A Possession and Use Agreement (PUA) is a contract between the condemning authority (such as the Texas Department of Transportation, or TxDOT) and a property owner. This agreement allows the condemning authority to take physical possession of your property and begin their project before a final settlement or court judgment is reached regarding the just compensation owed to the property owner.
Right of Way Acquisition companies will often tell landowners that signing a PUA is nothing more than a bonus being given to the landowner. However, there are certain terms in a PUA that can be detrimental to landowners and should be reviewed by an experienced condemnation attorney.
What is the purpose of a Possession and Use Agreement?
A PUA allows the condemnor, whether its TXDOT or a pipeline company, to start using your land before you come to an agreement as to how much they should have to pay for it. Condemnors like PUAs because it helps them keep their projects from falling behind their expected timelines. A PUA can also be attractive to landowners because they may receive a bonus for allowing the condemnor to build their project early. However, there are some common pitfalls that landowners do not know about and Condemnors rarely explain.
Common Pitfalls Landowners face when they sign a Possession and Use Agreement
- The PUA will often set a date of valuation as the time you sign the PUA. A date of valuation is important in eminent domain. Take the following example: A landowner signs a PUA setting the date of valuation as January 1, 2025. TXDOT runs into unexpected delays and decides not to proceed with eminent domain until January 1, 2027 (a common scenario). Because the date of valuation is January 1, 2025, the landowner will not receive any of the appreciation their property receives in the interim, leading to a lower value in eminent domain.
- Some PUAs, while framed as a bonus received by the landowner, actually require the landowner to deduct the “bonus” from the final agreed upon settlement. This functionally amounts to a loan the condemnor gives the landowner as opposed to a true bonus.
- A PUA will allow the condemnor to kick you off of your property prematurely. This can be important if you are running a business. If you run a business that is being impacted by eminent domain, signing a PUA will allow them to kick your business of the property earlier than they would have been able to do if you did not sign the agreement.
Luckily, the pitfalls of PUAs can be avoided by contacting an eminent domain attorney. At the Haack Law Firm, all consultations are free. Allow me to review these documents for you so that you don’t become a victim to PUAs.
