Section 23 Leasehold for a Term of Years

• Library: Condemnation Practice 2009

When the lease does not address the rights of the parties in the event of a total or partial taking, the general rule for the valuation of the leasehold interest is set out in Land Clearance for Redevelopment Corp. v. Doernhoefer, 389 S.W.2d 780 (Mo. 1965).

The Doernhoefer Court stated that:

the value of the leasehold should be determined from the testimony of qualified expert witnesses as that value which a buyer under no compulsion to purchase the tenancy would pay to a seller under no compulsion to sell, taking into consideration the period of the lease yet to run, including the unexercised right of renewal, the favorable and unfavorable factors of the leasehold estate, the location, type and construction of the building, the business of the tenant, comparable properties in similar neighborhoods, present market conditions and future market trends, and all other material factors that would enter into the determination of the reasonable market value of the property.

Id. at 784.

The Doernhoefer Court goes on to state that a lessee is entitled to a portion of the commissioners’ award in an amount equal to the “bonus value,” if any, that the lessee enjoys under the existing leasehold interest. “The bonus value, sometimes referred to as the leasehold...