(a) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.
§ 1263.320.Fair Market Value Defined; No Relevant, Comparable Market
Title 7. Eminent Domain Law · Chapter 9. Compensation · Article 4. Measure of Compensation for Property Taken · Last amended 1993 · Last verified July 29, 2026
In one sentenceSection 1263.320 defines fair market value as the highest price a willing, unpressured seller and buyer would agree to on the date of valuation with full knowledge of the property's reasonable uses, and allows any just and equitable valuation method when no comparable market exists.
Full Text of § 1263.320
(b) The fair market value of property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable.
Plain-English Summary
This section supplies the classic willing-buyer, willing-seller definition of fair market value, tailored for eminent domain. It's the highest price, as of the date of valuation, that a seller who is willing but not desperate to sell, and a buyer who is ready and able but not compelled to buy, would agree on -- with both sides knowing every use and purpose the property is reasonably adaptable and available for.
That hypothetical negotiation assumes a functioning market. Subdivision (b) covers what happens when the property doesn't have one -- no relevant, comparable sales or listings to draw on. In that situation, the fair market value is instead the property's value on the date of valuation as determined by whatever method of valuation is just and equitable under the circumstances, giving courts and appraisers room to work with unique or unusual property that the standard hypothetical-sale model doesn't fit.
Frequently Asked Questions
How is fair market value defined for eminent domain purposes?
As the highest price a willing seller and willing buyer, neither under compulsion, would agree to on the date of valuation, with full knowledge of the property's reasonable uses.
What if the property has no comparable market to draw on?
Section 1263.320(b) allows any method of valuation that is just and equitable to establish its value on the date of valuation.
Does the definition assume the seller must sell or the buyer must buy?
No. Both the hypothetical seller and buyer are assumed to act free of any particular or urgent necessity to complete the transaction.
Amendment History
Amended by Stats. 1992, Ch. 7, Sec. 2. Effective January 1, 1993.
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 29, 2026.
· Official source
Also known as: fair market value definition eminent domain californiano comparable market valuation condemnation