California Eminent Domain Lawyer: Strategic Use of Gov Code § 7267.2 in San Diego

California Eminent Domain Lawyer Leeran S. Barzilai represents property owners facing condemnation in San Diego Superior Court. Strategic use of Gov Code § 7267.2. Free consult.

“Key Takeaways”

Pre-Litigation Offer Required: Under Government Code § 7267.2 , the public entity must establish just compensation and make an offer before adopting a resolution of necessity—the offer cannot be less than its approved appraisal .
Appraisal Cost Revolution: AB 1752 (pending 2026) would require public entities to pay full reasonable costs of independent appraisals for certain projects—currently capped at $5,000 .
Utility Condemnation Overhaul: SB 875 (pending 2026) would create conclusive presumptions favoring public entities taking utility property in PG&E service areas—dramatically shifting the balance of power .
Clayton Transfer Right: Under Clayton v. Superior Court (1998), nonresident property owners can demand transfer to a neutral county under CCP § 394—and withdrawing deposited funds does not waive this right .
Appraisal Review Rights: For owner-occupied residential property (up to four units), owners may review the appraisal upon which the government’s offer is based—a critical tool for challenging lowball offers .
Relocation Assistance: Property owners may be entitled to relocation benefits and compensation for loss of goodwill for businesses operated on the property .

Full Pillar Page

Why Pre-Litigation Procedures Determine Eminent Domain Outcomes

A California Eminent Domain Lawyer must navigate a complex web of statutory requirements, constitutional protections, and procedural rules that govern how public agencies can take private property. Unlike general litigation, eminent domain cases are won or lost long before a complaint is filed—during the pre-litigation negotiation phase.

Under Government Code § 7267.2 , before a public entity can adopt a resolution of necessity and initiate formal condemnation proceedings, it must:

Establish an amount it believes to be just compensation
Make an offer to the property owner for that full amount
Provide a written statement detailing the basis for the offer, including:
- Date of valuation, highest and best use, and applicable zoning
- Principal transactions, reproduction cost analysis, or capitalization analysis supporting the valuation
- Separate statement of compensation for property taken and damages to remaining property

The offer amount cannot be less than the public entity’s approved appraisal of fair market value . This statutory floor provides property owners with a critical benchmark—if the agency’s own appraisal supports a higher value, the offer must reflect it.

At Leeran S. Barzilai, A Prof. Law Corp. , we maintain our office at 4501 Mission Bay Dr. #3c—minutes from the Hall of Justice. When a government agency threatens condemnation, we immediately request the agency’s appraisal and analyze whether the offer complies with § 7267.2. Agencies that fail to follow these procedures may lose their right to condemn.

The Local Knowledge Advantage

San Diego Courthouse	Address	What We File There
Hall of Justice (Central)	330 W Broadway, San Diego, CA 92101	Eminent domain actions, valuation trials, CCP § 394 transfer motions
Madge Bradley Building	1409 4th Ave, San Diego, CA 92101	Limited civil valuation proceedings
San Diego Superior Court – Central	1100 Union St, San Diego, CA 92101	Case management conferences, expert discovery motions

The Pre-Litigation Process: Your Rights Before They File

1. Appraisal and Valuation

Before negotiations begin, the public entity must:

Have the property appraised
Provide the owner with an opportunity to accompany the appraiser during inspection
Establish just compensation based on fair market value, injury to remainder, and loss of goodwill (if applicable)

Strategic note: For owner-occupied residential property with no more than four units, the homeowner may, upon request, review a copy of the appraisal upon which the offer is based . This right is critical—it allows you to see the agency’s own valuation methodology and challenge flawed assumptions before they file suit.

2. The Offer

The entity must provide a written offer including:

General statement of public use
Description of property to be taken
Inventory of improvements
Amount of offer, with certification that it:
- Is the full amount believed to be just compensation
- Is not less than the approved appraisal
- Disregards any value decrease caused by the project
- Does not include relocation assistance or other benefits

3. Loss of Goodwill

If you own and operate a business on the property, you may be entitled to compensation for loss of goodwill—the benefits that accrue from location, reputation, skill, and other factors resulting in customer retention or acquisition . The entity must inform you of this right in writing.

Strategic note: Goodwill claims require careful documentation. We work with forensic accountants and business valuation experts to quantify the value of established customer relationships and reputation—often substantial components of total compensation.

4. Uneconomic Remnants

If the taking leaves you with a remainder that has little or no utility or value (an “uneconomic remnant”), the entity must offer to acquire it if you so desire . This prevents the government from leaving property owners with worthless scraps of land after partial takings.

The 2026 Appraisal Cost Revolution: AB 1752

Under current law, when a public entity offers to purchase property under threat of eminent domain, it must offer to pay reasonable appraisal costs—but capped at $5,000 . For complex commercial or industrial properties, this cap falls far short of actual appraisal costs, which can easily exceed $20,000-$30,000 for specialized valuations.

Assembly Bill 1752, introduced February 9, 2026, would fundamentally change this landscape . The bill would amend Code of Civil Procedure § 1263.025 to require public entities to pay the full reasonable costs of independent appraisals ordered by property owners for projects involving:

Construction of facilities for the isolated transfer of water across the Sacramento-San Joaquin Delta, or
High-speed rail purposes

Strategic note: While AB 1752 currently applies only to these specific project types, it signals a legislative trend toward leveling the playing field. We monitor this bill closely and advise clients on strategies to maximize appraisal cost recovery under existing law and prepare for potential expanded rights.

The 2026 Utility Condemnation Revolution: SB 875

Perhaps the most significant pending legislation affecting California eminent domain is Senate Bill 875, introduced January 6, 2026 . This bill would fundamentally alter the balance of power between public entities and investor-owned utilities in condemnation proceedings—specifically within the PG&E service area.

Key Provisions of SB 875

Current Law	SB 875 (Pending 2026)
Presumption that public entity’s use is “more necessary” than utility’s existing use is rebuttable	Presumption becomes conclusive and not rebuttable for takings within PG&E service area where public entity intends same use
Resolution of necessity creates rebuttable presumption of public interest and necessity	Resolution of necessity creates conclusive presumption for PG&E service area takings
Court may award litigation expenses to defendant if proceeding dismissed	Litigation expense provisions do not apply to PG&E service area takings

The Legislature’s findings in SB 875 explicitly recognize that “local publicly owned utilities are safe and reliable, and charge lower rates than investor-owned utilities” and that “investor-owned utilities deny local governments the right to provide electrical service by refusing to negotiate the price of facilities, excessively litigating condemnation and other proceedings” .

Strategic note for public entities: If enacted, SB 875 would dramatically streamline municipalization efforts—making it nearly impossible for utilities to defeat condemnation through litigation. We advise cities and public agencies on structuring acquisition programs to take advantage of these new presumptions.

Strategic note for utilities: The stakes could not be higher. If SB 875 passes, utilities facing condemnation in PG&E’s service area will lose virtually all meaningful defenses. We counsel utilities on pre-litigation strategies and potential constitutional challenges to this legislation.

The Clayton Transfer Right: Neutral Forum for Nonresident Owners

When a governmental agency from one county condemns property owned by a resident of another county, the potential for local bias is obvious—jurors may identify with the agency that serves them and be reluctant to award full compensation to an “outsider.”

Code of Civil Procedure § 394 addresses this concern by requiring mandatory transfer to a neutral county when a local agency sues a nonresident defendant . For years, some courts and agencies argued that property owners who withdrew deposits of probable compensation waived this transfer right under CCP § 1255.260, which provides that withdrawing deposited funds waives “all claims and defenses” except a claim for greater compensation.

In Clayton v. Superior Court (City of San Diego) (1998), the Fourth District Court of Appeal decisively rejected this argument . The court held:

The right to transfer under § 394 is not a “claim” or “defense” within the meaning of § 1255.260
Section 394 is a procedural due process safeguard designed to guarantee fairness—including fairness in determining adequate compensation
Withdrawing deposited funds does not waive the right to transfer

Strategic note: If you own San Diego property but reside elsewhere, you have the absolute right to demand trial in a neutral county—and you can access your compensation deposit without forfeiting that right. We file § 394 motions early, often before the condemning agency even answers.

The Moreland Analysis: Who Qualifies as a “Local Agency”?

In Moreland Investment Co. v. Superior Court (San Diego Gas & Electric Co.) (1980), the court addressed a complex venue question: Is San Diego Gas & Electric, a private utility exercising eminent domain powers, a “local agency” requiring mandatory transfer under § 394?

The court held that SDG&E was not a governmental agency within the meaning of the statute, noting:

SDG&E is a private shareholder corporation, not a political entity
Unlike true governmental agencies, it cannot directly pass on acquisition costs to ratepayers—it must justify rate increases to the Public Utilities Commission
Its governing board is not appointed by or closely related to local political bodies

Strategic note: Moreland remains good law, but its reasoning may be tested as entities like community choice aggregators and newly formed public utilities exercise eminent domain powers. We analyze each condemning party’s structure and powers to determine available venue challenges.

The Appraisal Process and Your Right to Challenge

Government’s Appraisal Obligations

Under Title 25, California Code of Regulations § 6182 , before initiating negotiations, the public entity must:

Have the property appraised
Give the owner an opportunity to accompany the appraiser during inspection
Establish just compensation based on fair market value, injury to remainder, and loss of goodwill

Your Right to Additional Information

If you request additional information after receiving the offer, the entity must provide:

Date of valuation
Highest and best use
Applicable zoning
Identification of sales, contracts, and leases supporting the value determination
For each transaction: parties, location, date, price, and significant terms

Independent Appraisals

Current law caps reimbursement for independent appraisals at $5,000 . However, for complex properties, competent appraisals cost substantially more. We advise clients on:

Whether to invest in independent appraisals despite the cap
How to use the government’s appraisal against them through careful analysis of their methodology
Documenting appraisal costs for potential recovery under pending legislation or negotiated settlements

Compensation Elements: Beyond Fair Market Value

Fair Market Value

The foundation of just compensation is fair market value—the highest price on the date of valuation that would be agreed to by a willing buyer and willing seller, neither acting under compulsion.

Injury to Remainder

If only part of your property is taken, you’re entitled to compensation for damage to the remaining portion—including lost access, reduced utility, or diminished value due to the project.

Loss of Goodwill

For business owners, loss of goodwill can be a substantial component of compensation. Goodwill includes benefits from:

Location
Reputation for dependability, skill, or quality
Other circumstances resulting in customer retention or acquisition

Strategic note: Goodwill claims require expert testimony. We work with forensic accountants and business valuation specialists to quantify what the business loses when forced to relocate or close.

Relocation Assistance

Property owners may be entitled to relocation benefits under state and federal law, including:

Moving expenses
Replacement housing payments
Rental assistance
Business relocation payments

Pre-Judgment Interest

Under Civil Code § 3287 , you’re entitled to interest on the difference between the final award and any deposit withdrawn, from the date of possession.

The Litigation Timeline: From Resolution to Award

1. Pre-Litigation Phase (Months 1-12)

Agency adopts resolution of necessity
Agency makes offer under Gov Code § 7267.2
Property owner may request appraisal review and additional information
Parties may negotiate settlement

Strategic note: Most cases settle during this phase. We engage appraisers early, document everything, and build the record for trial while negotiating aggressively.

2. Filing of Complaint

Agency files complaint in condemnation
Files lis pendens
Deposits probable compensation with court
May seek order for immediate possession

3. Response and Transfer Motions

Property owner files answer, may challenge right to take
Nonresident owners should file CCP § 394 motion for transfer to neutral county
Parties conduct initial case management

4. Discovery (Months 3-12)

Discovery Method	Scope
Interrogatories	Identify valuation methodologies, expert opinions
Document demands	Appraisals, internal agency communications, comparable sales data
Depositions	Agency appraisers, project managers, expert witnesses
Expert discovery	Full exchange of expert reports and methodologies

5. Valuation Trial

Bench trial on compensation (juries are generally not available in California eminent domain cases)
Both sides present expert testimony on value
Court determines fair market value, injury to remainder, and other compensation elements
Pre-judgment interest calculated from date of possession

6. Post-Judgment

Final judgment entered
Agency pays award plus interest
Property owner may seek litigation expenses in certain circumstances (though SB 875 would eliminate this right for PG&E area utility takings)

FAQ Section

Question: What must a public entity do before it can file an eminent domain action?

Answer: Under Government Code § 7267.2 , the entity must establish just compensation, make an offer for that full amount (not less than its approved appraisal), and provide a detailed written statement of the basis for the offer . These steps must occur before adopting a resolution of necessity.

Question: Can I recover the cost of my own independent appraisal?

Answer: Current law caps reimbursement at $5,000 under CCP § 1263.025 . However, pending AB 1752 would require payment of full reasonable costs for certain projects involving Delta water conveyance or high-speed rail .

Question: What is SB 875 and how would it affect utility condemnation?

Answer: SB 875 (pending 2026) would create conclusive presumptions favoring public entities taking utility property within the PG&E service area—making it nearly impossible for utilities to defeat condemnation and eliminating litigation expense awards .

Question: If I withdraw the agency’s deposit, do I lose my right to transfer the case to another county?

Answer: No. Under Clayton v. Superior Court (1998), withdrawing deposited funds does not waive a nonresident owner’s right to transfer under CCP § 394 .

Question: Can I review the government’s appraisal?

Answer: For owner-occupied residential property with up to four units, yes—upon request . For commercial properties, the agency must provide detailed information supporting its valuation, including comparable sales data .

Question: What compensation can I recover if I own a business on condemned property?

Answer: You may recover loss of goodwill—the benefits from location, reputation, and customer relationships . These claims require expert testimony and careful documentation.

Question: What happens if the taking leaves me with a worthless remainder?

Answer: Under Title 25 CCR § 6182 , if the remainder has little or no utility or value (an “uneconomic remnant”), the entity must offer to acquire it if you so desire .

Question: Where are eminent domain cases filed in San Diego?

Answer: Cases file at the Hall of Justice (330 W Broadway) for unlimited civil matters. Nonresident owners may seek transfer to a neutral county under CCP § 394 .

Question: Is San Diego Gas & Electric considered a “local agency” for venue purposes?

Answer: Under Moreland Investment Co. v. Superior Court (1980), SDG&E is a private corporation, not a governmental agency, so mandatory transfer rules may not apply .

Question: What is the statute of limitations for challenging an eminent domain action?

Answer: Once the agency files its complaint, you must respond within 30 days. Failure to respond results in default. Pre-litigation challenges to the resolution of necessity must be raised in your answer.

Contact Our Office

Leeran S. Barzilai, A Prof. Law Corp.
4501 Mission Bay Dr. #3c
San Diego, CA 92109
(619) 436-7544

San Diego property owners deserve a California Eminent Domain Lawyer who understands pre-litigation procedures, pending legislation like SB 875 and AB 1752, and every procedural protection at the Hall of Justice. Whether you’re facing condemnation for a public project, a utility taking, or a partial acquisition, we provide the local knowledge and litigation experience your case requires.

Your free consultation includes:

30-minute phone or video meeting with a San Diego-based attorney
Review of the agency’s offer and supporting documentation
Appraisal analysis and valuation assessment
Evaluation of transfer rights under CCP § 394
Loss of goodwill analysis for business owners
Clear explanation of San Diego Superior Court procedures as outlined in the San Diego Superior Court Local Rules
Answers to all your questions—no pressure, no obligation

Call today or visit our Mission Bay office—minutes from the Hall of Justice—to discuss how we can protect your property rights and maximize your compensation.

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1. California Eminent Domain Litigation Lawyer

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We represent property owners in eminent domain litigation against public agencies and utilities, challenging the government’s right to take property and fighting for maximum compensation under California’s condemnation laws. Our litigation practice includes pre-litigation negotiations, valuation disputes, and trial representation at the Hall of Justice, with careful attention to pending legislation like SB 875 and AB 1752 that may affect your rights.