FEATURE: Can The Government Take My Land?


The short answer to this question is, "Yes." But before allowing that answer to panic you, take a look at the big picture and realize that the chances of that ever happening to you are slim to none.

In the United States, there are four primary ways that the government can take your land: 1) Failure to pay your property taxes, resulting in the local government taking the property and selling it to satisfy back taxes. 2) Failure to pay other taxes, resulting in local, state, or federal government seizure of your assets to satisfy the tax obligation. 3) Criminal use of the property, resulting in its seizure by law enforcement authorities. 4) Eminent domain, (known in Canada as Expropriation). You have complete control over all of these but the last. If you pay your taxes and obey the law, you won't run afoul of the government. It's as simple as that. Compare this to other ways you could lose your property: mortgage foreclosure, liens, civil suits, even gambling...and it puts things in better perspective.

What is Eminent Domain?

Eminent domain is something of which every property owner should be aware. Wikipedia defines it as the inherent power of the state to seize a citizen's private property, or rights in property, without the owners' consent. The property is taken either for government use or by delegation to third parties who will devote it to public use. Some uses of property taken in this way are for public utilities, roads, railroads, or dams. Some states require that the government body offer to purchase the property before resorting to the use of eminent domain.

The original definition of "public use" was relatively strict: it required that the land be used by the public, the common example being military installations, government buildings and public roads, as well as railroads and public utility facilities. Since the mid-1900s the term began to be interpreted more expansively. The Supreme Court held that the term "public use" encompassed a broader notion of public benefit than simply providing government facilities, railways and other utilities commonly used by the public.

The Supreme Court has largely given the public use requirement an expansive interpretation and has allowed takings of private property for reconveyance to other private parties, or in some cases by private parties directly, on the theory that the new owners will put the taken land to more lucrative uses that are likely to generate more tax revenues. This is known as "economic redevelopment." This increased awareness of eminent domain inspired a great public outcry. Several states have enacted or are considering state legislation that would drastically restrict the state's own power of eminent domain.

The term condemnation is used to describe the act of a government exercising its power of eminent domain to transfer title to private property from its rightful owner to itself. It is not to be confused with the same term that describes a declaration that real property, generally a building, has become so dilapidated as to be legally unfit for human habitation due to its physical defects.

The exercise of eminent domain is not limited to real property. Governments may also condemn personal property, such as supplies for the military in wartime, franchises, as well as intangible property such as contracts, patents, trade secrets, and copyrights.

Considerations When Purchasing Property

If you are considering purchasing property, eminent domain should be only one of many, many items on your checklist. If you keep abreast of current events in the area in which you are considering purchasing property, you will probably be aware if it is in the proposed path of a new freeway or within an area that will be flooded when a new dam is built. You may not, however, be aware of smaller projects, such as power transmission lines. Generally only a long, narrow strip of land is needed for such projects, and often the government only requires an easement. Like acquisitions of real property, easements may be sold voluntarily, or may be condemned by the government. The existence of an easement, whether sold or given voluntarily or acquired through condemnation, will generally affect the value of the parcel.

Most states have disclosure laws, and any reputable real estate agent will make sure prospective buyers are told about any potential problems. Although disclosure laws also apply to private sellers, some states may not require the same high standards of disclosure that real estate agents must meet. As in all transactions, it pays to do your homework and read the fine print before signing any purchase agreement.

If You Already Own Property

If an eminent domain situation arises with property you already own, there a lot you can do about it after the decisions have been made. If you stay tuned into your local current events, you may see a situation coming before it happens. This can give you an opportunity to get involved and to be heard. Most governments, whether local, state, or federal, have some sort of public input protocol in place for implementing projects. The media will almost always run stories on public works project proposals. If it looks like a project might impact your property, get all the details first. Read the proposal. Attend public meetings. Answer surveys. Talk to other affected landowners, and work with them.

In today's America, the government can't just go out and build a road or a dam. There are a lot of hoops they must jump through first. Any project that could impact native plants and animals, historic or prehistoric artifacts, or water flows must have environmental studies done first. These studies identify existing resources and conditions and any possible impacts the project might have on them. They also identify practices that could mitigate the impacts. If unmitigatable impacts are found, environmental laws may prevent the project's implementation.

In general, governments seem to be getting more conscientious about both environmental analyses and public input, probably in part because environmental groups and regular citizens are becoming more informed and, therefore, more effective at holding bureaucratic feet to the proverbial fire.

There have been a number of instances where alliances between such unlikely partners as ranchers and environmentalists have raised eyebrows by successfully rerouting new roads and rails, and preventing dams from being built. Today's Americans are less afraid to sue the government than they were even a generation ago.

How It Works
 
In cases where a project has cleared all of the hurdles and is going forward, the agency will generally notify all of the affected property owners of the time schedule and the amount of money that will be paid for the property or easement.

The fifth amendment to the United States Constitution requires that just compensation be paid when the power of eminent domain is used, and requires that the property be taken for "public use." When a condemnation action is filed, generally the only thing that can be challenged is the amount of just compensation, although in some cases the right to take may be challenged by the property owner on the grounds that the attempted taking is not for a public use, or has not been authorized by the legislature, or because the condemnor has not followed the proper procedure required by law.

Most courts have held the fair market value of the condemned property to be the constitutionally required "just compensation." Its determination is a judicial question, and it is usually determined in a trial by jury, on the basis of the parties' appraisal testimony.

Although in a depressed real estate market an optimist might be tempted to view this as a way to unload some hard-to-sell property, landowners are nearly always disappointed in the amount of money the government is willing to pay them. The reason for this is two-fold: 1) landowners generally believe their property is worth more than it actually is, and 2) governments will almost always try to find the lowest property value for the parcels they are buying. Government may use the values shown on the property tax rolls, or they may have an appraiser value the properties. In areas where property owners have fought to keep assessed values down to keep property taxes down, this may come back to bite them when they receive less for their property in a case of eminent domain.

The Controversy

Supporters contend that seizures of private property are necessary to the improvement of communities when private parties agree on the most efficient use of land. Opponents point out that, over a period of 200 years, American city-dwellers created large land assemblages and major structures without the coercive power of eminent domain, which they never got to use for urban redevelopment until the 1950s. Critics also point out that even successful redevelopment revives only limited sites (such as downtown areas), leaving other areas in decline.

Eminent domain has driven the development of the Interstate Highway System, railroads, and defense infrastructure, permitting the construction of many otherwise impossible developments. Ports, airports, and government buildings have also been constructed on land appropriated through eminent domain.

More recently, eminent domain has come to be used for private purposes (such as shopping malls), which has led to much controversy. In some cases, the non-government entities using eminent domain have been community groups trying to take control of planning and development. Some community groups have used it to claim vacant properties for the purpose of "positive community development." In other cases, well-connected firms persuade local governments to take property (sometimes that of their competitors) and turn it over to them.

The controversy is further fired up by the courts defining the "just compensation" promised by the Constitution so narrowly that displaced homeowners and businesses are not fully compensated for their demonstrable economic losses, which are sometimes deemed "non-compensable." This is particularly controversial in cases where business properties are taken, the owners are not compensated for lost business, and the taken land is turned over to another business at no cost.

The Use of Eminent Domain in Rural Areas

Most of the controversy over applying eminent domain for economic development purposes applies to urban, suburban, and other populated areas. Landowners in rural areas are more likely to be touched by eminent domain for traditional public uses of property.

Nuisance laws comprise another area where government can take private property in either urban or rural areas. When a landowner's use of a property is improper, the state, under its broad police power, may ban the improper use. If the landowner does not cease and desist the nuisance use, the government can force the use to cease, either by taking the property or through other methods. A county's zoning regulations will usually define what constitutes a public nuisance.

Safeguards Against Government Action

The constitutional requirement that property may only be taken for public use and upon payment of just compensation has been diluted to such an extent that virtually anything that a local condemning authority declares to be "public use" will be accepted by the Supreme Court and the lower federal courts. Some state courts disagree and have taken the position that the taking of private land for so-called "economic redevelopment" i.e, for reconveyance of the taken land to private companies for the construction of private, profit-making enterprises such as shopping malls, factories, office buildings and even gambling casinos does not meet the "public use" limitation under the state constitution.

Property-rights advocates contend that abuses of the exercise of these powers in the past require substantial additional safeguards to protect the people from having their homes and businesses taken for what are obviously private, not public, uses.

Existing federal statutes (and their state counterparts) require relocation assistance programs to be administered by the various states in order to receive Federal participation in the costs of the improvements (often 80%), and further require full certification that the public process and benefits were offered to the claimants and that the benefits were actually paid to the correct claimants. However, the benefits payable provide only partial compensation and the statutes do not allow the owners to sue to enforce its provisions.

The use of eminent domain has slowed nationwide, reflecting the fact that actions in the future will be mostly for schools, roads, and other local improvements. The extensive use of eminent domain for such purposes as economic development are currently under attack in many jurisdictions and there is a movement to pass state statutes to limit this use.

In June, 2006, President Bush issued an executive order stating that the federal government must limit its use of taking private property for public use with just compensation. The order states that eminent domain may not be used "for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken."

Disclaimer: Nothing in this article is intended to convey legal advice or substitute for the advice of an attorney. Copyright RPB Media, Inc. 2007. All Rights Reserved. Permission to reprint may be granted only by the publisher.

Related Links:
http://www.castlecoalition.org/ --

http://www.expertlaw.com/library/real_estate/eminent_domain.html

http://www.reason.org/eminentdomain/

http://www.ncsl.org/programs/natres/EMINDOMAIN.htm
-- The National Conference of State Legislatures is tracking state eminent domain legislation and ballot measures.