Eminent Domain

Sections within this essay:

Background

Grounded in the Fifth Amendment to the U.S. Constitution, the concept of eminent domain refers to the government's right to condemn and appropriate private property for public use. Other terms meaning essentially the same thing include "condemnation" (but that has additional implications, see below) and "expropriation." Through application of the Fourteenth Amendment, the power to exercise eminent domain is vested in both federal and state governments and subdivisions thereof (counties, cities, and towns, etc.). Such power also may be delegated to political subdivisions such as governmental agencies and local governments, as well as private persons or corporations that provide services or benefits to the public.

For years, the accepted scope of the term "public use" contemplated property being taken for such purposes as public roadways, bridges, parks, libraries, governmental buildings, utilities, etc. However, in the 2005 landmark case of Kelo v. City of New Landen, the U.S. Supreme Court made clear that the government could also appropriate property to private, for-profit real estate developers, if such development would result in economic growth for the betterment of the community.

Substantive Due Process

The Fifth Amendment (made applicable to the states through the Fourteenth Amendment), which protects individual liberties from unwarranted governmental intrusion, states in relevant part, "… nor shall private property be taken for public use, without just compensation." Importantly, the provision does not preclude such government action, as long as there has been "just compensation."

Property to be Taken

Although most often applied to real property (real estate, including buildings), in fact, any kind of property may be taken. This includes both tangible and intangible property, such as franchises and contracts.

However, not all property can be appropriated or condemned for any purpose. Many states prohibit the exercise of eminent domain for property currently being used for such purposes as cemeteries, gardens and orchards, or factories. A landowner cannot convert the use of property to one of these uses in order to avoid condemnation, once proceedings have begun (notice of intent).

Often, governmental units, particularly at the local level, begin condemnation proceedings for private property that is not needed for public use, but rather, has been deemed a risk to the public health or safety. This, in fact, is the more appropriate use of the term "condemnation," although the authority or power invoked to condemn the property is that of eminent domain.

A "dedication" of land is a similar form of appropriation of private land (or an easement therein) for public use, but is effected voluntarily by the landowner, rather than through an adverse process of condemnation. A dedication may be express or implied through the landowner's conduct and the facts and circumstances related to the property. Notwithstanding, a dedication also may arise following an adverse (to the interests and/or use of the landowner) and exclusive use by members of the public under a claim of right. Such claim, by an adverse public user, is similar to a common law "adverse possession" claim between private parties, and is predicated upon the knowledge, actual or imputed, and acquiescence of the owner. Many states provide for both common-law and statutory dedications.

What Constitutes a Taking

What is necessary in order for a "taking" to occur is not always a formal transfer of interest in the property. Rather, what is required is a destruction of a personalinterest in property, or such a drastic interference with the use and enjoyment of that property so as to constitute a taking. In other words, the impairment is so severe that it is tantamount to the assertion of a servitude on the property for the benefit of the government.

It is often the case that a landowner is not completely deprived of his property, but instead suffers a restriction or impairment of his or her right to use it. For example (and as is frequently the case), a government may need to run a utility through private property, or need to alter a shoreline such that the property is no longer on the waterfront. The property may need to be flooded to create a dam, or a building on the property may need to be relocated to make access to another point. In such cases, a partial taking may be effected, and the landowner is entitled to proportional compensation.

Still another form of taking may occur when there is no actual property being taken from a person. Instead, governmental activity on one property may so severely deplete the value of adjacent or neighboring property so as to constitute a "constructive taking," often referred to as inverse or reverse condemnation. Fumes, noises, vibrations, changes in flow of ground water, or toxic pollutants are some of the more common interferences that may constitute constructive takings. Examples include properties affected by airport noise and fumes, waterfront properties affected by rerouted water, or livestock farms affected by nearby noise or ground vibration. In each of these circumstances, property owners may be entitled to compensation from the governmental entity.

Finally, a taking need not be permanent; it may be effected and justified only under limiting circumstances. For example, in time of war or insurrection, a government may need to exercise control and dominion over lands otherwise not needed for public welfare or safety. Again, a landowner may be compensated for the temporary impairment or deprivation in his or her use of private property.

Public Use

A "public use" is generally one which confers some benefit or advantage to the public, and the term does not necessarily imply, and is not confined to, actual "use" by the public. Moreover, the purported benefit to be derived from the taking of property need not be available to the entire public; it may benefit a smaller sector of members of the public in a particular locality, i.e. a subdivision of the general public. In other words, it is not necessary that the intended users be all members of the public; rather, it is the purpose for the taking that must be for the public, and not for the benefit of any particular individuals.

The use (purpose) must be a needed one, which cannot be surrendered without obvious general loss or inconvenience. However, the parameters of such needed public use move along a spectrum, and defy absolute definition or parameter because of changing needs of society, increases in population, and developing modes of transportation and communications.

In Kelo v. City of New Landen(2005), the U.S. Supreme Court was called upon to determine whether that changing parameter was broad enough to in clude for-profit development of real estate which would ostensibly result in needed economic growth for the community. In a decision that surprised many, the Court agreed.

Justification or Necessity

It is the legislature that has the power to determine the necessity of taking property for public use, as well as the amount of property to be taken. Most takings must comport with legislative language that mandates under what circumstances such an action is justified or necessary. A formal court action objecting on grounds of taking property not strictly needed for public use, or for taking more property than needed for public use is generally referred to as an action for "excess condemnation."

If a local government deems certain property to be a hazard to the public, e.g. a health or safety risk, it may condemn the property as unfit for human occupancy following formal inspection and assessment. Usually this is accomplished by citation of violations involving local ordinances, building codes, or federal public safety regulations. During the time between condemnation and bringing the property back into conformity with relevant laws, a landowner is generallynot entitled to compensation, even though a deprivation of property rights has occurred.

What Compensation is Considered Just

Whether a proffered compensation is just or not is a judicial question. Generally, an appropriate measure is the fair market value of the property at the time of the taking, plus any subsequent accrued interest. An objecting claimant will not succeed in arguing speculative value, or the fact that the property could be used for a special purpose which would tend to enhance its value. Instead, an objective assessment of the property in its present state is the correct measure, although consideration may include assessment of market value at its best and most profitable use.

Notwithstanding, the compensation must be fair to both the property owner and the public. This assessment involves consideration of such factors as the cost of reproducing the property, its present market value, and the resulting damage or decrease in value to any remaining/residual property of the owner. It also may include consideration of the price originally paid for the property, and any buildings, crops, timber, or minerals located on the property. Additional compensation may be added for any delay in payment, as interest is recoverable when payment is not made at the time of the taking.

Procedural Due Process

An aggrieved party who objects to a government taking must have an opportunity to receive fair notice (a reasonable time to obtain legal advice and prepare a formal objection). Additionally, there must be opportunity for a fair hearing before the award (of compensation) becomes final. The hearing provides a forum to adjudicate whether or not there had been an actual taking (in the question of less than total deprivation of interest); whether the taking was for a public use; and/or whether just compensation had been made.

Notice

Prior to any governmental action to exercise its right of eminent domain, the government must negotiate in good faith with the land owner for an acceptable price for the land. Initially, most governments notify landowners of prospective action by serving a notice of intent. The contents generally describe the parameters of the property in question, the proposed use, and an offer (in dollars) of purchase. Extensive mediation and offers/counteroffers usually precede court action. A formal condemnation action only follows if an agreement cannot be reached.

Hearing

Not all condemnation proceedings are the same. State laws differ on the number of hearings and the procedural structure of each, depending on the type of property in question or the intended use. Generally, a landowner may contest both the proposed taking and the amount of compensation offered. Ultimately, if administrative appeals fail, the landowner may petition in court, under the auspices of violation of constitutional rights.

Both sides may offer witness testimony and other evidence in support of their positions. Both sides may call attention to the fair market value (by expert testimony) of similar properties for comparison. Following court decision, appeals may take years, but generally does not stay the taking; if a landowner ultimately prevails on appeal, only money damages are generally available.

Remedies

Initially, an objecting landowner may request either or both injunctive and monetary relief. However, if the government's action meets the legislative and constitutional criteria, the landowner may be responsible for court costs if the objection was not well-grounded or appears to have been motivated by excessive pecuniary interest.

In cases of partial takings or excessive takings, adjudication includes a determination of the percentage interest in a property which is adversely affected, and monetary award is prorated accordingly. Like-wise, if the complaint is for devalued property which is not directly taken, but is adversely affected because of governmental activity or use on nearby property, adjudication includes a determination as to whether other factors have devalued the property and the monetary difference between the devalued property and its fair market value without the alleged adverse effect.

Compensation is required, effective from the date of the alleged taking. Payments not made at that time accrue interest, to which the landowner is entitled. Occasionally, subsequent actions or objections are filed months or years after the initial determination. This is especially true in the case of partial takings, e.g., easements. Over time, a government entity may engage in additional activity that exceeds in scope of the initial taking. If this causes further decrease in residual use or enjoyment still vested in the original property owner, both injunctive and monetary relief may be available.

Additional Resources

Bhatnagar, Parija. "Eminent Domain: A Big Bonanza?" CNN News, 24 June 2005. Available at http://www.cnn.com

Eminent Domain information available at http://www.eminentdomainonline.com