What Is Eminent Domain in Real Estate? Examples of Eminent Domain
What Is Eminent Domain in Real Estate? Examples of Eminent Domain
What is the term “Eminent Domain”?
The term “eminent domain” refers to a government’s or its agent’s authority to expropriate private land for public use in exchange for compensation.
It is the right of a government to take private property for public use. It is usually used to build roads, public schools, or public parks. The government must pay the owner of the property a fair price for it.
In the United Kingdom, it is mostly applied to international law, but in the United States, it is applied to federal and state governments.
The ability of the United States government, states, and municipalities to seize private property for public use in exchange for appropriate compensation is known as eminent domain.
This power is granted by the Fifth Amendment of the US Constitution, which states that “private property [shall not] be taken for public use, without just compensation”.
However, the Fifth Amendment does not allow the government to take private property for public use unless it provides just compensation.
Eminent domain is a power provided by the Fifth Amendment to the United States Constitution. Most common law countries have similar powers.
Eminent domain is known as “compulsory purchase” in the United Kingdom, “compulsory acquisition” in Australia, and “compulsory acquisition” in the United Kingdom, New Zealand, and Ireland.
Private property is seized through condemnation proceedings, in which owners can contest the legitimacy of the seizure and determine the issue of fair market value used for compensation.
The most obvious cases of condemnation include the seizure of land and structures to make room for a public project. It may include airspace, water, soil, wood, and rock taken from private property for road building.
Leases, stocks, and investment funds are examples of prominent domains. In 2013, towns began to examine utilizing eminent domain legislation to refinance underwater mortgages by taking them from investors at market value and reselling them at lower rates.
As part of the FY 2015 budget, Congress approved legislation preventing the Federal Housing Administration from financing mortgages taken via eminent domain.
However, it remains a concern that might jeopardize the mortgage sector.
Because contract rights, patents, copyrights, and intellectual property are all susceptible to eminent domain, the federal government might hypothetically take Meta (previously Facebook) and transform it into a public utility to preserve people’s privacy and data.
Inverse Condemnation
Theoretically, in order to take someone’s land, the government must first condemn it. Therefore, if an individual’s property value declines due to an action undertaken by the government (regardless of whether or not the government itself is responsible), then he or she would be eligible for compensation.
This is known as inverse condemnation.
Original Eminent Domain
Prior to 1890, the power of eminent domain allowed states to resell surplus land acquired through land grants at a profit. While this was justifiable, it also contributed to the Panic of 1837.
In response, the federal government enacted the Swamp Land Act of 1850 and began exercising eminent domain on behalf of private parties.
The expansion caused a drop in property values and a rise in resentment against railroads, which were responsible for most condemnation proceedings. known as “railroad blackmail”, railroad companies used eminent domain to seize land rather than pay the cost of constructing their tracks across it.
In response to growing social unrest, the federal government limited eminent domain to public use in the Fifth Amendment of the US Constitution.
This was intended to allow the federal government to construct public works like roads and canals without lowering property values in private areas.
Modern Eminent Domain
New Jersey courts have ruled that individuals have no right to compensation for mental anguish suffered as a result of an inverse condemnation.
The question of whether the Fifth Amendment actually protects the right to compensation for property owners has not yet been decided by a US court.
In addition, although state constitutions may require compensation for property seized under eminent domain, they offer less protection than that provided by the federal Constitution.
Municipal Eminent Domain
In most cases, municipal governments are entitled to use eminent domain to build services like roads and parks. However, this power has not been fully used in recent years due to cost concerns.
Municipalities that use eminent domain to build roads must ensure they obtain adequate compensation to cover their costs. Failure to do so can be construed as a breach of contract and result in paying damages.
Moreover, public utility companies are not allowed to enforce eminent domain against private property owners for purposes unrelated to the provision of public services. They may not, for example, take land to increase their electricity or gas distribution areas as a cost-saving measure.
As the use of eminent domain becomes more restricted, property owners may not have access to the services they need.
For example, in 2013, government officials in Bedford County, Pennsylvania placed a mill tax on people’s homes in order to fund public services. Since no officials were available to collect the tax when they were levied and nobody made any effort to collect it, many citizens stopped paying.
This issue was raised at the meeting of the World Economic Forum in 2013.
Eminent Domain Controversies
While eminent domain serves a useful and necessary purpose, it is not without controversy. Property owners sometimes feel that the land they own is being unfairly taken from them, especially if the property causes no harm to anyone else.
There are cases in which eminent domain has been used to demolish homes or seize private property for the development of shopping malls.
In addition, some contend that government officials abuse their power simply by seizing private property because they can, even if the seizure is not justified by any public use.
In addition, some people dislike the idea of government agencies taking their land by eminent domain as it is a coercive process that can erode the citizens’ sense of self-determination.
Concerns have also been raised about how eminent domain is used. Some people believe it should be used only on sites that are contaminated and thus unfit for human habitation.
Others believe it should only be used to demolish buildings rather than to raze entire neighborhoods; this would prevent displacement of residents and poverty in any case.
Another issue is whether eminent domain can be used to construct military bases, which would be intended for the defense of national security rather than public use.
Eminent Domain Abuses
Eminent domain abuse is the practice of using one’s power to take something that belongs to another person. It occurs when an individual with greater power abuses their authority for purpose of advancing personal interests.
Although the eminent domain is not a commonly abused power, it has its fair share of abusers and victims.
Victims of eminent domain abuse maybe people who live or work near a government-owned property or buildings, such as professional sports stadiums or office buildings.
In some cases, it is even used as a tool to drive out poor and/or ethnic populations.
Although the power of eminent domain is valuable in many instances, it is important that the government use such force only when necessary.
Because eminent domain involves the taking of private property, governments must be cautious when using this power.
Eminent domain abuse takes advantage of this power to further a government’s own agenda, which can lead to negative consequences for citizens and communities.
Eminent Domain vs Imminent Domain
Eminent domain is the process by which sovereign governments take private property for public use by exercising the authority of their government through the limited civil power of condemnation.
When that condemnation is used to build roadways, pipelines, and other infrastructure, it is deemed a “condemnation” and therefore falls within the purview of eminent domain.
In common law jurisdictions, this principle is known as “inverse condemnation,” and its use for public works has become a cornerstone of property rights jurisprudence.
Eminent domain is fundamentally different from the older doctrine of “imminent domain”, which refers to a government’s ability to take private property for public use without giving any prior notice or opportunity to contest the taking.
The fundamental difference between eminent domain and eminent domain is that eminent domain precedes the taking of property by the government’s power, whereas eminent domain follows it.
A distinction should also be made between federal and state governments.
Eminent Domain in the Constitution
The United States Constitution prohibits the federal government from seizing private property, while the law of most states allows governments to take private property through eminent domain.
Eminent Domain and the State In many respects, state law and federal common law are intermingled as far as eminent domain is concerned.
In general, however, it is worth noting that every state constitution contains a provision in its Bill of Rights protecting private property rights from governmental seizure. However, “imminent” takings are permitted under some state constitutions as a matter of discretion.
Whether state or federal, these constitutional provisions nevertheless have little practical impact on eminent domain law.
Historically, the extent of state eminent domain power was based on common law concepts and was not written into the constitution until they were challenged in court.
The Property Clause of the US Constitution also allows the Federal Government to exercise eminent domain over private property for public use. In addition, the Federal Government may take private property by right of necessity if it is used to facilitate public works like roads and bridges.
The Due Process Clause of the US Constitution also allows the Federal Government to take private property by eminent domain.
Moreover, however, the Fifth Amendment provides that no person shall be deprived of life, liberty or property without due process of law. This applies to all levels of government, state and federal.
State law is used to govern the use of the eminent domain in all 50 states except Texas. Generally speaking, state governments can exercise eminent domain as long as they meet certain requirements established in state constitutions and court decisions.
Most of the controversies surrounding eminent domain today are centered on its use by state governments. Many states allow their state legislatures to pass laws that trump or negate the provisions of their own constitutions.
These laws provide for the taking of private property in exchange for just compensation when a public use is deemed to be necessary.
Eminent Domain Limitation
Certain limitations apply to eminent domain powers.
While the Fifth Amendment has been interpreted to permit valid condemnation, the government must follow procedural requirements to ensure just compensation for the property being taken.
The government may not take land for private purposes (e.g., in order to build a private business) or block access to it from the land around it.
It may not increase the value of its own property by taking someone else’s without paying market value.
It must also provide a reasonable period of time in which opponents can challenge the taking with an opportunity for adjudication. This period is usually 30-60 days.
Methods of Payment
The methods by which the government may pay just compensation vary. In the simplest case, payment is made in cash. In other cases, payment can be made in kind, such as land or real estate. It could also take the form of a combination of cash, land and/or real estate.
It is important to note that payment in cash does not mean that the government must pay at the current fair market value for the property taken. In many cases, the government takes property whose value exceeds its current market value.
This can happen when the government takes land far in excess of its current actual or potential use.
In case of conflicting claims, the government is required to pay “just” compensation. This can be a contested issue of fact, or the court may simply award money damages or an equivalent substitute.
Types of Eminent Domain Litigation
Briefly stated, eminent domain is property taken by a government for public use without first proving that taking is necessary for the advancement of “the general welfare”.
There is much controversy over what constitutes “the general welfare”. Some argue that eminent domain proceedings are entirely discretionary and open-ended.
Others maintain that there are specific guidelines and limitations that must be satisfied in order for eminent domain to be valid.
The determination of what constitutes “the general welfare” is ultimately left to the discretion of the courts.
The common types of eminent domain litigation:
Expropriation, Condemnation, Regulatory taking, Partial taking, Partial regulatory taking, and public use.
Expropriation
Expropriation is the taking of private property for public use without any compensation. It is often initiated by the government for reasons of public necessity or convenience.
The Property Clause of the US Constitution allows federal governments to exercise eminent domain over private property for public use. In addition, the Federal Government may also take private property by right of necessity if it is used to facilitate public works like roads and bridges.
The Due Process Clause of the US Constitution also allows it to take private property by eminent domain. Moreover, however, the Fifth Amendment provides that no person shall be deprived of life, liberty or property without due process of law.
This applies to both the federal and state levels.
Condemnation
Condemnation is a process whereby the government takes private property through eminent domain and pays just compensation at fair market value.
Regulatory taking
Regulatory taking is the taking of private property by a municipality or state in order to regulate the use of that property. It could be anything from container storage to building occupancy limits.
Partial Taking
Partial taking is where a government takes private property without paying just compensation and then allows the exercise of the use for which it was taken. It is often used for economic development purposes.
Partial regulatory taking
Partial regulatory taking is where a government takes private property without paying just compensation and then prohibits the owner from engaging in any of the normal use for which it was taken. It is often used for economic development purposes.
Public Use
Public use is a limiting ground for determining whether or not real property can be taken by the government through eminent domain, though “public use” has been narrowly defined by case law.
Public use may only be exercised if the government can prove that it is necessary for a “public use”.
Public use is a broad term, with no clear-cut definition or detailed standards for its determination.
In general, however, it has been defined to mean any exercise by the government of “the power of eminent domain defined at common law and as established by statute.”
This simply means that the taking must serve a public purpose.
FAQs
What exactly is eminent domain?
Eminent domain refers to a power that the government has to wipe off land or structure owned by private individuals in order to take over land or properties for public use.
What is the meaning of “public use” and “public purpose”?
Essentially, the government has the power to take over any property if it is for public purposes. Public use means for what public at large, not for individuals or private companies.
Can a government hold back some land for its own future use, while taking other parts?
Yes. This is often done with eminent domain actions.
It is unconstitutional and in violation of the just compensation, a clause to take property when no public need exists, however.
If a government takes land to build a highway through it, can it still be used as farmland?
No. The owner may only be compensated for the value of his or her loss, not for any profits he or she would have made.
If a government takes land from me for a public purpose, am I entitled to compensation?
Probably. The owner should be compensated at the prevailing rate of fair market value. This can be difficult to determine, however, since this rate is not easily determined.
Does the amount of compensation depend on market value?
No. Market value is only one determining factor in compensation for property taken through eminent domain.
It may be the case that the amount of compensation will differ depending on how much actual use is made of the property by other people.
Are private property owners entitled to any additional compensation?
Yes. If a government takes private property for public use, owners are entitled to compensation for any “reasonable use” that they would have made of their property.
Are there limits on how much you can be compensated for a loss?
Yes, there are some limits.
If the government forces you to sell your property at a lower price, it can be required to pay you the difference between that price and fair market value.
In addition, if the losses were incurred because of no fault of their own (such as when an unexpected natural disaster occurs), the government may have to pay for those losses. However, compensation for losses is limited by local zoning laws, which can be extremely difficult to challenge in court.
What are the rules of eminent domain?
The rules of eminent domain are very complex, and they vary significantly from state to state.
However, there are some general rules that apply in most cases. One of these is that a person cannot force the government to take property that he or she already owns.
Can property be taken from people who have no knowledge about it?
No, it cannot. This would violate the prohibition on taking property without due process of law, which is one of the principles established in the 5th Amendment of the US Constitution.
What is an example of eminent domain?
One of the most common examples of eminent domain in the United States is when the government attempts to build a road and the road’s path is obstructed by private property.
Municipal buildings, public schools, and parks are some examples. There are occasions when there is just no other option for storing public property.
Can the eminent domain be stopped?
Yes, it can. The government’s power to take property through eminent domain is limited by the 5th Amendment of the US Constitution.
Although it is rare, governments are prevented from taking private property unless they pay a fair price as compensation to the owner.
Is eminent domain federal or state?
Eminent domain is neither federal nor state. These powers are reserved for the states by the 10th Amendment to the US Constitution.
If a person has been ordered to vacate his or her property by a government agency, can he or she still challenge the eminent domain?
Yes. A person ordered to vacate his or her property may still file a motion to declare that such an order is invalid and unenforceable.
