No Relocation Benefits for Tenants Forced Out by Sale to Government

What Happened: A city in Oregon purchased commercial property that it intended to develop for a City Hall. The sale agreement required the owner to deliver the property free of tenants. The owner kept its end of the bargain by informing the tenants of the sale, ending their leases, and letting them stay on a month-to-month basis until the city took ownership. Some of the tenants sued under a state law requiring a public entity that acquires real estate for a program or project to provide “fair and reasonable relocation payments and assistance to or for displaced persons.” The city claimed that the law didn’t apply to this transaction.

Decision: The Oregon federal district court agreed and dismissed the case.

Reasoning: First, the tenants weren’t “displaced persons” under the law because their lease terms expired and became month-to-month before the city officially closed the deal and acquired the property. And because the tenants had no possessory right to remain on the property after the sale, they weren’t entitled to relocation benefits.

In addition, the relocation benefits law applies only when the public entity acquires property via condemnation. But the owner in this case sold the property voluntarily in an arm’s-length transaction without the city’s having to use or threaten to use its condemnation powers.  

• Cars Northwest, Inc. v. City of Gladstone: 2020 U.S. Dist. LEXIS 11424, 2020 WL 390881