You can see inverse condemnation as the flip side of eminent domain. As outlined in California statutes, inverse condemnation can occur anytime the value of a property is diminished by the government or a utility company. The loss of property can be permanent or temporary. Generally, there is a three-year statute of limitation on filing these cases, and they are limited to the loss of economic value of the property.
Cost to cure
Usually, the property must be restored before an inverse condemnation case can be filed. Any costs incurred by the property owner to restore the property can be recouped when an inverse condemnation lawsuit is determined in the private property owner’s favor.
Cost to mitigate
Property owners must take steps to lessen the economic impact of the government’s actions. For example, suppose a business is located on a corner where construction is ongoing. In that case, the property owner must create a new drive further down their property to allow customers to enter and exit. These costs are generally covered in inverse condemnation lawsuits.
Loss of goodwill
If a business loses some of its good reputation through the public entity’s actions, then the property owner can economically recoup if they can prove their case in court. While cases are usually limited to economic recovery, a property owner may also recover through administrative mandamus, where a judge can rule that a specific government regulation does not apply to a particular property or declaratory relief, where a judge rules a government regulation unconstitutional.
Inverse condemnation is the reverse of eminent domain because these cases occur after the government takes over a property for the public good. These cases are becoming increasingly popular as a way to recoup after a government entity has failed to pay the property owner before work begins.