Condemnation and Eminent Domain
Condemnation, also called eminent domain or a “taking,” is the right of a government or its agent to take private property for public use, with payment of compensation. In a condemnation action, the government takes both physical possession and legal title to the property. A related legal theory, inverse condemnation, describes a situation in which the government does not take legal title but essentially regulates away all usefulness of the property.
Parties and Property
Most, but not all, governmental entities have authority to condemn for a “public purpose.” Some uses are clearly public purposes: highways, schools, prisons, airports, and government facilities. Sometimes, the public purpose is less obvious. For example, property may be condemned as part of urban renewal, only to be redeveloped for a new private use that will reduce blight and generate greater tax revenue. Some states allow condemnation by transportation companies and utility or energy companies. Eminent domain is primarily governed by state legislation, and states differ on condemnation for redevelopment and on authority to condemn, so you may need to consult your local laws for details.
Condemnation may involve less than the whole property. For example, the county might condemn a 10-foot strip of each of several front yards in order to widen a street. It might also condemn only an easement, rather than ownership, for example, to run water lines. A taking can be temporary. For example, the state might need to use part of a neighboring property for access while building a prison that will, in the future, have its own road. In some cases, tenants have recourse if their lease rights are part of what is taken. When a taking involves less than the whole property, compensation should take into account any damage to the property not taken.
In some cases, owners may have rights if a governmental entity publicizes its intent to pursue a project but delays actually doing so. The delay can cause the property to lose value and discourage the owner from making improvements to it.
The owner is entitled to be notified of the pending condemnation. Many states require the governmental body to negotiate toward a voluntary purchase of the property before pursuing condemnation. While the owner generally cannot challenge whether the condemnation will occur, challenges to the amount of compensation offered are quite common.
The owner should consider obtaining an independent appraisal but should also remember that the court will ultimately look at current fair market value. Fair market value does not take into account sentimental value, what the owner paid for the property, or debts against the property.
Challenging the valuation will not necessarily delay the process. Most states have “quick take” laws that allow the government to deposit money and take title and possession immediately, avoiding delays to important projects.