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What is Eminent Domain in Real Estate?

On Behalf of | Mar 2, 2021 | Eminent Domain

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Eminent domain has long been an important issue in the field of real estate. That’s because the constitution gives the federal government and all 50 states the authority to take private property for the purpose of benefiting the public. There are, however, two very importation limitations on a governmental body’s ability to exercise its eminent domain power. The final clause of the Fifth Amendment says that:

“nor shall private property be taken for public use without just compensation”

This – the so-called Takings Clause – was added to the constitution largely in response to a fear that the newly formed federal government might wield its eminent domain power in an abusive way. Broadly speaking, analyzing whether a taking of private property conforms with the requirements of the Fifth Amendment can be broken down into the following four questions:

Is There a Taking?

There are two types of takings: possessory and regulatory. A possessory taking takes place when the government physically occupies or confiscates property. A regulatory taking, by contrast, occurs when a government regulation results in a diminution of private property rights. In the seminal case of Pennsylvania Coal v. Mahon (1922), the Supreme Court found that a government regulation would constitute a taking if it went “too far.”

Is There a Legally Cognizable Property Interest at Stake?

Eminent domain law only comes into play when “property” is being taken by the government. Historically, the Supreme Court has deferred to state law property right definitions in deciding whether Fifth Amendment eminent domain protections can be invoked.

Is There a Public Use?

The Takings Clause was born out of a concern that the government could simply take private property and give it to others. As such, it grants government the ability to exercise its eminent domain power but only if it is for a “public use.” In a series of decisions, the Supreme Court has expansively defined what a public use can be to the extent that virtually any taking is constitutionally permissible. It is well established in real estate that eminent domain procedures can be used so long as there is a rational belief that the taking will benefit the general public.

Has Just Compensation Been Paid?

The fourth and final prong of eminent domain analysis asks whether “just compensation” has been paid to the affected property owner. This largely reflects the idea that if government takes away someone’s private property to benefit society, then society ought to pay. On this point, the Supreme Court has consistently ruled that just compensation is measured in terms of the property owner’s financial loss. Putting a value on property generally boils down to determining its fair market value at the time of the taking. This can be accomplished through comparable property sales, projected future income analysis, and various other methods.

Inverse Condemnation

It is frequently the case that a property owner is justified in bringing a legal action against the government if a taking has occurred without compensation being paid. This is called an inverse condemnation action that typically involves a two-step inquiry. First, it must be determined whether a taking has, in fact, taken place. Second, assuming there has been a taking, just compensation must then be calculated. Some states also allow for the award of attorney and appraiser fees in successful inverse condemnation lawsuits.

Contact Palmieri, Hennessey & Leifer, LLP Today

Have you recently been notified that you could lose property to eminent domain? A California eminent domain lawyer from Palmieri, Hennessey & Leifer will be pleased to speak with you about your legal options during a free consultation. Our team has been at the forefront of eminent domain and inverse condemnation litigation in Southern California for decades and has obtained multi-million-dollar settlements and court verdicts for our clients. Scheduling your complimentary consultation with a California eminent domain lawyer at our firm by calling 949-851-7388 or submitting this online form.