Arizona Supreme Court Expands Landowners’ Rights to Recover Severance Damages in Eminent Domain Cases

By Anthony T. King, Paloma Scheiferstein, and Miranda Martinez

In State of Arizona v. Foothills Reserve Master Owners Association, Inc.,¹ the Arizona Supreme Court ruled that severance damages are available to landowners when their appurtenant easements are condemned, even if their physical property remains untouched. The case arose when the State condemned common areas and associated easements within the Foothills Reserve Community to construct the Loop 202 South Mountain Freeway. While the homeowners’ association received compensation for the common areas, individual homeowners claimed that the loss of their easements over the common areas diminished their property values and sought additional compensation in the form of severance damages. The Court held that A.R.S. § 12-1122(A)(2) allows a landowner to recover severance damages when an appurtenant easement is taken, reinforcing landowners’ rights in eminent domain proceedings.

This ruling has direct implications for Arizona property owners, particularly those who rely on easements such as access roads, parking, utility corridors, recreational pathways, or restrictive covenants. Such easements are often essential to a property’s value, functionality, and desirability, and their condemnation can significantly impact the land and landowners. The decision confirms that property owners are entitled to compensation not only for physical land takings, but also for the loss of use and diminished property values associated with condemned easements. As a result, property owners facing eminent domain proceedings may now have stronger claims for severance damages, potentially increasing individual payouts when public projects require the acquisition of private land and easements.

Beyond the direct impact on property owners, this ruling sets a legal precedent with far reaching consequences for eminent domain law in Arizona. Traditionally, severance damages were applied only when part of a physical property was taken, but this decision broadens that principle to include non-physical property interests like easements. By expanding the scope of compensation, the ruling may increase the volume of severance damage claims and lead to more expansive or increased litigation in condemnation cases. Consequently, government entities planning infrastructure projects, such as transportation and utility expansions, may need to reassess their budgeting and negotiation strategies to account for potentially greater financial obligations this interpretation of severance damages could impose.

For Arizona landowners, homeowners, and property developers, the decision underscores the importance of properly documenting and valuing easements when purchasing real property or negotiating development agreements. It also highlights the need for legal guidance when facing condemnation proceedings, as property owners may be entitled to additional compensation beyond direct, physical property loss. As Arizona continues to develop and expand its infrastructure, this ruling sets a precedent for what compensation landowners are entitled to when government projects impact property usability and value, potentially shaping future eminent domain practices and associated decisions throughout the state.