What Is Eminent Domain?

What Is Eminent Domain?

Let me explain eminent domain to you directly: it's the power governments have to take your private property and repurpose it for public use, but only after paying you just compensation. This happens in the United States and in many other countries, though it goes by different names elsewhere. You might think it's unfair if you're the property owner, and that's why lawsuits over eminent domain are common, especially when you feel the compensation isn't fair.

Understanding Eminent Domain

You should know that eminent domain is a right granted under the Fifth Amendment of the Constitution, and similar powers exist in most common law nations. It's called 'expropriation' in Canada, 'compulsory acquisition' in Australia and New Zealand, and 'compulsory purchase' in the U.K. and Ireland.

When the government takes your private property, it happens through condemnation proceedings, where you can challenge the legality of the seizure and negotiate the fair market value for compensation. The simplest cases involve land and buildings seized for public projects, but it can also include airspace, water, dirt, timber, and rock from your land for things like road construction.

Eminent domain isn't limited to physical land; it can cover leases, stocks, investment funds, and even intellectual property like patents and copyrights. For instance, back in 2013, some municipalities considered using eminent domain to seize underwater mortgages from investors and refinance them at better rates, though Congress later passed a law to stop the Federal Housing Administration from financing such seized mortgages.

Theoretically, the federal government could use eminent domain to take over a company like Meta (formerly Facebook) and make it a public utility to protect privacy and data— that's how broad this power can be.

Types of Taking

The government decides how to use your property, and you as the owner often don't have much say in it. Each type of taking is handled, used, and compensated differently, and fighting it in court can be a long battle you're hesitant to start.

In a complete taking, also called total taking, the government seizes your entire piece of land. Compensation is based on the highest market value, but many owners feel it's not enough. This usually happens for large projects or utilities that need the whole parcel.

Partial taking means only part of your property is seized, which complicates valuation because it's harder to price individual parts than the whole. The government accounts for the value of what's taken and any loss in value to what's left, known as the remainder.

Temporary taking involves seizing your property for a set period, which some owners see as a form of leasing that can provide income. A common example is an easement for construction, paid based on rental value, and if it affects access to other parts, compensation covers all impacted areas.

Regulatory taking comes in total and partial forms: total when a regulation makes your property unusable, and partial when it substantially reduces its value without eliminating it entirely.

Just Compensation

Just compensation is what you're entitled to receive if eminent domain affects your property. The government calculates the fair market value based on the type of taking and offers it to you.

Fair market value assumes you're not forced to sell and the buyer isn't forced to buy, ignoring desperate situations on either side. Some argue this is unfair because eminent domain means the government needs your property more than you need to sell it.

Factors in just compensation include land improvements, residue damage from the seizure, and rarely, benefits that offset the total amount.

Eminent Domain Abuses

The Supreme Court has expanded what counts as public use to include making a city more attractive or revitalizing communities, which has allowed big business interests to benefit. For example, General Motors took land for a factory in the 1980s to create jobs and taxes.

One notorious case was in 2000 when Pfizer seized homes in a poor neighborhood in New London, Connecticut, for a research facility, outraging critics. The Supreme Court upheld it in 2005, but states passed laws to protect against such abuses, and Pfizer eventually abandoned the plans after bulldozing the homes.

Seizing land for private use has led to serious abuses throughout history.

Inverse Condemnation

There's ongoing debate about the government's duty to compensate for property taken or damaged without payment, leading to inverse condemnation lawsuits. Owners sue when the government or a business impacts their property without compensation, like for pollution or environmental damage.

For instance, electrical utilities have been held liable for wildfire damages, and during Hurricane Harvey, property owners demanded compensation after the Army Corps of Engineers flooded their homes by releasing reservoir water.

What If I Refuse Eminent Domain?

Guidelines for eminent domain require public purpose, just compensation, and acquisition, making it hard for you to refuse. The government can easily claim it meets these, so your best bet is negotiating higher valuation or suing, though halting it is usually impossible.

Why Is Eminent Domain in the Fifth Amendment?

It's in the Fifth Amendment to let the government acquire assets for public good, like routing water pipes through private land to supply a town, even if you don't want it.

Has Anyone Ever Won an Eminent Domain Case?

Many have 'won' by getting higher compensation than initially offered through lawsuits, but these are expensive and lengthy. Most owners just accept and move on, as stopping the case is nearly impossible, though more compensation is sometimes achievable.

How Do I Protect My Property From Eminent Domain?

Unfortunately, there's little you can do to protect your property, as seizures aren't always for real estate and future public needs are unpredictable. It may seem unfair, but you have few options against government seizure.

The Bottom Line

Eminent domain lets federal, state, and local governments seize your private property for public use after fair compensation. It can be entire, partial, or temporary, with many lawsuits over whether it should happen or if compensation is enough. Stopping it is almost impossible, but you might negotiate better pay.