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What is Eminent Domain?

What is Eminent Domain?

What is Eminent Domain?

If you are reading this for a reason other than to educate yourself, you are probably worried about the taking of your real property. There are many kinds of takings in real estate, both legal and illegal, but the legal one we’ll focus on today is eminent domain.

Eminent domain is the right of a government or quasi government agency to acquire property for the greater good of the public. Although as real property owners we have been granted the maximum allowable rights on title, subject to what the laws allow, the government holds even greater power.

If I determined that an eminent domain action might affect my property, the very first thing I would do is hire a qualified attorney. We’ll soon see why.

Government powers that affect real estate:

As an overview, let’s look at four common powers that government holds which affect our properties.

  • Taxation – the right of the government to charge an assessment on property for the purpose of meeting its operating expenses.

  • Escheat – is an action by which the government can acquire property from a deceased owner who has no heirs and has not disposed of the property in his or her estate.

  • Police power – is where the state laws in place to preserve the public health and safety are put into action. Two good examples are zoning laws and ordinances for the construction of buildings.

  • Eminent domain - as described above, is the right of a qualified agency to acquire property for the greater good of the public.

What agencies can use eminent domain?

  • A federal, state or local government or municipality

  • A quasi-government agency – a publicly funded agency that is privately managed or supervised.

  • A utility company – such as a electric or water public utility district.

The requirements for eminent domain actions:

The basic process for an imminent domain action is that a qualified government or quasi government agency will determine that they have a desire and right to acquire private property for the greater public good. It goes without saying that it will be to the detriment of the current owner(s) of the affected property.

Condemnation suit:

The government will file a condemnation suit. This action brings the issue to the attention and jurisdiction of the courts, who will preside over it. There are two conditions that every condemnation suit must meet:

1.       The court must determine that the proposed use in the condemnation suit is for a public use.

2.       The owner must be paid just compensation, which is determined by the court.

Notice:

Many condemnation suits can be seen coming, if one pays attention. There is typically significant advance planning and notice provided to the public for major projects that can result in a condemnation suit for affected property owners.

Multiple property condemnation:

A good contemporary example is public transportation expansions like light rail which can run underground, on the surface, overhead, or any combination of the three. States and cities are under a lot of pressure to relieve traffic congestion and it’s pretty much agreed across the board that the greater public interest can be served by expanding public transportation options.

If I had a property in the gunsights of such an expansion, I would make sure to read and understand the conceptual plans, studies, applications filed, permits on record, any notices provided, and the type(s) of potential impact. I would attend all public hearings and stay locked into any and all communications regarding “progress” of the proposed expansion. As addressed earlier, I would be advised by an attorney from the start.

I have a dim view of the potential success of any single property owner in fighting this type of condemnation, but what’s the choice? The upside of fighting these types of public interest expansions is that they usually involve more than a few private properties. Therefore, groups of affected owners might take legal action together. To prevail, the group would have to stay away from arguments like how “unfair it all is to us individuals” and focus on the legal arguments for why the expansion should not happen across the properties, or be revised in some favorable way.

In the end, the court(s) will make the determination and the property or properties will be condemned if the government prevails with the court.

Just compensation:

Besides any possible appeals within the court system, if we lose, we move to step two: just compensation. That will be decided by the court as well. The standard used is based on the market value of the property, which means what a willing buyer would pay a willing seller. The challenge here, and why I need to stay away from going deeper, is that courts may also use alternative standards to make the compensatory determination.

Review:

Eminent domain is the right that the government has to file a condemnation suit for the greater public good, and this is a very serious threat that cannot be ignored. It has the power to trump private ownership rights and result in the loss of property, along with the uncertain court determination for compensation.

There’s a fair precedent for a law of this type to exist, since it can prevent some greedy landowner from holding up a key public project because he wants $30 million for his measly 5,000 sq. ft. lot. However, the affected property owner who has lost his home to this process probably doesn’t feel that way.

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