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What is Eminent Domain?

UPDATED: August 14, 2013

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Eminent domain is the power to take private property for public use. This right of eminent domain is the right of the government to take private property for the benefit of the public. However, the U.S. Constitution puts limits on this power through the 5th Amendment Takings Clause, which requires just compensation to the private individual for this government "taking" for a public purpose.

Justification for Eminent Domain

The justification for eminent domain has always been simple. We live in a society and enjoy its benefits. But, in return, we must give up some autonomy and control for the good of the general public. Still, this power of government has been the subject of heavy criticism. 

Public Purpose and Eminent Domain

The land taken by the government through eminent domain must be used for a “public purpose.” Because the U.S. Supreme Court allows the lower courts to determine the meaning of “public purpose,” this phrase has been subject to various interpretations. 

“Public purpose” most commonly means that the private property is taken to build highways, or government buildings and structures such as schools or parks. However, courts have found that “public purpose” has a broader meaning as well, and have allowed government to exercise eminent domain to further these public goals through private companies. The rationale is that certain public goals can be accomplished more effectively when done through private enterprises. While the companies can be seen as benefiting from the taking, courts have held that the “public purpose” criteria is still met. For example, railroads are generally owned by a private company, which ultimately benefits from the taking. Yet, this taking furthers the important public goal of public transportation. 

Private Property and Eminent Domain

Courts have also allowed government to allocate private property to private companies through eminent domain in “blighted” areas, for the purposes of spurring economic development. The benefits of allowing this are that bad conditions and slums are eliminated, and growth is encouraged. The drawbacks are that this can lead to corruption. Interested private enterprises can bribe the government through campaign contributions or exploit this power in other ways. Furthermore, whole communities can be displaced. Some jurisdictions have been criticized for over broadening the "blighted" criteria, and for finding this type of eminent domain appropriate in neighborhoods that are not deprived.

Just Compensation and Eminent Domain

The Supreme Court has determined that “just compensation” means fair market value, or the amount that a willing buyer would pay for the property. Unfortunately, this is not always considered a fair price. Businesses that lose their property through eminent domain sometimes have no other place to go. This is particularly true when businesses are forced out of poorer neighborhoods to make room for newer business that will spur growth. Some jurisdictions have attempted to correct this problem by compensating the business for disruption, or for loss of “goodwill.”

Eminent Domain Procedure

Though eminent domain procedure will vary by jurisdiction, the government will generally initiate the process, condemning the property by issuing a declaration of public need. This is followed by an appraisal of the property, and finally an offer of “just compensation” to the owner. Many times, the owner will dispute either the right of the government to take the property, or the amount they are being offered. In these eminent domain cases, the owner can sue the government, and allow the court to determine the outcome.

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