The government often starts large projects, some of which require the use of someone’s private property. For example, a new highway or hospital project would likely take up a lot of space and require purchasing neighboring lots. When this happens, it’s required by law to provide just compensation to the property owner. This is known as eminent domain.
What does just compensation mean?
Just compensation means that the government is typically required to provide fair market value for the property that it takes. In other words, the government has to leave the property owner whole or no worse off than before.
The government has to provide just compensation because the Fifth Amendment to the Constitution protects private property rights. The amendment states, “No private property be taken for public use without just compensation.”
This is typically done through negotiation with the property owner, but if the parties don’t agree, then the government may condemn the property and force a sale as part of eminent domain.
How does the government value the property?
The government will typically hire an appraiser to value the property. The appraiser will look at things like the size of the property, its location and recent sales of similar properties in the area to come up with a fair market value for the property.
Once the government has valued the property, it will make an offer to the property owner. If the property owner agrees to the offer, then they will sign a contract and receive the compensation.
When the owner disagrees
If the property owner does not agree with the government’s offer, then they can file a lawsuit. A court will then determine the fair market value of the property and award just compensation accordingly.
The government is required by the Constitution to provide just compensation when it takes private property for public use. Just remember that it may only take private property for public use, which means that the taking must be for a project that will benefit the general public.