Real Estate Newsletter
Waste and Mismanagement
Eminent domain is the inherent power of a sovereign government to condemn and take private property without the owner's permission and often over his or her strenuous objection. The US Constitution mandates that federal and state governments may only take property for public use and with just compensation. The government also must provide due process of law to the property owner during a condemnation.
Federal, state and local governmental bodies regularly condemn real estate of private citizens for public necessity. The government may condemn several adjoining parcels, a single parcel of land in its entirety, part of a parcel, or even an easement over a parcel or parcels. Common public uses that justify the power of eminent domain include:
- Public roads
- Public buildings, like schools or courthouses
- Public transportation routes, such as train beds
- Public utility rights-of-way
- Parks and other open spaces
- Dams and other public water projects
Far more controversial is a trend to allow governmental bodies to condemn private property to transfer it to other private owners, such as for factories, retail establishments or urban redevelopment of blighted areas. The government's position is that the property improved by the subsequent owner is a public use because the government could collect higher taxes on the redeveloped property, jobs may be preserved or created, or the improvements may increase overall commercial activity in the area.
Available legal remedies vary depending on the particular laws of the federal, state or local jurisdiction involved, so the retention of an experienced real estate lawyer with knowledge of eminent domain law can be crucial for a property owner facing condemnation. Legal advice may be necessary from the earliest stages of the proceedings.
Typically, the governmental body instituting a condemnation will start by giving proper notice of its intent to institute the eminent domain proceeding to the owner. The owner may be able to settle with the government on a fair price, or the condemnation may end up in court. Owners may have many different goals, from preventing the government taking completely to influencing issues of valuation, timing or taxation.
Inverse condemnation is a related concept, also called regulatory taking. When the government takes property without following formal condemnation procedures, the wronged property owner may file a lawsuit for inverse condemnation against the appropriate public officer, seeking to force the government to pay the fair compensation due. Other types of lawsuits may be available to the aggrieved landowner based on statutes, common law or constitutional law.
In every eminent domain case, at least three questions are asked:
- Is the taking for a legitimate public use?
- What is just compensation for the taking?
- Was the property owner given due process of law, including reasonable notice and a fair proceeding with opportunity to present evidence and argue his or her position?
Other issues can arise, such as governmental compliance with environmental and historic preservation laws.
A defining issue in every condemnation is compliance with the constitutional requirement that the property owner receive just compensation. How much compensation is fair depends on the circumstances; there is no particular formula, but the owner is entitled to money damages. If the parties do not agree to a compensation figure, it usually is decided by a court, guided by applicable statutes, case law and constitutional requirements.
In our society we tend to consider the market model of valuation, looking at what a willing buyer would pay and a willing seller would accept at the relevant point in time. In reality there can be many types of relevant evidence when determining the fair market value of a piece of property, including:
- Recent sale prices of similar local properties
- Tax assessments
- Lost value in remaining lands of the owner not part of the condemnation
This is a very basic overview of eminent domain law. Complex legal issues face the targeted property owner and he or she should seek the guidance of an experienced eminent domain attorney as early in the process as possible.
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