Section 4.2.2

4.2.2. The Unit Rule.The market value concept in federal acquisitions generally requires application of the so-called unit rule, a principle developed by the federal courts that dictates what is to be valued for just compensation purposes.233 Under the unit rule, the property being appraised must be valued as a unitary whole and held in single ownership.234 The value of the whole cannot be derived by adding together the separate values of various interests or components.235 As a result, summation or cumulative appraisals are improper under federal law.236 The unit rule relates to ownership interests (estates) in real estate—such as landlord and tenant, or mortgagor and mortgagee—and to various physical components of real estate—such as timber, mineral deposits, farmland, and buildings.237 As discussed in Section 4.6, the unit rule can raise particularly challenging valuation issues in appraisals for partial acquisitions, especially if easements are involved. 

  • Section 4.2.2.1 Ownership Interests (the Undivided Fee).A property with multiple owners...
  • Section 4.2.2.2 Physical Components.Buildings and improvements, timber, crops, sand, gr...
  • Section 4.2.2.3 Allocations and Administrative Payments Under the Uniform Act.Valuation...
  • Section 4.2.2.4 Departure from the Unit Rule.Federal courts have repeatedly emphasized ...