§ 24.102 - Basic acquisition policies.

§ 24.102 Basic acquisition policies.

(a) Expeditious acquisition. The Agency agency shall make every reasonable effort to acquire the real property expeditiously by negotiation.

(b) Notice to owner. As soon as feasible, the Agency agency shall notify the owner in writing of the Agencyagency's interest in acquiring the real property and the basic protections provided to the owner by law and this part. (See § §§ 24.203 and 24.5(d) and appendix A to this part, section 24.102(b).)

(c) Appraisal, waiver thereof, and invitation to owner.

(1) Before the initiation of negotiations, the real property to be acquired shall be appraised, except as provided in § 24.102 paragraph (c)(2) of this section, and the owner, or the owner's designated representative, shall be given an opportunity to accompany the appraiser during the appraiser's inspection of the property.

(2) An appraisal is not required if:

(i) The owner is donating the property and releases the Agency agency from its obligation to appraise the property; or

(ii) The Agency agency determines that an appraisal is unnecessary because the valuation problem is uncomplicated and has a low fair market value, and the anticipated value of the proposed acquisition is estimated at $10$15,000 or less, based on a review of available data. The agency representative making the determination to use the waiver valuation option must understand valuation principles, techniques, and use of appraisals in order to be able to determine whether the valuation of the proposed acquisition is uncomplicated and has a low fair market value. (See appendix A to this part, section 24.102(c)(2).)

(A) When an appraisal is determined to be unnecessary, the Agency agency shall prepare a waiver valuation.

(1) Waiver valuations are not appraisals by definition in this part (See § 24.2). Persons preparing or reviewing a waiver valuation are precluded from complying with Standards Rules 1, 2, 3, and 4 of the “Uniform Standards of Professional Appraisal Practice,” as promulgated by the Appraisal Standards Board of The Appraisal Foundation^[1] (see appendix A to this part, sections 24.102(c) and 24.103(a).)

(2) Because a waiver valuation is not an appraisal, a review of a waiver valuation is not required. However, some recipients may also be subject to State laws or agency requirements to review a waiver valuation.

(B) The person performing the waiver valuation must have sufficient understanding of the local real estate market in order to be qualified to make perform the waiver valuation.

(C) The Federal Agency agency funding the project may approve exceeding the $10$15,000 threshold, up to a maximum an amount of $25$35,000, if the Agency agency acquiring the real property offers the property owner the option of having the Agency agency appraise the property.

(D) If the agency determines that the proposed acquisition is uncomplicated and has a low fair market value, and if the agency acquiring the real property offers the property owner the option of having the agency appraise the property, the agency may request approval from the Federal funding agency to use a waiver valuation for properties with estimated values of more than $35,000 and up to $50,000. Approval for using a waiver valuation of more than $35,000, but up to $50,000 may only be requested on a project-by-project basis and the request for doing so shall be made in writing to the Federal funding agency setting forth the anticipated benefits of, and reasons for, raising the waiver valuation ceiling above $35,000. Within 6 months of completion of acquisition activities a close-out report measuring cost/time benefits, condemnation rate, settlement rate, and any other relevant metric which the funding agency requires to adequately document both the administrative savings and accuracy and efficacy of the waiver valuations of more than $35,000, but up to $50,000 shall be submitted to the funding agency.

(E) Under paragraphs (c)(2)(ii)(C) and (D) of this section, if the property owner elects to have the

Agency

agency appraise the property, the

Agency shall

agency must obtain an appraisal and shall not use the waiver valuation procedures described in

this paragraph

paragraphs (c)(2)(ii)(A) through (D) of this section. (See appendix A to this part,

§

section 24.102(c)(2).)

(d) Establishment and offer of just compensation. Before the initiation of negotiations, the Agency agency shall establish an amount which it believes is just compensation for the real property. The amount shall not be less than the approved appraisal or waiver valuation of the fair market value of the property, taking into account the value of allowable damages or benefits to any remaining property. An Agency agency official must establish the amount believed to be just compensation. (See § 24.104.) Promptly thereafter, the Agency agency shall make a written offer to the owner or the designated owner's representative to acquire the property for the full amount believed to be just compensation. (See appendix A to this part, § section 24.102(d).)

(e) Summary statement. Along with the initial written purchase offer, the owner or the designated owner's representative shall be given a written statement of the basis for the offer of just compensation, which shall include:

(1) A statement of the amount offered as just compensation. In the case of a partial acquisition, the compensation for the real property to be acquired and the compensation for damages, if any, to the remaining real property shall be separately stated.

(2) A description and location identification of the real property and the interest in the real property to be acquired.

(3) An identification of the buildings, structures, and other improvements (including removable building equipment and trade fixtures) which are included as part of the offer of just compensation. Where appropriate, the statement shall identify any other separately held ownership interest in the property, e.g., a tenant-owned improvement, and indicate that such interest is not covered by this offer.

(f) Basic negotiation procedures. The Agency agency shall make all reasonable efforts to contact the owner or the owner's designated representative and discuss its offer to purchase the property, including the basis for the offer of just compensation and explain its acquisition policies and procedures, including its payment of incidental expenses in accordance with § 24.106. The owner shall be given reasonable opportunity to consider the offer and present material which the owner believes is relevant to determining the value of the property and to suggest modification in the proposed terms and conditions of the purchase. The Agency agency shall consider the owner's or the designated owner's representative's presentation. (See appendix A to this part, § section 24.102(f).)

(g) Updating offer of just compensation. If the information presented by the owner, or a material change in the character or condition of the property, indicates the need for new waiver valuation or appraisal information, or if a significant delay has occurred since the time of the appraisal(s) or waiver valuation of the property, the Agency agency shall have the appraisal(s) or waiver valuation updated or obtain a new appraisal(s) or waiver valuation. If the latest appraisal or waiver valuation information indicates that a change in the purchase offer is warranted, the Agency agency shall promptly reestablish just compensation and offer that amount to the owner in writing.

(h) Coercive action. The Agency agency shall not advance the time of condemnation, or defer negotiations or condemnation, or the deposit of funds with the court, or take any other coercive action in order to induce an agreement on the price to be paid for the property.

(i) Administrative settlement. The purchase price for the property may exceed the amount offered as just compensation when reasonable efforts to negotiate an agreement at that amount have failed and an authorized Agency agency official approves such administrative settlement as being reasonable, prudent, and in the public interest. When Federal funds pay for or participate in acquisition costs, a written justification shall be prepared, which states what available information, including trial risks, supports such a settlement. (See appendix A to this part, § section 24.102(i).)

(j) Payment before taking possession. Before requiring the owner to surrender possession of the real property, the Agency agency shall pay the agreed purchase price to the owner, or in the case of a condemnation, deposit with the court, for the benefit of the owner, an amount not less than the Agencyagency's approved appraisal of the fair market value of such property, or the court award of compensation in the condemnation proceeding for the property. In exceptional circumstances, with the prior approval of the owner or the owner's designated representative, the Agency agency may obtain a right-of-entry for construction purposes before making payment available to an owner. (See appendix A to this part, § section 24.102(j).)

(k) Uneconomic remnant. If the acquisition of only a portion of a property would leave the owner with an uneconomic remnant, the Agency agency shall offer to acquire the uneconomic remnant along with the portion of the property needed for the project. (See § 24.2(a)(27).)

(l) Inverse condemnation. If the Agency agency intends to acquire any interest in real property by exercise of the power of eminent domain, it shall institute formal condemnation proceedings and not intentionally make it necessary for the owner to institute legal proceedings to prove the fact of the taking of the real property.

(m) Fair rental. If the Agency agency permits a former owner or tenant to occupy the real property after acquisition for a short term, or a period subject to termination by the Agency agency on short notice, the rent shall not exceed the fair market rent for such occupancy. (See appendix A to this part, § section 24.102(m).)

(n) Conflict of interest.

(1) The appraiser, review appraiser, or person performing the waiver valuation shall not have any interest, direct or indirect, in the real property being valued for the Agencyagency. Compensation for

making

developing an appraisal or waiver valuation shall not be based on the

amount of the valuation estimate

reported opinion of value.

(2) No person shall attempt to unduly influence or coerce an appraiser, review appraiser, or waiver valuation preparer regarding any valuation or other aspect of an appraisal, waiver valuation, or review of appraisals or waiver valuationvaluations. Persons functioning as negotiators may not supervise or formally evaluate the performance of any appraiser, waiver valuation preparer, or review appraiser performing appraisal or appraisal review work, except that, for a program or project receiving Federal financial assistance, the Federal funding Agency agency may waive this requirement if it determines it would create a hardship for the Agencyagency.

(3) An appraiser, review appraiser, or waiver valuation preparer making an appraisal, appraisal review or waiver valuation may be authorized by the Agency agency to act as a negotiator for the acquisition of real property for which that person has made performed an appraisal, appraisal review or waiver valuation only if the offer to acquire the property is $10$15,000, or less. Agencies that wish to use this same authority to act as the negotiator on a valuation greater than $15,000, and up to $35,000, may not use a waiver valuation, and these acquisitions are subject to the following conditions:

(i) For those acquisitions where the appraiser or review appraiser will also act as the negotiator, an appraisal must be performed in compliance with § 24.103 and reviewed in compliance with § 24.104;

(ii) Agencies and recipients desiring to exercise this option must request approval in writing from the Federal funding agency;

(iii) The requesting agency shall have a separate and distinct quality control process in place and set forth in the written procedures approved by the Federal funding agency; and

(4) Agencies wishing to allow subrecipients to use conflict of interest waivers of more than $15,000 must determine and document that the subrecipient has a separate and distinct quality control process in place which is set forth in written procedures approved by the agency or in an agency approved subrecipient's written procedures. (See appendix A to this part,

§

section 24.102(n).)

[70 FR 611, Jan. 4, 2005, as amended at 70 FR 22611, May 2, 2005]

Agencies and recipients desiring to exercise this option must request approval in writing from the Federal funding agency.

Footnotes - 24.102

^[1] Uniform Standards of Professional Appraisal Practice (USPAP). Published by The Appraisal Foundation, a nonprofit educational organization. Copies may be ordered from The Appraisal Foundation.