The Government's Power of Eminent Domain to Condemn Private Property




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The Government’s Power of Eminent Domain

One of the most controversial and highly litigated real estate doctrines is the power of the state or federal government to take private land for public use under certain circumstances without the landowner’s consent. This power of the sovereign is called “eminent domain.”

While this power is controversial and has spawned much litigation, it is historically rooted and is critical to the development of individual property rights and government services and regulations throughout the United States.[1] United States Supreme Court Justice William Strong even wrote that the federal government’s authority to appropriate public use is “essential to its independent existence and perpetuity.”[2] For example, something as essential as the interstate highway system almost certainly could not have been completed were it not for the government’s power to appropriate lands necessary to complete highway sections.

While recognizing the historical power of eminent domain as being legitimate and within the province of the United States government, the Fifth Amendment to the United States Constitution places certain limitations on it.

The “takings” clause of the Fifth Amendment states:

“…nor shall private property be taken for public use, without just compensation.[3]

There are three elements to this clause:

1.    The “takings” component. If there is a “taking,” then the government has the responsibilities set forth in the following two elements.

2.    The “public use” clause. A taking under the power of eminent domain is only valid and constitutional if the taking is for a “public use.”

3.    If there is a legitimate taking for public use, the provision requires that the government provide “just compensation” to the owner in exchange for the taking.

Although this clause appears in the Fifth Amendment which, technically, is applicable only to the federal government, it has been incorporated by the “Due Process Clause” of the Fourteenth Amendment and thus is considered equally applicable to states.[4]

Moreover, when exercising its power of eminent domain to forcibly take property against the will of the owner, a government must:

·         Follow the state’s statutory procedural requirements for eminent domain actions;

·         Negotiate in good faith; and

·         Accurately describe the property that is being taken.

Takings

The first issue is what constitutes a “taking.” Clearly, government condemnation of a piece of property (which means appropriating it for government use and forcing the owner completely off the property) constitutes a taking. A more gray area is invoked when government regulations limit the ability of people to use their own property. It is axiomatic that not all government regulations that limit someone’s ability to use his own property are considered takings. If, for example, a new zoning regulation limits the ability of a homeowner to expand her home, that does not constitute a taking of the home.

To be considered a taking, a government regulation must deprive its owner of “all economically beneficial use” of the property.[5] For example, in Lucas v. South Carolina Coastal Council, the Supreme Court ruled that an environmental regulation that prevented developers from being able to develop beachfront properties that they had purchased for the purpose of developing…? (what was the ruling?)

The question of whether a regulation is considered a taking is critical, as a taking requires public purpose and just compensation, whereas a run-of-the-mill zoning regulation does not.

If a taking does occur, some states require the government to provide the property owner a condemnation notice prior to initiating the eminent domain proceeding. In other states, the government must file a lawsuit to commence a taking process and provide notice to the property owner that the government seeks to acquire his land.   

Public Use

The government may only exercise its power of “eminent domain” for public use. The term “public use” has evolved a very broad definition. It is defined to include not only direct government usage, but also private usage that would achieve a benefit to the public.[6]

Public use can be transportation projects such as bridges, highways, and other roads, park projects, and even public structures that can benefit the community such as schools. In one of the first eminent domain cases before the Supreme Court of the United States, the Court held that the federal government could seize private property to build a post office on the seized land.[7]

In one of the most hotly contested and controversial Supreme Court cases of the last twenty years, the Court was asked to broaden the definition of public use. In Kelo v. City of New London,

the city of New London had condemned private homes in a waterfront area to make room for the economic revitalization of the district.[8] In fact, the land seized was to be used by private companies who would bring jobs and an economic boost to the city.[9]

The Court held that the city’s act of acquiring the property through eminent domain for “economic development” was, in fact, a legitimate public use. The Court found that the carefully considered, devised, and written economic plan to redevelop New London served a public purpose because the economic redevelopment would benefit the public at large.

The Kelo decision expanded the definition of public use to allow eminent domain to seize land and to hand that land over to private companies when that would assist in the economic development of the city. In reaction to Kelo, which was an unpopular decision in many circles, some states enacted legislation to constrain the use of eminent domain.[10] The federal government also refined the definition of public use. The federal government requires that the “public use” be to benefit the general public and not merely for the purpose of advancing the economic interest of private parties.[11] Note, however, that cities like New London are not necessarily bound by this federal definition because cities are functions of state governments and states, as sovereigns in their own rights, also possess the power of eminent domain.

Just Compensation

Once there is a government “taking,” the Fifth Amendment requires “just compensation” for that taking. “Just compensation” typically means the fair market value of the property taken.[12]

Fair market value is what a willing buyer would pay a willing seller for the property. Real property appraisals, especially those that consider sales of comparable real estate, can provide the most accurate estimate of fair market value. Factors taken into consideration in determining fair market value include:

·         Property size and dimensions;

·         Property’s current use;

·         Property’s potential use; and

·         Land use regulations affecting the property.

Just compensation is limited to the fair market value of the property seized. It does not include the removal or relocation costs for the affected property owner, business interests, or emotional and sentimental losses tied to losing property.[13]

 Federal and state governments have passed legislation to assist property owners affected by eminent domain actions. For example, Congress passed the Uniform Relocation Assistance and Real Property Acquisition Policies and the Federally Assisted Programs Act which aided property owners by providing moving expenses and a dislocation allowance.[14]

            Eminent domain actions can generate a great deal of controversy as seizure of private property seems to go against the American ideas of homeownership and private property. Thus, while the Constitution of the United States recognizes this necessary power of government, it also establishes safeguards to protect citizens from unjust takings and to assure that property owners are justly compensated for any losses to their property.

 

 

 Footnotes:

[1] Kohl v. United States, 91 U.S. 367, (1875).

[2] Kohl v. United States, 91 U.S. 367, (1875).

[3] US Constitution, 5th Amendment

[4] Chicago, Burlington & Quincy Railroad Co. v. City of Chicago, 166 U.S. 226, (1897).

[5] See Lucas v. South Carolina Coastal Council, 505 U.S. 1003

[6] Alexandra B. Klass, Takings and Transmission, 91 N.C.L. Rev. 1079, (2013).

[7] Kohl v. United States, 91 U.S. 367, (1875).

[8] Kelo v. City of New London, 545 U.S. 469, (2005).

[9] Id.

[10] Bruce Benson, Property Rights: Eminent Domain and Regulatory Takings Re-Examined, (2010).

[11] Exec. Order No. 13,406, 71 Fed. Reg. 36,973, 36,973 (June 23, 2006).

[12] Marisa Fegan, Just Compensation Standards and Eminent Domain Injustices: An Underexamined Connection and Opportunity for Reform, 6 Conn. Pub. Int. L.J. 269, (2007).

[13] Lynda J. Oswald, Goodwill and Going-Concern Value: Emerging Factors in the Just Compensation Equation, 32 B.C. L. Rev. 283, (1991).

[14] Uniform Relocation Assistance and Real Property Acquisition Policies for Federal and Federally Assisted Programs Act of 1970, 42 U.S.C. §§ 4601-4655