Legally, eminent domain is also called condemnation. The process 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 simplest route.
- Many times the property owner doesn't agree with the 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 a decision.
- Sometimes the property owner refuses to sell. When that 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 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. When only a portion of the property is needed, 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 involves the general right of someone to make use of someone else's property; it usually refers to using land for a roadway or utility installation. The property owner maintains use of the land but gives up ownership.
When a business owner is forced from a leased building, he or she is entitled to compensation. Typically, this means the value of the lease is paid, in addition to improvements made by the tenant. The tenant also can ask for payment for the amount of lost business.
In the next section, we'll look at a Supreme Court ruling that some say has paved the way for eminent domain abuse.