Reserving Goodwill Claims

In California, a business operating on real property being acquired, in whole or in part, for a public project may make a claim for loss of goodwill and be entitled to compensation if the business operator establishes the foundational elements: (1) the taking caused the loss, (2) the loss could not be prevented by relocation or other reasonable mitigation measures, (3) the loss is not includable as a reimbursable relocation expense, and (4 ) the loss does not duplicate other compensation being paid. (Code Civ. Proc. §1263.510(a).) As part of its affirmative duty to mitigate damages, a business often relocates its operations to a new site to preserve its goodwill. Appraisers retained by the business and agency typically compare the business' goodwill in the "before condition" (at the subject property) and in the "after condition" (at the replacement property) to determine the amount of loss, if there is any loss.