Monday, April 13, 2009

Rails-to-Trails: The Old Abdandoned Railroad Scam

An article in the Indianapolis Star this past week reported on the opening of a new 1.5 mile stretch of the Monon Trail that brings the State closer to the 2,200 miles of greenways.

As someone who often bikes to work using the White River Trail during the summer, I think these trails are wonderful and a tremendous asset to the community. Unlike I believe the city and state does can have a role in developing and maintain a park system, including these linear parks.

However, I spent my first 2 1/2 year of law doing eminent domain lawsuits for the State of Indiana. That experience causes me to wave a yellow, cautionary flag on some of these projects. Here's why.

One of the oldest property scams there is out there is when a railroad easement is abandoned and the railroad (or someone else who has bought the easement from the railroad) goes around and sells the easement to the property owners whose property the railroad passes through. Now the con game has switched to selling the railroad easement to a State or municipal entity wanting to establish a linear park.

What's the problem? Most of the time those railroads never owned fee title to the property. A ll they usually own is an easement, a right to use the property for a particular purpose, in this case the running of a railroad. The railroad's only right to sell is the right to sell the property for use as a railroad. When the use of the property as a railroad ends, the property reverts back to the homeowner who owned fee right to the property. See IC 32-23-11-10.

What happens is that when these railroad easements get purchased, the government entity will start building the trail only to find themselves faced with a class-action inverse condemnation lawsuit from adjoining property owners. (Former congressional candidate Nels Ackerson's law firm handles many of these lawsuits.) That lawsuit then forces the government entity to buy the land from the true owners through the condemnation process. So government ends up paying for the railroad easement unnecessarily and then the people they should be paying, the homeowners.

While many of these greenway projects have resulted in litigation, government entities continue to fall for the property scam of buying worthless railroad easements rather than moving straight to condemnation, and paying the true property owners. One wonders when will they ever learn?

For more on the subject see this lengthy article.

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