Wednesday, October 18, 2017

Most Americans are familiar with the concept of eminent domain, which is generally defined as the government’s right to take private property for a public purpose, provided that just compensation is provided to the property owner. Put another way, eminent domain is the government’s power to take private property and convert it to public use. Federal, state and local governments, and other agencies or designated entities, may take private property via eminent domain and they may also regulate it by exercising their police power, which is an inherent power of government to impose restrictions on private rights to insure such objectives as public health, welfare, peace and quiet and safety.

Eminent domain is an inherent right of sovereignty, giving the sovereign power the power over all lands within the government’s jurisdiction. The U.S. Supreme Court has ruled that the power of eminent domain is necessary to the existence of the national government. In the United States, this power is enshrined in the United States Constitution in the Fifth Amendment and it has been expanded to apply to the states via the due process clause of the Fourteenth Amendment: “…nor shall any state deprive any person of life, liberty, or property, without due process of law.” Thus, state governments, in state constitutions, are granted power to initiate condemnation proceedings; North Carolina, an exception, is granted this power via statute.

In order for governments to take private property, the taking must meet several tests, pursuant to the U.S. Constitution. The property to be taken must be private, it must be taken for public use and the compensation to the property owner must be just. The Fifth Amendment to the Constitution states “…nor shall private property be taken for public use, without just compensation”—i.e., market value. Eminent domain is a legal process that can only be halted if the condemnation and proposed taking fail to meet the constitutional requirement of public purpose or public necessity. However, the government cannot dictate the price that it will pay—that is determined by the highest and best use laws regarding the property to be taken.

The federal power of eminent domain is also limited by the grants of power in the Constitution—that is, property may only be taken to effectuate a granted power. However, because national powers are so extensive, many objects may be subject to eminent domain. These can include not just land but, for example, water and air rights, and leases. Whenever lands in a state are needed for a public purpose, Congress may authorize a taking, either by rulings in state or federal courts, with or without the consent or concurrent acts of a state. While it is a judicial decision whether or not the intended use is a public one and the Supreme Court retains the power of judicial review, the Supreme Court usually defers to the legislature; when a state’s action is being challenged under the 14th Amendment, the Supreme Court is also willing to defer to the state’s highest court in resolving the issue. Thus, the Supreme Court usually defers to Congress to decide what type of taking is for public use. Justification for eminent domain should also be in accordance with the police power as well as public need as determined by the legislature.

Federal, state and local governments may exercise the power of eminent domain. So, also, may a corporation authorized to exercise functions of a public character, as may a government entity such as a school or hospital district or other agencies. Eminent domain is exercised via legislation or legislative delegation, usually to another government body but it may also be delegated to private corporations such as public utilities and railroads when they are promoting public purposes. The Supreme Court has approved eminent domain by federal and state governments in conjunction with private companies to facilitate urban renewal, destroy slums, and to build low-cost housing to replace deteriorated housing. Eminent domain has been used to facilitate transportation, supply water, establish public parks, promote beautification, preserve historic sites, improve highways and install utility projects such as power lines and sewer systems. The acquiring agency passes a resolution, including a declaration of public need, to condemn the private property. The resolution will include an appraisal and an offer of compensation. If the private property owner sues, then the government becomes the property owner at that time, and the offered amount is put into a trust account until the matter is resolved.

Before the enactment of the 14th Amendment, state governments’ power of eminent domain was not restrained by federal authority and the just compensation provision of the Fifth Amendment did not apply to the states. However, after the Supreme Court ruled that the due process clause of the 14th Amendment gave property owners the same protection against the states as the Fifth Amendment does against the federal government, the amount of compensation given by the states was no longer solely a matter of local law. The Supreme Court ruled that if a state legislature prescribed a procedure for taking private property for public use then due process is violated if the procedure does not include provision for compensation.

The extensive grant of powers to take and convert private property to public use and for so many now-authorized purposes presents a serious challenge to a private property owner who wishes to challenge a condemnation. Indeed, federal and state courts have expanded the definition of public use. If a property owner challenges the justification for condemnation and/or the compensatory amount offered, then the owner has the right of due process and should hire an attorney who specializes in this area to negotiate or to go to court if negotiation fails. Usually, one cannot prevent the government from taking the property, but it is possible to appeal the amount offered and this is a matter that the courts will decide. If the final award is substantially greater than the initial offer, then the court may decide to award the property owner an even larger amount to cover costs and attorney’s fees.

In an adverse condemnation proceeding, a property owner alleges that the government has acquired an interest in the property without condemning the property and without giving just compensation to the property owner. In this case, the property owner—not the government—initiates the action. An example of grounds for inverse condemnation could occur when the government floods a farmer’s field or pollutes a stream on private land. Inverse condemnation proceedings are often brought by property owners who have been injured when it appears that the government does not intend to condemn their property and offer compensation.

By Vivian J. Oleen

Vivian J. Oleen is an associate broker at Sopher Realty.


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