The University of Tennessee, Knoxville

Tennessee County Municipal Advisory Service

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Leasehold Damages

Reference Number: MTAS-1316
Tennessee Code Annotated
Reviewed Date: September 12, 2017
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It has been held that a leasehold constitutes a compensable property interest under the law of eminent domain. [1] This interest has been characterized as the right of the lessee to remain in undisturbed possession of the leased premise until the expiration of his term. [2] A lessee’s entitlement to damages is not limited to cases where the leasehold property is actually taken or destroyed, but extends even to cases where impairment of access to the leasehold property can be shown. [3] A tenant also is entitled to recover compensation where the condemnation of a part of the leased premises destroys the value of the leasehold. [4]

[1] City of Johnson City v. Outdoor West, Inc., 947 S.W.2d 855 (Tenn. App. 1996); Shelby County v. Barden, 527 S.W.2d 124 (Tenn. 1975); Mason v. City of Nashville, 155 Tenn. 256, 291 S.W. 1074 (1927); Colcough v. Nashville and Northwestern Railroad Co., 39 Tenn. 171 (1858); Lamar Advertising of Tennessee, Inc. v. Metropolitan Development and Housing Authority, 803 S.W.2d 686 (Tenn. Ct. App. 1990); Gallatin Housing Authority v. Chambers, 50 Tenn. App. 411, 362 S.W.2d 270 (1962).

[2] City of Nashville v. Mason, 11 Tenn. App. 344 (1930).

[3] Shelby County v. Barden, supra.

[4] Mason v. City of Nashville, supra; Gallatin Housing Authority v. Chambers, supra.