1.7.1.1. Damages. When considering damages to remainder properties, appraisers must understand that state and federal rules may differ on which items of damage may be compensable (severance) and which items may be non-compensable (consequential). It is recommended that appraisers seek guidance from agency legal counsel if there is any question about whether an element of damage is compensable. 

The fundamental basis for a claim of compensable damages is a diminution in the market value of the remainder. The extent to which the utility of a property has been impacted by the acquisition must be established by factual information and analysis and must never be assumed or based on speculation. Evidence that the highest and best use of the remainder property has changed as a result of the taking provides support for the existence of damages. Factual evidence of a change in the intensity of the highest and best use, such as from a balanced farm to an unbalanced farm, may also provide support for the conclusion. 

In certain circumstances, damage to the remainder may be cured by remedial action. This is generally called the cost to cure and is a proper measure of damage only when it is no greater in amount than the decrease in the market value of the remainder if left as it stood. When the cost to cure is less than the compensable damages if the cure were undertaken, the cost to cure is the proper measure of damage and the United States is not obligated to pay in excess of that amount. Developing the cost to cure requires that the appraiser develop a well-supported cost estimate in the same manner as described in Section 1.5.3, which describes the critical elements in developing a cost approach. 

If a consultant’s services are used to assist an appraiser in estimating a cost to cure damage amount in a partial acquisition, the appraiser must review and analyze the cost estimate with great care. Even though a cost to cure method of estimating the diminution of value may be appropriate, it must be remembered that the remainder property is still to be valued in its uncured condition. Therefore, it is important that any cost to cure estimate of damage include not only the direct costs of the cure, but also the indirect cost, any effects of delay, and if appropriate, an entrepreneurial profit factor.