Rates of Interest on Orders for Possession in Eminent Domain Actions
Sections 1268.310 through 1268.360 of the Code of Civil Procedure address the computation of interest in eminent domain and inverse condemnation cases. The method and the rates prescribed are also applicable to rights of entry. The statutes provide that the rate of interest on eminent domain awards shall be the apportionment rate calculated by the Controller as the rate of earnings by the Surplus Money Investment Fund. The rate of interest payable for each period, or fraction thereof, for which interest is due is the apportionment rate for the immediately preceding period (for example, February of 2006 would use the Surplus Money rate for October to December 2005).
The apportionment rate is calculated by the Controller on a quarterly basis, prior to 2004 it was calculated on a semi-annual basis. Each rate is based on the average of rates earned by the State on surplus money for the applicable quarter or semiannual period. The apportionment rate has a compounding factor built into it by the Controller.
The law provides that each district office of the Department of Transportation shall quote the apportionment rate to any person upon request. The State Controller requires some time to calculate the rate for each period; rates are generally available for the preceding period about the 16th of the following month. These rates are also available directly on the Controller’s website.
Following is an example indicating which rates to use when an Order for Possession has, say, an effective date of February 5, 2003, and a Final Order of Condemnation recorded on April 30, 2004. The applicable rate of interest is selected from the table for each three month period. (See the following compilation of rates.)
Under this example the total settlement is the initial settlement plus three interest calculations, each of which is added separately to the settlement prior to calculating the next period (or fraction thereof). Adding earned interest in this manner prior to the next computation results in compounding of interest. Using these dates and rates, a calculation using a settlement of $100,000, follows as an example of computing interest.