[Title 32 CFR 644.83]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 32 - NATIONAL DEFENSE]
[Subtitle A - Department of Defense (Continued)]
[Chapter V - DEPARTMENT OF THE ARMY (CONTINUED)]
[Subchapter J - REAL PROPERTY]
[Part 644 - REAL ESTATE HANDBOOK]
[Subpart C - Acquisition]
[Sec. 644.83 - Negotiations.]
[From the U.S. Government Printing Office]


32NATIONAL DEFENSE42002-07-012002-07-01false644.83Sec. 644.83NATIONAL DEFENSEDepartment of Defense (Continued)DEPARTMENT OF THE ARMY (CONTINUED)REAL PROPERTYREAL ESTATE HANDBOOKAcquisition
Sec. 644.83  Negotiations.

    (a) Acquisition Objectives. The objective of a land acquisition 
program is to acquire land at a price that will afford each landowner 
his constitutional guarantee of ``just compensation'' as that term has 
been defined by Federal judicial decisions. The Government must never 
pay less than just compensation unless a gift is intended. In eminent 
domain proceedings, the just compensation due a landowner is determined 
judicially by court award or by settlement prior to trial; in a purchase 
case, it is determined by negotiations leading to a satisfactory price 
and agreement with the landowner. While it is recognized that an 
appraisal is only an informed opinion and does not

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establish or determine just compensation, it is also recognized that, in 
negotiating for the purchase of land, an appraisal is the best and 
sometimes the only reliable opinion of the market value of the land 
which is supported by a thorough, acceptable analysis of market 
conditions at the time of purchase. Therefore, in the negotiation for 
the purchase of land, an approved current appraisal shall establish the 
minimum price to be paid for the land being acquired by the Corps of 
Engineers. Negotiations or offers below this price are prohibited except 
where the property is being acquired on a competitive basis and 
condemnation is not authorized.
    (b) Negotiating Objectives. In all cases, it is important that the 
negotiator receives adequate guidelines and explicit instructions. 
Promptly, after the amount of the estimated just compensation is 
established, the negotiator shall make an initial offer in the full 
amount of the fair market value, shall advise the landowner that the 
land was appraised for such amount, and shall furnish the landowner a 
written statement of, and summary of the basis for, said amount. A 
concentrated effort will be made to acquire the land for that amount. 
This written statement will be in the form of a letter which may be 
delivered personally or by first class mail. Such summary will include, 
as a minimum, the following items:
    (1) Definition of the term ``fair market value.''
    (2) An accurate legal description and location identification of the 
real property and the interest(s) therein to be acquired (legal 
description and estate may be attached).
    (3) The amount of the offer and a statement that such amount:
    (i) Is the amount believed by the agency to be just compensation for 
the property;
    (ii) Is not less than the approved appraisal of the fair market 
value of the property;
    (iii) Disregards any increase or decrease in the fair market value 
caused by the project for which the property is to be acquired, or by 
the likelihood that the property would be acquired for such project, 
other than that due to physical deterioration within the reasonable 
control of the owner;
    (iv) Does not reflect any consideration of or allowance for any 
relocation assistance and payments which the owner is entitled to 
receive.
    (4) An inventory identifying the buildings, structures, fixtures, 
and other improvements, including appurtenant removable building 
equipment, which are considered to be part of the real property for 
which the offer of just compensation is made. The inventory shall 
include a statement of the utility and condition of said buildings, 
structures, fixtures, and other improvements.
    (5) A description of the appraisal technique used, i.e., market 
approach, income approach, or cost approach, in sufficient detail to 
explain clearly to the landowner the process by which his property was 
valued. Thus, as an illustration, where the market approach was used, 
the explanation should include the number of comparable sales used, 
their general location and type, the factors considered in adjusting 
sales of subject property, and any other information which would help 
the landowner understand what was done to value his property. A 
statement that comparable sales of similar properties were examined 
without more explanation is not sufficient. Similar information should 
be given when any other appraisal technique is used. Unusual cases will 
require a more detailed explanation.
    (6) An identification of land classification categories (do not show 
acreage breakdown).
    (7) If only a portion of a property is to be acquired, an 
apportionment of the total estimated just compansation for the partial 
acquisition between:
    (i) The amount representing the just compensation for the real 
property to be acquired;
    (ii) The amount, if any, representing severance damages to the 
remainder, together with a brief narrative description of the cause 
thereof; and
    (iii) In the event ``off-setting benefits'' are involved, these must 
be shown, along with a narrative explanation and the landowner shall be 
given a ``person-to-person'' explanation by the negotiator.
    (8) If the property contain a dwelling, the value of said dwelling 
and homesite

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shall be set forth separately, with the statement that this figure will 
be used in calculating housing relocation benefits under title II of 
Pub. L. 91-646.
    (9) If any building, structure, fixture, or other improvement, 
comprising part of the real property, has been identified as being owned 
by a tenant who has the right or obligation to remove it at the 
expiration of his term, the amount of the value of such building, 
structure, fixture, or other improvement, being the greater of:
    (i) The amount which the tenant's improvement contributes to the 
fair market value of the real property to be acquired; or
    (ii) The fair market value of the tenant's improvement for removal 
from the real property. The basis of such amount shall be included.
    (c) Appraisal reports or the appraiser's analysis (complete 
breakdown of principal value elements) will not be revealed by the 
negotiator unless specifically authorized. Cases involving property for 
which the highest and best use cannot be definitely established, and to 
which the exceptions mentioned in paragraph (a) of this section do not 
apply, will be reported to HQDA (DAEN-REA) WASH DC 20314 for specific 
instructions. If the land is being donated, initial offers are not 
necessary, and the appraisal will be significant in negotiations only 
when considering the conditions under which the donation is made as, for 
example, an agreed valuation for tax purposes. Negotiations will be 
based on current market values, which normally means that last offers 
will be based on appraisals not over six months old. Exceptions will be 
required in instances of rapid escalation of values when the appraisal 
is quickly outdated or in instances of a relatively static market or 
other condition resulting in a minimal change in property values. In 
such cases an explanation will be necessary.
    (d) Exceptions--(1) Corps Employees. If an employee of the Corps of 
Engineers has a direct interest in a tract of land being acquired by the 
Corps for public use, the tract will be acquired by condemnation. In 
cases of this nature, appraisal reports should be prepared, reviewed and 
forwarded together with a declaration of taking, with the condemnation 
assembly. The negotiator's report, of course, will not be included. The 
Department of Justice will be requested to handle all further matters 
pertaining to settlement or trial of the case. The Department of Justice 
has agreed to accept full responsibility for negotiations and approval 
of settlements or awards in such cases, without contacting any Corps 
personnel other than the owner of the interests being acquired.
    (2) Members of Congress. Since, under 18 U.S.C. 431 and 432, members 
of Congress who hold interests in land that is required for project 
purposes cannot contract for sale of such interests to the Government, 
these interests will also be acquired by condemnation. Negotiations for 
acquisition by purchase or for settlement without trial cannot be 
conducted by officers or agents of the United States. The determination 
of just compensation must be made by judicial proceedings. Appraisal 
reports and the condemnation assembly should be prepared and forwarded 
as set forth in paragraph (d)(1) of this section.
    (e) Negotiating Guidelines. (1) The negotiator should be thoroughly 
familiar with the Division and District negotiating guidelines and 
should study the background data of the project, consisting of the 
authorizing act, survey report, project document, design memoranda, 
etc.; the applicable appraisal reports; tract ownership data; 
preliminary title certificates; and other related material. He should be 
entirely familiar with the project and the owner's individual property 
before initiating negotiations.
    (2) The owner shall be provided with available brochures which 
explain the project and the Pub. L. 91-646 benefits, together with the 
written statement and summary required by Sec. 644.83(b). The negotiator 
should explain to the landowner the Government's requirement for the 
land, the amount of land required, the estate(s) to be acquired, the 
terms and conditions of the Government's contract form, and the fact 
that relocation assistance benefits may be available. He should furnish 
the landowner a copy of a map indicating the boundaries of that portion 
of his land to be acquired, where the entire ownership is not being 
acquired or

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where different estates are being acquired in the same ownership, 
specifying the estate in each area.
    (3) Negotiations will be continued in an effort to obtain acceptance 
of the Government's offer or a reasonable counteroffer from the 
landowner, or until it is definitely determined that such a counteroffer 
will not be forthcoming. It is not intended that negotiations be 
continued until an unacceptable counteroffer is finally obtained. 
However, in an effort to obtain a reasonable counteroffer above the 
Government's estimate, the negotiator will, if necessary, take the 
initiative in suggesting a series of prices within a range which, in 
accord with the guidelines discussed in Sec. 644.84, has been 
predetermined to be reasonable.
    (4) The interest of both owners and tenants must be considered and 
protected. The tenant is a proper party to the transaction, and every 
effort must be made to obtain the consent of the landowner and tenant as 
to the price to be paid to the tenant for his leasehold interest. This 
can be accomplished by the tenant's execution of ENG Form 1564, Consent 
to Offer to Sell Real Property, which shall then accompany the owner's 
offer to sell. In cases where the tenant executes this form, payment for 
the tenant's interest can be made to him in the closing of the purchase 
transaction. This procedure will be followed whenever possible. An 
exception is permitted in those cases where the landowner and tenant 
prefer to handle the matter as a private transaction between themselves. 
In such cases, it should be determined that a satisfactory agreement has 
been made by the landowner and tenant. Consideration should be given to 
any interest which the tenant may have in growing crops. This procedure 
is also applicable to any third party having an interest in the 
property, except through severance of a subsurface estate.
    (5) Negotiations with landowners will be conducted in a fair and 
courteous manner. The negotiator must not, under any circumstances, 
resort to coercion or threats of condemnation.
    (6) The negotiator has no authority to obligate the Government in 
any manner beyond the contract form. He must refrain from oral promises 
or understandings and include all terms and conditions in the contract 
form.
    (7) Although appraisal reports cannot be made available for 
inspection by a landowner, the various elements of value considered by 
the appraisers may, and should, be discussed with the landowner to 
satisfy him that all elements of compensable values and damages have 
been considered in arriving at an overall value for the property being 
acquired. Care will be exercised during any discussion not to reveal 
specific amounts related to any elements considered in the appraisal, 
except the acquisition cost assigned to the dwelling for purpose of 
calculating replacement housing payment under section 203, Pub. L. 91-
646.
    (8) Any interest in a tract of land sought to be acquired, or any 
type of relationship with the owner, disqualifies the negotiator from 
participating in negotiations for the acquisition of that particular 
tract.
    (9) An appraiser is not, under any circumstances, permitted to 
negotiate for the acquisition of a tract of land for which he has 
prepared the appraisal or reviewed it as reviewing appraiser.
    (f) Discussions With Landowners. In order to avoid the creation of 
negotiating patterns, and keeping in mind that counteroffers must be 
justified as being just and reasonable, discussions with landowners 
should be conducted without disclosing the extent of the delegations and 
redelegations of authority to accept counteroffers. However, during 
negotiations on individual tracts, the landowners must be advised that, 
in the event of condemnation, the deposit will be in an amount no less 
than the approved appraised value, since the question of value cannot be 
resolved by negotiations. It must further be made clear that this advice 
is not in the nature of a threat, but is an explanation of the statement 
of policy directed by the Congress and the law. The negotiator will also 
inform each owner that offers and counteroffers made during negotiations 
are made without prejudice in the event of condemnation. The negotiator 
will make a notation on the Negotiator's Report to the effect that he 
has so informed the owner.

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    (g) Obtaining the Written Counteroffer; Preparation of Negotiator's 
Report. If the negotiator considers that a counteroffer in excess of the 
approved appraised value is in the amount which should be considered for 
acceptance, the counteroffer will be reduced to writing on ENG Form 42, 
Offer to Sell Real Property, or on ENG Form 2970, Offer to Sell 
Easement, and be properly executed by the landowner. In such cases, a 
complete written record of negotiations with respect to each tract or 
ownership, as appropriate, will be maintained by means of ENG Form 3423, 
Negotiator's Report, Part I. This record will state the chronological 
history of negotiations, all elements considered in evaluating the 
landowner's final counteroffer, and the justification for such 
recommendation in accordance with Sec. 644.84. The justification will be 
fully recorded in ENG Form 3423A, Negotiator's Report, Part II, which is 
a separate page of this report, and which will be removed in the Office 
of the Chief of Engineers prior to submitting the counteroffer assembly 
to higher authority for approval. Final action on the counteroffer, 
either by the Secretary of the Army, the Chief of Engineers or under the 
delegated authority to Division and District Engineers, will be entered 
on this record as soon as that information is available.