The government may seize private property, with or without permission of the landowner, and convert it for public use through a process called eminent domain. The power of eminent domain primarily rests in the hands of the legislature. The legislature may, however, delegate its power of eminent domain to another governmental body, or to private corporations promoting a valid public purpose. While the exercise of eminent domain is generally limited to real property, the government may also condemn personal and intangible property. The Fifth Amendment of the United States Constitution, also known as the "Takings Clause," recognizes the government's power to allocate private property for public use, so long as the government pays "just compensation" to the owner.
Taking Private Property
When the government exercises eminent domain, it must determine whether a "taking" has occurred within the meaning of the Fifth Amendment. What constitutes a taking under the Fifth Amendment generally depends on the degree of control the government asserts over the property. To be classified as a taking, the property owner must typically be deprived of all beneficial uses of the property. Thus, permanent physical invasion or occupation of real property by the government generally qualifies as a taking. The regulation of property by the government, on the other hand, may qualify as a taking only if the owner is unable to derive any sort of benefit from the property. Regulations which allow the property owner to continue some use of the property generally do not require just compensation.
For a Fifth Amendment taking to occur, the government must make the private property available for public use. Courts often have to decide whether a use constitutes a "public use," but they generally permit those uses that benefit the public interest or public welfare. Accordingly, governments have used eminent domain to promote both aesthetic and economic values, such as to create public parks, preserve historical landmarks, construct defense installations and improve transportation. Governments also use eminent domain to promote urban regeneration and development. Through the use of eminent domain, the government may attempt to decrease poverty and improve communities by replacing deteriorated housing, building commercial areas and engaging in general beautification. A taking does not occur when the government condemns private property for public health or safety purposes. Such land is not converted for use by the public and the owner maintains the right to maintain or sell his property.
When the government seizes property for public use under eminent domain, the government must pay the property owner just compensation. "Just compensation" is compensation that is complete and adequate without being excessive. If the government and the property owner cannot agree upon the amount of compensation, the courts will determine the compensation after hearing testimony from both parties. Generally, when the government seizes real property by eminent domain, the courts will award the fair market value of the property. If fair market value cannot be calculated, the courts will consider other data to determine what constitutes adequate compensation. The government must also pay compensation for taking intangible property, such as contract rights and trade secrets. Damages which arise in connection with the taking of property, such as the payment of additional expenses or remote losses of use, are generally not compensated by the government.