How Eminent Domain Works


The Senate Judiciary Committee holds hearings on the Kelo v. New London property rights issue.
The Senate Judiciary Committee holds hearings on the Kelo v. New London property rights issue.
Mark Wilson/Getty Images

If you've ever visited your childhood home only to find it's been replaced by a strip mall or widened road, then you may be experiencing the effects of eminent domain. Backed by the Fifth Amendment to the U.S. Constitution, your state government has power over all property in the state -- both private and public. With this power comes the right for the government to take your home or business, pay you fair value and tear it down for public use. This typically means that roads, courthouses, schools and utilities can be erected on the land your home or business sits on. It can also mean private commercial development that's considered a benefit to the community.

The Fifth Amendment states that private property can't be taken for public use without just compensation. This establishes that private land can be taken for public use without the consent of the landowner, as long as he or she is fairly compensated. In the early days of eminent domain, it was mainly used to support large-scale public works operations. The growing freeway system after World War II is a good example of how the government used eminent domain to accomplish necessary development for the good of the country.

In the early 1980s, a Michigan Supreme Court ruling allowed more than 1,000 homes and 600 businesses to be razed to make way for a General Motors auto plant. The town where the plant was built didn't experience the economic boom developers expected. In what can only be considered a "too little, too late" decision, the high court reversed the GM ruling more than twenty years after the homes and businesses were torn down [source: PBS].

In recent years, there's been a great deal of debate about what the government defines as "for the public good." Using eminent domain for schools, roads and courthouses has given way to developers looking to build condos and retail outlet malls. The Supreme Court weighed in with a landmark decision that paves the way for even more wide-reaching definitions of public good.

In this article, we'll learn about the eminent domain process and examine some recent abuses of these powers.

The Process of Eminent Domain

Hollywood Star Lanes bowling alley was a sad casualty of eminent domain.
Hollywood Star Lanes bowling alley was a sad casualty of eminent domain.
Photo courtesy Adriene Biondo

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.

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In the next section, we'll look at a recent Supreme Court ruling that some say paved the way for eminent domain abuse.

Eminent Domain Abuses

The Ambassador Hotel played host to Hollywood's elite in the 1950s, hosted eight Oscar Awards shows and was the sight of the assassination of Robert Kennedy. The landmark hotel was razed due to eminent domain in 2006.
The Ambassador Hotel played host to Hollywood's elite in the 1950s, hosted eight Oscar Awards shows and was the sight of the assassination of Robert Kennedy. The landmark hotel was razed due to eminent domain in 2006.
Ralph Crane/Time and Life Pictures/Getty Images

In recent years, the power of the government to take land under eminent domain has been under fire. The definition of "public use" has been stretched to the point that any project that could potentially generate more tax revenue is a consideration. The Supreme Court ruled favorably on the side of the government in the landmark case Kelo v. New London in 2005 [source: MSNBC]. In this case, the city of New London, Conn., had many homes and businesses razed to build an office complex. The 5-4 ruling gave new power to local governments that saw fit to tear down homes or businesses to build whatever they deemed a benefit the community -- including shopping malls, hotels, condos or health clubs. It was a victory for wealthy developers and a defeat for homeowners. Thirty-four states reacted to the decision by passing measures that more clearly defined or restricted what was considered public use [source: NCSL].

Lakewood, Ohio, residents fought back when their government attempted to take their homes in order to build expensive riverfront condominiums. The mayor of Lakewood argued that the community couldn't survive without a strengthened tax base. Fifty-five homes, four apartment buildings and 12 businesses were threatened with demolition after they were deemed "blighted." The government determined that any home that didn't have three bedrooms, two baths, central air conditioning and an attached two-car garage fell under this definition. Locals were outraged that their homes were referred to in these terms. The television news show "60 Minutes"investigated and found out that even the mayor's home didn't fit this requirement. The town rejected the development by unanimous vote and was also successful in voting the mayor out of office [source: ­CBS News].

One business owner in Mesa, Ariz., also fought back and won his eminent domain case. The owner of a brake and repair shop was being muscled out of the business his father started by a local politician looking to get an Ace Hardware in its place. The hardware store was only a few blocks away, but there was more land for expansion where the car shop operated. Instead of going to the auto shop to negotiate, the hardware store owner went straight to the City of Mesa to ask them to take the property and sell it to him. The brake shop owner held his ground and the Arizona Court of Appeals ruled in his favor [source: ­CBS News].

One case that was not successful was in New York City, just a few blocks from Times Square. A corner building was taken under eminent domain for the purpose of erecting a new headquarters for The New York Times. The state of New York declared the block "blighted" and ruled in favor of the newspaper giant. The owner was forced to give up the building his family had owned for more than 100 years [source: ­CBS News].

If a government official comes to your door talking eminent domain, it's important that you know your rights as a homeowner. Groups like the Castle Coalition and Natural-Rights help to educate homeowners and fight eminent domain abuse.

To learn more about eminent domain, please look into the links on the following page.

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More Great Links

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Sources

  • Associated Press. "Home may be taken for private projects." MSNBC, June 23, 2005. http://www.msnbc.msn.com/id/8331097/
  • "The Bill of Rights." U.S. Constitution. ­The Bill of Rights Institute. http://www.billofrightsinstitute.org/Instructional/Resources/ ­FoundingDocuments/Docs/TheBillofRights.htm
  • "Eminent Domain." National Conference of State Legislatures (NCSL), 2007. http://www.ncsl.org/programs/natres/EMINDOMAIN.htm"Eminent Domain History" PBS, June 24, 2005. http://www.pbs.org/now/politics/domain.html
  • "Eminent Domain: Being Abused?" 60 Minutes. CBS News, July 4, 2004. http://www.cbsnews.com/stories/2003/09/26/60minutes/main575343.shtml
  • Larson, Aaron. "Eminent Domain." expertlaw.com, 2007. http://www.expertlaw.com/library/real_estate/eminent_domain.html