Real Estate

Frequently Asked Questions About Eminent Domain

By Brian Farkas, Attorney
Although private property ownership is a fundamental feature of U.S. law, it's also true that the government has the power to take private property when needed for public use. This power is called eminent domain.

Although private property ownership is a fundamental feature of U.S. law, it's also true that the government has the power to take private property when needed for public use. This power is called eminent domain. Every state has its own laws outlining and restricting government taking of private property, but that doesn't stop landowners from feeling that abuses have occurred. Here are answers to some frequently asked questions about eminent domain.

Where does eminent domain power come from?

Eminent domain, otherwise known as the power of the state to take private land, is a concept brought to the United States from early modern Europe. The common law concept is intended to give the government the ability to circumvent private property interests when necessary to benefit the society as a whole.

The Fifth Amendment to the Constitution acknowledges the federal government’s inherent ability to take possession of lands, but also gives some degree of protection to citizens. It provides that “private property [shall not] be taken for public use, without just compensation.”

In other words, if the government seeks to take private land for the public benefit, it must provide payment that compensates the owner of that land. Like all of the Amendments in the Bill of Rights, this provision aims to protect people from government overreach.

State governments also have the power to take private lands for public benefit within their borders, when the government deems it necessary to do so. States have these powers either through their own state constitutions or through statutes.

The Fourteenth Amendment’s Due Process Clause makes the Fifth Amendment’s guarantee of “just compensation” applicable to the states. In other words, the states, too, must pay reasonable market value to any private person whose land it exercises this power over and takes.

In short, the concept of eminent domain predates the United States. While American courts give federal and state governments wide latitude in their inherent power, they also enforce the ability of private persons to recoup “just compensation” for the taking of their property.

Do local governments have eminent domain power just like the federal and state governments?

Yes. Cities, towns, counties, and other municipalities have the same eminent domain power as the federal and state government. The extent of these powers varies by jurisdiction, and is explained in the state’s constitution and/or legislation.

The justification for giving local governments the same power eminent domain power as the federal government is simple. Just as the federal government might need to take a piece of private property to construct a massive multi-state highway for the public benefit, a local government might have similar needs, albeit on a smaller scale.

For example, a municipality might need to move a sewer system, or run a road through private land. These sorts of projects are certainly not as massive as a multi-state federal project, but they are still undertaken for public use. The idea is that private land interests should not inhibit the government from benefiting society at large.

Keep in mind that, if the use is small-scale, your entire property might not be taken. For example, in the case of a road being widened, the government might take only a shaved-off portion of the perimeter of your property.

Fortunately, local governments are also constrained by the same Constitutional requirement as state and federal governments: They must pay “just compensation” for any private property that is taken.

What does the legal term "condemnation" mean, and what are its limits?

A “condemnation” means that the federal or state government is using its power to take private land for public use. “Condemnation” is often used synonymously with “eminent domain” or a “taking.” It might also be called a "forced sale."

All of these legal terms indicate that the government will take private land (in exchange for just compensation to the owner) for some public use.

Potential public uses are broadly defined. For example, the government might decide that it needs to take your land to run a train route or public highway through it. Or it might decide that a school or public park needs to be built there. These uses would benefit the entire community, perhaps increasing health, safety, commerce, or public space.

But not all public uses need to benefit the entire public in order to allow eminent domain, nor do they even need to be open to the entire public. For example, constructing a military base or government office would in all likelihood constitute a “public use,” even though most of the public would not be permitted to enter these facilities. Even transfer of land to another private owner has been upheld by courts as a "public use," typically in situations where the purpose is to combat blight or promote economic development or urban revitalization.

In short, U.S. courts allow the government tremendous leeway in deciding what constitutes a “public use.” They primarily require that the government show some rational relationship between the intended use and the public benefit.

This naturally creates concern and criticism about use and abuse of the government's eminent domain power. Many allege that a situation has been created where private developers can influence the governmental process so as to reap benefits to someone else's detriment--building, for example, luxury condos in an area that once had middle-class single-family homes.

Don't be confused by the fact that the word "condemn" is sometimes used when a government authority declares a home or property to be unfit for habitation, as in a slum or tenement. Your property can be in perfectly fine condition and the government can still exercise condemnation power over it.

The idea behind this governmental power is that the property interests of a single person should not impede the ability of the government to do what is best for society at large.

Typically, the government will take both possession and legal title to your property. There are certain cases, known as “inverse condemnation,” where the government has taken physical possession without going through the appropriate legal process of notifying the owner and paying just compensation. In these instances, the owner can file an “inverse condemnation” claim. While the owner cannot refuse the government’s right to take the land, he or she can demand just compensation for the taking.

How is my property's fair market value established for eminent domain purposes?

Before it can exercise its taking power over private land in the United States, the government is legally obligated to pay “just compensation” to the owner. Courts interpret the Constitution’s mandate of “just compensation” as being the property’s fair market value. In other words, if you tried to sell a similar piece of property in a similar condition in a similar location, how much would you likely get for it?

Fair market value is ordinarily determined by a professional real estate appraiser: someone who is typically licensed by the state and has experience in real estate. The government will hire an appraiser to evaluate your home or property’s fair market value.

The appraiser will look at factors such as your property's location (for example, whether it's a parcel of land in a big city versus in a rural area), its condition (such as whether it's a brand new state-of-the-art home or a decrepit shack), its natural or manmade resources (whether it has, for instance, a big pool or oil reserve in the back yard), what improvements have been made to it (that is, whether it's vacant land or has buildings or structures on it), and the general market conditions in the area (say, whether the property is in a very desirable neighborhood or a very undesirable neighborhood).

All of the above elements would go into the appraiser’s estimate of the property’s fair market value. This formula is not surprising; Any buyer who would make an offer on the property would consider the same elements when considering the appropriate price to pay.

It's true that different appraisers may arrive at different numbers, for example if one appraiser places more or less value on one of those factors. However, all appraisers will attempt to find objective data points such as the above on which to base their ultimate number.

No matter what, however, your property will not have the opportunity to be tested on the open market. A property's true value is ultimately the amount a willing buyer will pay for it. So if you find yourself frustrated by the amount the appraiser arrives at, you might well have good reason.

What happens if I don't agree with the fair market value determined by the appraiser for eminent domain purposes?

If you are facing a loss of your property through eminent domain, you are likely concerned about the amount of money you will receive. While the Constitution provides that the government must pay you “just compensation” for any private property it takes, the document does not specify exactly how the amount of compensation is determined.

After the government sends you notice of its intent to take your property through eminent domain, it will likely schedule an appraiser to evaluate your property’s value. Technically, this appraiser is neutral and is charged with determining the “fair market value” of your property. Nevertheless, this person is paid by the government and has an interest in not coming in with too-high figures.

What if the government’s appraiser comes up with a number that you feel is entirely too low? While you are unlikely to be able to prevent the government from taking your land, you can challenge the government’s calculation. Some states have local boards or commissioners who hear such challenges. The decisions of these sorts of agencies can typically be appealed to courts, which can accept or reject their determinations.

Practically speaking, this means you will likely need to hire your own appraiser to write a report and determine the property's value. Even though your appraiser would consider the same basic information as the government’s, he or she might emphasize different factors, or do more detailed market research, to come to a different valuation.

You (or your lawyer) could use your appraiser’s report to either attempt to work out a settlement with the government (i.e., a number somewhere between their appraiser’s valuation and yours), or to sue the government. The judge or jury would hear the expert testimony from both sides, and ultimately make a determination.

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