Eminent domain is the power the United States government, states, and municipalities to take private property for public use, following the payment of just compensation. Eminent domain is a right granted under the Fifth Amendment of the Constitution.
Private property is taken through condemnation 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 or the dirt, timber, and rock appropriated from private land for the construction of roads. Eminent domain can include leases, stocks, and investment funds.
In 2013, municipalities began to consider using eminent domain laws as a way to refinance underwater mortgage by seizing them from investors at their current market value and reselling them at more reasonable rates. Congress passed a law prohibiting the Federal Housing Administration from finance mortgages seized by eminent domain, in 2016. But it is still a live issue that could undermine the mortgage market. Because contract rights, patents, copyrights, and intellectual property are all subject to eminent domain, the Federal government could, theoretically, use eminent domain to seize social media platforms and turn them into a public utility, to protect people’s privacy and data.
Eminent Domain Abuses
Seizing land for private use has led to serious abuses. Most notoriously, Pfizer seized the homes of a poor neighborhood in New London, Connecticut in 2000 to build a research facility. Americans 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, leaving behind a wasteland.
Most states use the term eminent domain, but some U.S. states use the term appropriation ( New York ) or expropriation ( Louisiana ) as synonyms for the exercise of eminent domain powers. The constitutionally required just compensation in partial takings is usually measured by fair market value of the part taken, plus severance damages ( the diminution in value of the property retained by the owner when only a part of the subject property is taken ). Where a partial taking provides economic benefits specific to the remainder, those must be deducted, typically from severance damages. The former owners of the property rarely receive full market value because some elements of value are deemed noncompensable in eminent domain law.
The term condemnation is used to describe the formal act of exercising this power to transfer title or some lesser interest in the subject property.
The practice of condemnation came to the American colonies with the common law. When it came time to draft the United States Constitution, differing views on eminent domain were voiced. The Fifth Amendment to the Constitution requires that the taking be for a public use and mandates payment of just compensation” to the owner.
In federal law, Congress can take private property directly ( without recourse to the courts ) by passing an Act transferring title of the subject property directly to the government. In such cases, the property owner seeking compensation must sue the United States for compensation in the U.S. Court of Federal Claims. The legislature may also delegate the power to private entities like public utilities or railroads, and even to individuals. The U.S. Supreme Court has consistently deferred to the right of states to make their own determinations of public use.
There is also legal debate about whether onerous regulations constitute a taking. Private property owners have sued the government in proceedings called inverse condemnation, where the government or private business has taken or damaged property but failed to pay 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. And the property owners in Houston, who were deliberately flooded during Tropical Storm Harvey, when the Army Corps of Engineers released a torrent from Houston’s two reservoirs, are demanding compensation under inverse condemnation.
Eminent domain is called compulsory purchase in the U.K., New Zealand and Ireland, expropriation in Canada and compulsory acquisition in Australia.
Many countries recognize eminent domain to a much lesser extent than the English-speaking world or do not recognize it at all. Japan, for instance, has very weak eminent domain powers, as evidenced by the high-profile opposition to the expansion of Narita International Airport, and the disproportionately large amounts of financial inducement given to residents on sites slated for redevelopment in return for their agreement to leave.
In the People’s Republic of China eminent domain occurs whenever it is convenient to make space for new communities and government structures. Singapore practices eminent domain under the Land Acquisitions Act, which allows it to carry out its Selective En bloc Redevelopment Scheme for urban renewal. The Amendments to the Land Titles Act allowed property to be purchased for purposes of urban renewal against an owner sharing a collective title if the majority of the other owners wish to sell and the minority did not. Thus, eminent domain often invokes concerns of majoritarianism.
In the Bahamas, the Acquisition of Land Act operates to permit the acquisition of land where it is deemed likely to be required for a public purpose. The land can be acquired by private agreement or compulsory purchase. Under section 24 of the Acquisition of Land Act, the purchaser may purchase the interest of the mortgagee of any land acquired under the Act. To do so, the purchaser must pay the principal sum and interest, together with costs and charges plus 6 months additional interest.
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