Eminent domain is a right granted by the Fifth Amendment to the U.S. Constitution, which gives the government the right to take private property for the public good. If you visit your childhood home and find it replaced with a strip mall or widened road, eminent domain may be at work.
The Fifth Amendment declares that private property can be taken for public use if compensated. As long as a fair price is set, roads, courthouses, schools, and utilities can be built on private property. Private commercial development that is considered beneficial to the community can sometimes be built on other people’s land as well.
Initially, eminent domain was mostly used for large-scale public works projects. The government’s use of the eminent domain to accomplish necessary development for the country’s benefit is best illustrated by building the freeway system after World War II.
Even so, the eminent domain issue has remained a thorny one, pitting the individual’s rights against those of a government that is, at least theoretically, working for the greater good.
In the early 1980s, the Michigan Supreme Court ruled that more than 1,000 homes and 600 businesses could be torn down to build an auto plant for General Motors. The town where the plant was built did not experience the economic boom developers anticipated. The high court reversed the GM ruling over 20 years after the homes and businesses were demolished, which can only be described as a “too little, too late” decision.
Using eminent domain for schools, roads, and courthouses has given way to developers looking to build condos and outlet malls. A landmark Supreme Court decision in 2005 set the stage for even broader definitions of “public good.”
The process a government agency must follow to obtain your property through a case of eminent domain is usually determined through statutes in your state.
When a government agency is interested in acquiring your property through eminent domain, they will:
- Make initial contact to express an interest in your property
- Arrange for an appraisal of your property
After the appraisal is completed, you will be provided with a copy of the appraisal and an offer to purchase your property.
Condemnation is the legal term for eminent domain. State laws vary, but the basic steps are the same. When the local government needs a parcel of land or a building, it contacts the owner to negotiate a price.
Once I Receive an Offer for My Property, What Happens?
A public hearing is held for the agency to justify why your property must be taken after an offer is made. Usually, the agency must demonstrate:
- Your property is required for a public project
- The greatest benefit to the public will be where your property is at
- They have made an offer to you
When the landowner agrees to the sale and price, the government issues payment, and the landowner relinquishes the deed. This is the easiest route.
Often, the property owner does not agree with the price. The two parties proceed to a hearing to determine what “fair value” is. Attorneys and appraisers are involved, and the property owner can request a jury trial.
Occasionally, the property owner refuses to sell. If that occurs, the government files a court action and posts a notice of the hearing. During the hearing, the government must demonstrate that it tried negotiating the sale and that the takeover is for public benefit. Both sides can appeal the decision.
Land taken by the government is referred to as a taking. Several types of takings exist. A complete taking is when the entire property is taken. Partial takings may be used when only a portion of the property is required. In this case, the owner must be compensated for both the value of the land and the depreciation of the remaining property. A temporary taking is necessary if the property is used for a limited time. Owners are compensated for any losses that result from temporary taking but remain owners throughout. One way to apply for a temporary taking is to use private land adjacent to a public works project.
Right of way or easement taking is the final category. Technically, this refers to the right of someone to use someone else’s property for a specific purpose, such as building a road or installing utilities. The land owner retains the use of the land but does not retain ownership.
A business owner evicted from a leased building is entitled to compensation. Normally, the tenant pays the lease value plus any improvements they make. The tenant can also seek payment for lost business.
You are also free to challenge the taking at a hearing.
Once the Hearing Is Complete, What Will Happen Next?
An eminent domain case will be filed in court when it is shown that your property is necessary for a public project. You can be certain of getting the best price for your property through a court proceeding:
- A government agency that wants to take your property will deposit the expected value with the court
- Before your case is heard in court, you and the government will hire appraisers to determine the fair market value of your property
- You will exchange appraisals and have the opportunity to settle
- If you do not settle, a jury will decide the fair market value
When Will I Get Paid?
In the event of a settlement or jury verdict, the government agency must pay you within 30 days. The title to your property will then be transferred to the government.
What Is Public Use?
The government may only take property if it is used to serve the public’s needs. The most common example is highways. Schools are another possibility.
In recent decades, however, there has been a shift in the definition of “public use.” In 2005, the federal Supreme Court broadened the definition of “public use” to include private companies such as oil companies, gas companies, and retail giants. The shift has not been without controversy.
Residents in Lakewood, Ohio, fought back when their government attempted to take away their homes to build expensive riverfront condominiums. Lakewood’s mayor argued that the community couldn’t survive without a stronger tax base. Any home without three bedrooms, two baths, central air conditioning, and an attached two-car garage was considered “blighted” by the government.
A total of 55 homes, four apartment buildings, and 12 businesses were threatened with demolition. Residents were outraged. 60 Minutes investigated and discovered that even the mayor’s home was deemed “blighted.” The town rejected the development unanimously and was able to remove the mayor.
Do I Need an Eminent Domain Lawyer?
If you are contacted by a government agency wanting to take your property, an experienced real estate attorney can help protect your rights. It’s important that you know your rights as a homeowner. An attorney can assist you in obtaining an accurate appraisal and help you reach a settlement or guide your case through court.