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Defining “just compensation”

On Behalf of | May 5, 2024 | Eminent Domain

California has been the site of numerous significant public works projects over the years. In those instances, the government sometimes invokes eminent domain to acquire land for those endeavors.

Eminent domain refers to the government’s right to seize private property for public use. A key feature of eminent domain is that the government is required to compensate the owner of that property for the seizure.

What is just compensation?

The 5th Amendment of the US Constitution states that the government is not licensed to take private property without providing just compensation to that property’s owner. Just compensation is the price a piece of property would fetch in a willing and fair transaction between a buyer and seller. So, in a scenario where the government is invoking eminent domain, it’s crucial to determine what just compensation might be for the property being seized.

How is just compensation determined?

At its most basic form, the government determines just compensation by looking at similar properties in the area that have been sold recently. The sale prices can often form an accurate basis for what that property would sell for on the open market, fulfilling the standard of just compensation.

Note that only completed transactions are generally considered for calculating just compensation. Nearby property listings or unconsummated sales usually can’t be factored in.

There are a few other special circumstances that occasionally come up in just compensation determinations. One is in a scenario where the government takes part of an owner’s property, leaving them with a partial holding. In this case, an owner may seek additional compensation for any damages caused to the property remaining.

Finally, some properties may hold value that can’t be completely assessed by comparing them with other nearby property sales, such as income-generating properties. Projecting future income might provide a basis for assessing just compensation.