It comes as a severe shock to a real estate owner when a government agency takes his property from him under the principle of eminent domain. How can the government take your property against your wishes? The simple truth is that the Constitution says it can, so long as it pays you an appropriate amount. Is there any way to stop the seizure? Do you have any protections?
Definition of eminent domain
Government seizure of private property has existed for many centuries. Federal, state and local governments can seize privately held land and buildings for public use, and there is little the owner can do to stop it. In the U.S. and most western democracies, however, laws further provide that the seizing government must pay “just” or “fair” compensation to the property owner for the seizure.
The last clause of the Fifth Amendment of the U.S. Constitution states “nor shall private property be taken for public use, without just compensation.” Courts have interpreted this provision to mean that the government can seize property only when two circumstances are met. First, the seizure must be for a “public use,” not a private concern. Second, the government must pay the owner the fair market value of the property as compensation.
For example, if the government wants to build a public highway but the best location runs over private land, the government can legally seize the property so long as it pays the owner fair market value (typically the price that would be reached between a seller not being forced to sell and and a buyer not being forced to buy). Other examples of projects for which the government might take property through eminent domain include building an airport, a reservoir, or a military base. Typically fair market value is deemed to include only the property itself, not business income that is lost because of the taking.
It’s not just real estate that the government can seize under eminent domain. Governments can take contracts, patents, financial securities and even debt obligations.
Types of takings
When it comes to real estate seizures, property can be taken to different extents.
- A complete taking takes place, for example, when a public utility takes an entire tract of land to build an electrical power station.
- A partial taking occurs when a government takes only a section of a piece of property, such as an area through which utility lines must pass.
- A temporary taking takes place when a government seizes property for a period of time for a public project but ultimately returns it to its private owner after the project is completed.
- A regulatory taking occurs when government laws or regulations restrict the private owner’s use of property to the extent that the land loses value. An example is when the government prohibits certain activities on private land to protect an endangered species.
Unfortunately for private property owners, the definition of “public use” has expanded beyond road projects and airports. The U.S. Supreme Court has allowed eminent domain to proceed in instances when properties were seized to allow commercial development on the theory that such projects would revitalize a community, foster economic development or the like.
What can a property owner do?
The courts have given broad approval to governmental exercise of the power of eminent domain. Thus, there are few avenues to stave off the taking of your property. You can challenge an eminent domain seizure in a lawsuit, but it is unlikely you can stop the seizure unless the governmental agency didn’t follow the law. This litigation is expensive, however, and can drag out for years. Some property owners find it easiest to accept the seizure and focus on making sure the relevant agency strictly adheres to the law. Lawsuits challenging the amount the government intends to pay as inadequate have met with some success.
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