Section 20 Compensable Interest and Valuation

• Library: Condemnation Practice 2009

Usually, deeds of trust or mortgage documents will provide for the mortgagee’s receipt of the distribution of money equaling the outstanding debt upon a total or a partial taking of the subject property. This language will be highly persuasive in a distribution hearing to convince a court that the interest is compensable and the amount of the interest in the event of a total taking of the subject property. Cassville Sch. Dist. v. McArtor, 286 S.W. 729 (Mo. App. S.D. 1926).

In a partial taking, language in the mortgage document requiring full payment of the outstanding debt, arguably, may be usurious and therefore not found to be persuasive. In such a case, the lender will be required to persuade the court of the value of its compensable interest.

In a partial taking, a lender that pursues a distribution of a portion of the...