What is Eminent Domain?
Eminent domain refers to the power possessed by the state over
all property within the state, specifically its power to appropriate property
for a public use. In some jurisdictions, the state delegates eminent domain
power to certain public and private companies, typically utilities, such that
they can bring eminent domain actions to run telephone, power, water, or gas
lines. In most countries, including the United States under the Fifth Amendment
to the Constitution, the owner of any appropriated land is entitled to
reasonable compensation, usually defined as the fair market value of the
property. Proceedings to take land under eminent domain are typically referred
to as "condemnation" proceedings.
The Process of Eminent Domain
Eminent domain law and legal procedures vary, sometimes significantly, between
jurisdictions. Usually, when a unit of government wishes to acquire privately
held land, the following steps (or a similar procedure) are followed:
A. The government attempts
to negotiate the purchase of the property for fair value.
B. If the owner does
not wish to sell, the government files a court action to exercise eminent
domain, and serves or publishes notice of the hearing as required by law.
C. A hearing is
scheduled, at which the government must demonstrate that it engaged in good
faith negotiations to purchase the property, but that no agreement was reached.
The government must also demonstrate that the taking of the property is for a
public use, as defined by law. The property owner is given the opportunity to
respond to the government's claims.
D. If the government
is successful in its petition, proceedings are held to establish the fair
market value of the property. Any payment to the owner is first used to satisfy
any mortgages, liens and encumbrances on the property, with any remaining
balance paid to the owner. The government obtains title.
E. If the government
is not successful, or if the property owner is not satisfied with the outcome,
either side may appeal the decision.
Takings - There are several types of takings which can occur through eminent domain:
- In a complete taking, all of the property at issue is appropriated.
- If the taking is of part of a piece of property, such as the condemnation of
a strip of land to expand a road, the owner should be compensated both for the
value of the strip of land and for any effect the condemnation of that strip
has on the value of the owner's remaining property.
- Part or all of the property is appropriated for a limited period of time. The
property owner retains title, is compensated for any losses associated with the
taking, and regains complete possession of the property at the conclusion of
the taking. For example, it may be necessary to temporarily use a portion of an
adjacent parcel of property to complete a construction or highway project.
Rights of Way - It is also possible to bring an eminent
domain action to obtain an easement or right of way. For example, a utility
company may obtain an easement over private land install and maintain power
lines. The property owner remains free to use the property for any purpose
which does interfere with the right of way or easement.
Fair value is usually considered to be the fair market value -
that is, the highest price somebody would pay for the property, were it in the
hands of a willing seller. The date upon which the value is assessed will vary,
depending upon the governing law. If the parties do not agree on the value,
they will typically utilize appraisers to assist in the negotiation process. If
the case is litigated, both sides will ordinarily present expert testimony from
appraisers as to the fair market value of the property.
At times, fair value includes more than the price of an item of
property or parcel of real estate. If a business is operating from the
condemned real estate, the owner is ordinarily entitled to compensation for the
loss or disruption of the business resulting from the condemnation. In a
minority of jurisdictions, the owner may also be entitled to compensation for
loss of "goodwill", the value of the business in excess of fair
market value due to such factors as its location, reputation, or good customer
relations. If the business does not own the land, but leases the premises from
which it operates, it would ordinarily be entitled to compensation for the
value of its lease, for any fixtures it has installed in the premises, and for
any loss or diminished value to the business.
Ordinarily, a government can exercise eminent domain only if its
taking will be for a "public use" - which may be expansively defined
along the lines of public "safety, health, interest, or convenience".
Perhaps the most common example of a "public use" is the taking of
land to build or expand a public road or highway. Public use could also include
the taking of land to build a school or municipal building, for a public park,
or to redevelop a "blighted" property or neighborhood.
Abuses of Eminent Domain
In recent decades there has been growing concern about the
manner in which some states and units of government exercise their power of
eminent domain. Some governments appear inclined to exercise eminent domain for
the benefit of developers or commercial interests, on the basis that anything
that increases the value of a given tract of land is a sufficient public use.
Critics respond that this is absurd, and that there are few properties, no
matter how upscale, which could not be made more valuable if developed in a
different manner. They also note that if a developer is unable to purchase the
property on the open market, it is unlikely that the landowners will truly be offered
the value of the property through condemnation proceedings. The governmental
response to that point is that the law of eminent domain arose from the
experience that some property owners are unwilling to negotiate a reasonable
sale price, and such unreasonableness should not provide a basis to extort an
above-market price or to prevent the completion of a public project.
For example, in one case a town wished to exercise eminent domain over a
residential neighborhood, so that an upscale condominium development could be
built on that land. To advance that goal, they defined any home within the
neighborhood as "blighted" if it did not have three bedrooms, two
bathrooms, an attached two car garage, and central air conditioning. The
homeowners challenged the definition in court, and were ultimately successful
in fighting the municipality's efforts to take their homes.
This site and any information contained herein is intended for informational
purposes only and should not be construed as legal advice. Seek
competent legal counsel for advice on any legal matter.