EMINENT DOMAIN

One possible challenge to the government's right to take can be raised where the project for which the property is being taken is not for a "public use."  The Fifth Amendment of the United States Constitution  allow private property to be taken by eminent domain only for a "public use."

The term "public use" has been interpreted very broadly by the Courts.  The project need not be actually open to the public to constitute a public use.  Instead, generally only a public benefit is required.  Elimination of blight through redevelopment projects, for example, is a public benefit which courts have held satisfies the "public use" requirement of the Federal Constitution.  This is true even though the property will typically be transferred to a private redeveloper and may never be open to the general public.  It usually doesn't matter if the redeveloper may be doing nothing more than building a new mall or a complex of movie theaters.

Eminent Domain Groups

The following groups are experts in the field of Eminent Domain and should be referred to:  Castle Coalition and  Institute for Justice

When a buyer and a seller negotiate a price for property, they often discuss the prices similar properties have sold for in the recent past. Similarly, appraisers use sales of similar properties that have taken place at or near the date of value to help arrive at an opinion of value for the subject property. These similar properties have been referred to as "comparables." 

Frequently, there are disagreements over whether these "comparable" sales involved property that is really equivalent to the property whose price is being negotiating. When each expert witness gives their opinion as to the fair market value of the property in this case, he or she based his or her opinion largely on the prices actually paid in sales of other properties. You must decide the usefulness of the evidence of each sale in determining the market value of the property taken in this case. See Appraising

COST APPROACH vs INCOME APPROACH

Learn more about how a property may be valued using the COST APPROACH vs the INCOME APPROACH. Read more here.

  [For example, if an expert based his or her opinion on prices paid for other properties that you do not think are similar to this property, and the expert did not properly account for such differences in his or her analysis, his or her opinion of the fair market value should not be given much weight in your deliberations.]
    Here are some of the questions you may consider in deciding if the sale price of other property is helpful.
    1)    Is the other property of similar size?
    2)    Does the other property have a similar location?
    3)    How close to the date of taking was the other sale?
    4)    Were both the buyer and seller negotiating freely?
    The experts have mentioned other factors to show the similarity or dissimilarity of other sales.
    It is up to you to sort out the differences with what you think a buyer and seller, freely negotiating at arm's length, would consider in arriving at a sale price for the property taken in this case. Give the evidence on each of those other sales whatever weight you think it deserves in determining the market value of this property

What is Eminent Domain? Can property simply be taken from you?

"Eminent domain" (also called "condemnation") is the power of government agencies to acquire property for "public use" so long as the government pays "just compensation." Recognized public uses for which the power of eminent domain may be used include, among other things, schools, parks, roads, highways, subways, fire and police stations, public buildings, and the elimination of blight through redevelopment (as in Asbury Park - or not?) A key attribute of eminent domain is that the government can exercise its power of eminent domain even if the owner does not wish to sell his or her property. 

Even though the vast majority of government agencies possess the power of eminent domain, on occasion, a successful challenge to the government's right to take a particular property for a particular project can be made. You should be cautioned, however, that such challenges are the exception, not the rule, and usually result only in a delay, rather than outright prevention of the government's right to take.

Typical challenges to the right to take are for failure of the government to follow the proper procedural steps towards eminent domain. If the government fails to follow the proper procedures, a right to take challenge is sometimes possible. Again, however, it must be remembered that the circumstances allowing a successful challenge to the right to take are rare. Each case must be evaluated on its own facts and experienced eminent domain counsel should be consulted. Seeking compensation for the taking, rather than challenging the government's right to take, will be the property owner's usual remedy.

 Also see: Our Commercial Real Estate Glossary and our Appraisal Guide