compensates that owner for the unit and its allocated interests, and those interests are automatically reallocated among the remaining units. Colorado codifies this at C.R.S. section 38-33.3-107 and Minnesota at Minn. Stat. section 515B.1-107. Our guide on who owns the common areas in an HOA is the starting point, because the ownership answer drives the payment answer.
Most takings are partial, and the damage is in the details
The classic case is a strip along a frontage road, a sidewalk or utility easement across an entrance, or a corner of a detention pond. Compensation covers the land taken plus damages to what remains, including the cost to cure what the project broke: relocating an entry monument, rebuilding a section of fence, repairing an irrigation zone that the new right-of-way cuts in half. The condemning authority will open with an offer based on its own appraiser's number. An association is entitled to its own appraisal and to contest value, and the first offer on a partial taking frequently undercounts remainder damage because the appraiser valued dirt rather than the amenity sitting on it.
What the board can do with the award
Read the declaration before anyone spends a dollar. Condemnation-proceeds clauses vary: some direct the money to restoring what was damaged, some send it to reserves, and some require distribution to owners or to mortgage holders in a condominium. Many declarations also require a supermajority member vote to convey common area, which boards sometimes read as a veto over a taking. It usually is not, because a condemnation is compulsory rather than a voluntary sale, though a negotiated settlement in lieu of condemnation can look enough like a sale to trigger the clause. That distinction is worth getting an opinion on before the board signs anything.
The bill can arrive after the check
A taking changes what the association maintains. A narrower buffer may cut mowing costs, while a relocated entrance, a rebuilt wall, or a replacement pump can cost more than the award covered, and the gap has to come from somewhere. Update the reserve study once the project scope is final rather than after the invoices land, and be candid with owners early if the shortfall points toward a special assessment, which our guide on HOA special assessments explains from the owner's side. Property values on the lots nearest the new right-of-way may take the hit that no association award compensates.
Practical steps when a project is announced
Send someone to the public hearings and get the plan sheets showing the proposed right-of-way line against your recorded plat. Hire counsel who handles condemnation, not only community-association work, and retain an independent appraiser before responding to any offer. Photograph and document the common area as it exists now, including irrigation, lighting, signage, and landscaping, because the record you make today is the evidence in the valuation later. Keep owners informed in writing about the scope, the likely timeline, and what the association is doing, and put the declaration's proceeds language in front of them early so the eventual decision about the money is not the first time they hear about it.
Sources
These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.