How Eminent Domain Works: 14 Things to Know
Eminent domain is the power of a certain party – like a government agency – to seize private property.
If a local government is building a school near your property, for example, they could use eminent domain to seize your property. The process of seizing property through eminent domain is called condemnation.
With eminent domain, property owners are required to offer fair compensation for their property. Unfortunately, many property owners find that this offer is inadequate. Some property owners hire attorneys. Others take their case to trial.
Eminent domain can be complicated. Here are the top 14 most important things you need to know about eminent domain and the property condemnation process.
What is Eminent Domain?
Eminent domain is the power of a certain party – called a condemnor – to seize private property and put it towards public use.
Government agencies, for example, could use eminent domain to seize private land. The agency compensates the owner of the land, then puts the land towards public use – like to build a school or construct a powerline.
How Does Eminent Domain Work?
Eminent domain cases can be complicated, but many cases proceed in the following way:
- An organization with eminent domain – like a government agency – identifies private land that can be put towards public use.
- The organization begins the condemnation process. The condemnation process allows the government to legally acquire your property and put it towards a public use.
- The organization must provide “just compensation” to the property owner. The organization hires appraisers and other valuation experts to assess the value of the property.
- The condemnor (the organization applying eminent domain to your property) makes an offer to the property owner based on the appraised value.
- Owners have the right to reject or challenge the compensation offer in court. Some accept the offer. Others hire an attorney. Some take the process to trial to receive more compensation or to overturn the eminent domain claim entirely.
Sometimes, this process takes years. In other cases, it’s over in a few months.
Who Has Eminent Domain?
When they hear the word “eminent domain,” most people think of the government.
However, a range of entities – from governmental organizations to private companies – can use eminent domain to seize private property.
Depending on municipal, state, and federal law, any of the following organizations could have eminent domain over property owners:
- Public entities and governmental bodies
- Local and municipal organizations
- Local boards or public utilities
- Private companies (like utility and pipeline companies)
In many cases, a court decides who has eminent domain: some private entities may try to exercise eminent domain, for example, only to be rejected under state or federal law.
What is Condemnation?
Condemnation is the process used to exert eminent domain over private property.
When someone uses eminent domain, they become a condemnor. A condemnor, like a government entity or organization, begins the condemnation process to seize private land.
Condemnation vs. Condemned Property
Condemnation, in the context of eminent domain, is different from condemnation in the context of local health risks and closed properties:
- Condemnation, in eminent domain, is the process where a condemnor, like a government organization, uses eminent domain to seize control of private property.
- Condemnation, in the context of local health and safety risks, is a property closed by local authorities for public safety or public health. It’s unrelated to the condemnation process and eminent domain and is typically used by cities to protect citizens.
When Can the Government Use Eminent Domain?
Typically, eminent domain refers to the government’s seizure of private property for public use.
As mentioned above, the application of eminent domain depends on state and federal laws – and how those laws are interpreted and applied.
Generally, however, the government can use eminent domain when:
- The government has announced a project involving the use of your property.
- The project is for public use and public good – say, to build a school or construct local utilities.
- The government has offered fair value for your property based on appraisals and estimates.
What Qualifies as “Public Use”?
Eminent domain is based on the idea that governments can seize private property for “public use.”
Typically, public use includes projects like:
- Roads
- Schools
- Infrastructure
- General economic development
- Utility access
- Other projects to benefit the public
Can Private Companies Use Eminent Domain?
Yes! Many are surprised to discover that private companies are allowed to use eminent domain.
In fact, the United States Supreme Court made a decision on the issue in Kelo vs. City of New London, 545 US 469. As part of that case, the Supreme Court broadened what qualifies as public use – including projects that benefit the public indirectly.
Here’s how private companies can become condemnors and use eminent domain to seize private property:
- Per the 2005 Supreme Court decision, private companies are allowed to use eminent domain to seize private property for public use.
- The Supreme Court decided municipal organizations or private entities could pursue that public purpose. In other words, an organization doesn’t have to be a governmental entity to pursue land for a public purpose.
- Because of this decision, private companies could use eminent domain to seize private property.
- During the condemnation process, the private company must demonstrate the land will be used for public good – say, to construct utilities or build a pipeline. The private company must also provide fair compensation to the property owner.
Most Common Examples of Eminent Domain
Eminent domain is used periodically in the United States to acquire private property.
Some of the most common situations where a government would use eminent domain include:
- Highway and road construction. Expanding and building new roadways may require the acquisition of residential or commercial land.
- Public schools and universities. Cities often acquire land to build or expand public educational facilities.
- Utilities. Power lines, pipelines, water systems, and telecommunication infrastructure are frequently involved in eminent domain cases.
- Urban renewal and redevelopment initiatives. Sometimes, cities acquire property in distressed areas or areas prone to natural disasters to stimulate economic growth.
- Public transportation and infrastructure. Airports, rail lines, bus depots, and other public infrastructure projects may need to acquire land via eminent domain.
- Other initiatives. Eminent domain could be used for environmental and conservation projects, public housing developments, military or federal installations, parks and recreation areas, and flood control systems.
Do I Need to Sell My Property If the Government Invokes Eminent Domain? Can I Fight Eminent Domain?
If the government legally follows the eminent domain process, then you must relinquish your property.
However, you can challenge the eminent domain process in court – say, to overturn the eminent domain request or to dispute the compensation.
You can also reject the condemnor’s initial offer, hire your own appraiser, and push for extra coverage for relocation costs, among other options.
You have the right to a fair trial under the 5th Amendment of the US Constitution. A jury could decide if your land is being put towards public use – and if the condemnor made a fair value offer.
Some property owners hire an attorney as soon as a local government starts to explore the idea of eminent domain. Others hire an attorney after receiving an eminent domain offer.
What Happens If You Refuse to Leave?
If you refuse to leave your property, the government can forcefully take possession, assuming all proper legal steps have been taken.
According to US law, your property no longer belongs to you after the correct application of eminent domain, which means the government can legally remove you from the property.
How Much Compensation Will I Receive?
Organizations assess the value of your property during the condemnation process. Typically, they hire appraisers or land valuation experts. Then, they make an offer based on the value of your property and appropriate relocation costs.
Some of the factors that influence the compensation you receive include:
- The value of the property itself
- Relocation costs
- Lost income
- Damage to remaining property (in the case of partial seizure)
- Local laws and other case-specific factors
Eminent domain does not consider the sentimental or emotional value of the property. If the land has been in your family for 250+ years, for example, then this is unlikely to impact the compensation you receive.
Should I Challenge My Eminent Domain Case?
Property owners can and do challenge eminent domain cases.
As mentioned above, the government, along with certain private companies, have the right to acquire land through eminent domain as long as they follow the correct steps.
However, the US Constitution also guarantees your right to a trial, including a trial over eminent domain.
In many cases, the first offer isn’t the best offer, and you have the right to negotiate.
In other cases, the condemnor is inaccurately applying “public use.” A private company may argue its pipeline is for “public use,” for example, even though profits are being mostly distributed to overseas shareholders.
In all of these cases, it may be in your best interest to challenge eminent domain.
How to Challenge Eminent Domain
Some of the ways to challenge eminent domain include:
- Hire an attorney specializing in eminent domain
- Hire your own appraiser to calculate fair value.
- Negotiate with the condemnor, or the organization applying eminent domain.
- Request displacement support, relocation costs, and other assistance on top of the valuation of the property.
- Negotiate for a partial seizure of land or an easement, which allows you to retain ownership of the land while granting the condemnor certain rights to your land
Eminent domain seems like a scary process, and it certainly can be.
However, by educating yourself on eminent domain and understanding your rights, you can ensure you don’t get trampled by government organizations or private entities seeking to begin the condemnation process and acquire private property through eminent domain.
Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.
