# Eminent Domain Explained: Types, Compensation, and Legal Implications

## What Is Eminent Domain?

Eminent domain is the power of the government to take private property and put it to public use, in exchange for just compensation. This is practice is established by the U.S. Constitution, but it also occurs in many other countries under different names.

Seized property is often used for public works or infrastructure projects. Property owners can typically sue to keep their property or demand more compensation.

### Key Takeaways

*   Eminent domain allows the government to seize private property for public use with just compensation, as mandated by the Fifth Amendment.
*   Types of property seizure include complete, partial, temporary, and regulatory takings, each with unique implications for owners.
*   Fair compensation is often debated and calculated based on the property's fair market value and any damages or benefits involved.
*   Inverse condemnation occurs when owners sue for compensation for unacknowledged property losses or damages by the government.
*   The scope of eminent domain can extend beyond land to include airspace, intellectual property, and contract rights.  
    

## Understanding Key Aspects of Eminent Domain

The Fifth Amendment of the Constitution grants the right of eminent domain. Many [common law](https://www.investopedia.com/terms/c/common-law.asp) countries have similar powers. In Canada, it's "expropriation"; in Australia and New Zealand, it's "compulsory acquisition"; and in the U.K. and Ireland, it's "compulsory purchase."

Private property is taken through [condemnation](https://www.investopedia.com/terms/c/condemnation.asp) proceedings, in which owners can challenge the legality of the seizure and settle the matter of fair market value used for compensation. The most straightforward examples of condemnation involve land and buildings seized to make way for a public project. It may include airspace, water, dirt, timber, and rock appropriated from private land for the construction of roads.

Eminent domain can also apply to [leases](https://www.investopedia.com/terms/l/lease.asp), stocks, and [investment funds](https://www.investopedia.com/terms/i/investment-fund.asp). In 2013, some cities considered using eminent domain laws to refinance underwater [mortgages](https://www.investopedia.com/terms/m/mortgage.asp) by seizing them at current market value and reselling them at better rates. Congress passed a law prohibiting the [Federal Housing Administration](https://www.investopedia.com/terms/f/federal-housing-administration.asp) from financing mortgages seized by eminent domain as part of the FY 2015 budget.

Eminent domain can apply to contract rights, [patents](https://www.investopedia.com/articles/investing/111014/patents-trademarks-and-copyrights-basics.asp), and [intellectual property](https://www.investopedia.com/terms/i/intellectualproperty.asp), allowing the government to seize companies like Meta and turn them into public utilities to protect privacy.

## Exploring Various Types of Property Seizure in Eminent Domain

The government determines how your property will be used. Each category of use is taken, used, and compensated differently. Property owners often have little say in how their property is seized and may hesitate to engage in lengthy legal battles.

### What Is Complete Taking in Eminent Domain?

Complete taking, also known as total taking, is when the entire piece of land is seized. Even if just compensation is the highest market value, many still feel it is unfair. When large construction projects or utilities need the entire parcel in order to function, complete taking is usually the resulting type of condemnation.

### Understanding Partial Property Seizure

In a partial taking under eminent domain, only part of the property is taken. This is slightly more complicated than a complete taking, since it is much easier to value a piece as a whole than it is to assign fair value to each individual part. The government knows that taking part of a property can lower the value of what's left, so two components are considered in partial takings. The first is the value of the property that was acquired, and the second is the loss of value to the property remaining, called the remainder.

### Exploring Temporary Property Seizure

The taking of a property for a set period of time is known as temporary taking. Many owners consider this type of eminent domain a form of leasing, and for some, it can be a breath of fresh air. A common example is when a construction project requires easement of the property. The easement is paid out based on the rental value of the land and can provide some owners with a steady stream of income for a piece of property they may not have been able to lease under other circumstances.

If the easement requires denying access to any other part of the property than what is currently being seized, just compensation would pay for all affected sections of the property, not just what is directly required.

### Impacts of Regulatory Taking on Property Rights

Regulatory taking can be broken down into two sections, total regulatory taking and partial regulatory taking. A total regulatory taking occurs when a regulation affects a property to such a degree that it cannot be used. A partial regulatory taking occurs when a regulation affects the property as well, but does not cause it to lose all of its value, only a substantial portion.

## How Fair Compensation is Determined in Eminent Domain

[Just compensation](https://www.investopedia.com/terms/j/just-compensation.asp) is the amount you receive when your property is taken under eminent domain. Depending on which type of taking you are facing, the government will calculate the value of the property and offer you what they consider just compensation, which is the [fair market value](https://www.investopedia.com/terms/f/fairmarketvalue.asp) of your property.

Fair market value assumes you're not forced to sell, and buyers are willing but not forced to buy. This consideration exists to ensure that unseen aspects of the sale process are not considered during just compensation, such as an owner desperate to sell, or a buyer who may overpay because they are desperate to purchase. Some consider this method of determination unfair, as the necessity of eminent domain points to the buyer needing the property more than the seller, or the person having their property seized, needs to sell.

[Just compensation is dependent](https://www.investopedia.com/eminent-domain-reverse-mortgage-5223807) on a few factors including the value of any land improvements, any residue damage to the property due to the seizure, and something called benefits. Benefits, rarely considered in just compensation, offset the total amount received.

### Identifying and Understanding Misuse of Eminent Domain

The definition of what constitutes a public project has been expanded by the Supreme Court, from highways, trade centers, airport expansions, and other utilities, to anything that makes a city more visually attractive or revitalizes a community. Under this definition of public use, eminent domain began to encompass big business interests. General Motors took private land for a factory in the 1980s to create jobs and boost tax revenues.

Most notoriously, Pfizer seized the homes of a poor neighborhood in New London, Connecticut, in 2000 to build a new research facility. Critics were outraged to learn a city could condemn homes and small businesses to promote private development. While the Supreme Court upheld this ruling in 2005, several states passed new laws to protect property owners from abusive eminent domain takings. Long after the homes were bulldozed, Pfizer abandoned its plans.

> **Important**
>
> Seizing land for private use has led to serious abuses throughout history.

## Essential Insights Into Inverse Condemnation

Legal debates exist about the government's responsibility to fairly compensate those affected by eminent domain. Inverse condemnation proceedings occur when property owners sue, claiming the government or a business took or damaged property without fair compensation. This has been used to obtain damages for pollution and other environmental problems.

For example, electrical utilities can be found liable for economic damages caused by a wildfire they started. In another case, when the Army Corps of Engineers released a torrent from Houston's two reservoirs during Hurricane Harvey, houses were deliberately flooded, leading property owners to demand compensation under inverse condemnation.

## What If I Refuse Eminent Domain?

There are some clear guidelines for eminent domain. They are that the property will serve a public purpose, that just compensation is offered, and that the property is acquired. It is fairly easy for the government to assert its fulfillment of constitutional responsibility and therefore, it is usually not possible to refuse eminent domain. The most that most property owners can hope for is a high market valuation, or to engage in a lawsuit.

## Why Is Eminent Domain in the Fifth Amendment?

Eminent domain is [in the Fifth Amendment](https://www.investopedia.com/terms/d/due-process.asp) to ensure that the U.S. government is able to acquire assets that benefit the public good. An example of this would be if a town needed water, and the only possible way to bring water to that town was through the property of a private landowner. The landowner may not want pipes running through their property, but since it benefits the public, the government will pursue it.

## Has Anyone Ever Won an Eminent Domain Case?

Many people have won eminent domain cases in the sense that their fair market value claim was awarded. The claimant, in this case, would be an aggrieved property owner who can sue for a higher value than what the government assessed, although these cases are lengthy and extremely expensive to pursue. Most private property owners find it is easier to just accept the value and move on with their lives. It is nearly impossible to halt an eminent domain case, although it is possible to pursue further compensation.

## How Do I Protect My Property From Eminent Domain?

Unfortunately, there is not much you can do to protect your property from eminent domain. It is not always real estate that is seized, and it is not possible to anticipate the future needs of the public or the government. It may seem unfair, but property owners do not have many options to protect their property from seizure by the government.

## The Bottom Line

Eminent domain allows federal, state, and local governments to seize private property for public use. The takings might be complete, partial, temporary, or regulatory. Property owners are entitled to fair compensation and often sue if they find the deal unfair.

Stopping an eminent domain case is nearly impossible, but negotiating for higher compensation is sometimes viable. Some government officials and private businesses have been accused of abusing eminent domain to enrich themselves. Stopping an eminent domain case is nearly impossible, but seeking higher compensation is a legitimate option.

It's important for property owners to understand their rights and the implications of eminent domain on their property.

> **Article Sources**
>
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>     
> 2.  U.S. Department of Justice. "[Anatomy of a Condemnation Case](https://www.justice.gov/enrd/condemnation)."
>     
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>      
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>      
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