The legal process of eminent domain is called condemnation, and it varies by state -- but the basic steps are similar. Once the local government decides that it needs a parcel of land or a building, it contacts the owner to negotiate a selling price. At this point there are three different paths the process can take:
- If the property owner agrees with the sale and price, then the government issues payment and the landowner gives up the deed. This is the simple route and usually the road less traveled.
- Many times the property owner doesn't agree with the sale price. In this situation, the two parties proceed to a hearing where "fair value" is established. Attorneys and appraisers are involved, and the property owner can request that a jury make the decision.
- Sometimes the property owner refuses sale entirely. When this happens, the government files a court action and posts public notice of the hearing. In the hearing, the government must prove that it tried to negotiate the sale and that the takeover is for public use. If the government wins, an appraiser establishes fair market value and the property owner is paid and evicted. Both sides are allowed to appeal the decision.
When the government needs your land, it's referred to as a taking. There are several different categories of takings. A complete taking is when the entire property is purchased. But sometimes only a portion of the property is needed. This means a partial taking may be used. In this case, the owner must be compensated for the value of the land, as well as the amount the remaining property is devalued. If the property is used for a limited amount of time, then a temporary taking is necessary. The owner is paid for any losses that result from the temporary taking, but remains owner throughout the process. Using private land adjacent to a public works project is one way a temporary taking might apply. The final category is called right of way or easement taking. Technically, this means the general right for someone to make use of someone else's property -- but in this case it usually refers to using land for a roadway or utility installation. The property owner maintains use of the land taken for a power pole or roadway, but gives up ownership.
When a business owner is forced from a building he or she leases, he or she is still entitled to compensation. Typically, this means the value of the lease is paid, in addition to improvements made by the tenant. The tenant can also ask for payment for the amount of lost business due to the move.
In the next section, we'll look at a recent Supreme Court ruling that some say paved the way for eminent domain abuse.