What Is Eminent Domain? The Government Can Force You to Sell Your Home

Disclaimer: Information in this blog post is meant to be used as a helpful guide and for educational purposes only, not legal advice. If you need assistance with an eminent domain situation, please contact a skilled real estate attorney.

A freeway expansion, a bridge project, a new sports arena, an updated power plant — the government is initiating a new community project . . . on your land. Crazy as it sounds, the government has the constitutional right to acquire your land for public use so long as it pays just compensation for it through what is known as eminent domain.

If you’re subject to eminent domain, you need to learn your legal rights to resolve the situation in the most favorable way possible. We’ll help you get started with a clear-cut breakdown of eminent domain, informed by advice from real estate attorneys from across the U.S.

The Fifth Amendment outlines eminent domain

The Constitution’s Fifth Amendment grants the government the right to eminent domain in a provision that states, “private property shall not be taken for public use, without just compensation.” Let’s break down these terms:

Just compensation

Whether federal or state, the government can seize private property if it pays the owner the equivalent of its fair market value. But that’s not an objective figure understood by all parties. Rather, fair market value generally means the sale price that a willing and well-informed buyer would pay to purchase the property on the open market. The amendment also grants property owners the right to challenge the legality of the seizure.

“‘Just compensation’ is a fluid concept and depends on the art of valuation and the costs everyone will invest in litigating,” shares Rajeh A. Saadeh, a New Jersey-based real estate attorney, investor, professor, and an expert on the subject of eminent domain.

Public use

The government can only justify eminent domain if it is seizing private land for public use. Public use includes projects like roadways, bridges, public parks, buildings, schools, and facilities like water, power, and gas. The government may also employ eminent domain in wartime for defense reasons.

Beyond these purposes, public use remains a somewhat fluid concept that may apply to other government projects, as well. In a 2005 ruling, for instance, the Supreme Court ruled that “public use” extends to general benefits a community would enjoy from a boost in economic development. However, in 2006, the Minnesota state legislature enacted a law that prevented eminent domain seizures based on economic benefit alone.

Here’s an overview of the eminent domain process

If you’re the subject of eminent domain, here’s a preview of the events to come:

1. The government agency first inspects the property to determine fair market value. HUD guidance stipulates that the fair market value “should be determined by an independent state-licensed or state-certified appraiser.” As the homeowner, you will receive notice of the appraisal, so you or your real estate agent may accompany the appraiser while they evaluate your home.
2. As the homeowner, obtain a copy of the appraisal so you can anticipate the government’s offer and plan with your attorney accordingly.
3. The government will make you an offer at or above the appraiser’s assessed fair market value, typically within 45 to 60 days following the appraisal. The offer will include a “summary statement” explaining the basis for the offer.
4. Once you receive the offer, you may negotiate with the agency until both parties reach a satisfactory agreement. You’ll sign a purchase contract and receive payment at a mutually acceptable time.
5. If you’re unable to reach an agreement, the agency may file a lawsuit to acquire your property through an eminent domain proceeding in court. You have the right to receive notice of the proceeding and the right to a fair hearing before the award is made final. Typically, notice must be sent 90 days before the hearing if the property is occupied, or 60 days before if it is not.

You can negotiate for a higher sale price and better terms

As soon as you receive notice of eminent domain, contact a lawyer who is well versed in real estate law. Your attorney will serve as the liaison between you and government representatives. They’ll negotiate on your behalf to secure the best offer possible and represent you in court if both parties cannot reach an agreement.

“Always negotiate with the government when you are in an eminent domain situation. Many individuals often forget that the government has a budget and could easily exceed a property’s worth,” advises Carlos Del Rio, a real estate attorney in Chicago.

Here are some of the items your lawyer can help you negotiate:

• Selling price
• Timing
• Relocation expenses

To negotiate the best price possible, you should also hire a top real estate agent to help you identify your home’s fair market value. Your agent will conduct a comparative market analysis, which targets the value of your home by evaluating properties similar to it (these are called “comparables,” or “comps” for short). They can then provide these comps to the appraiser to encourage a higher appraised value for your home.

“A real estate agent is a great investment here because they will know the current market and will know what homes are selling for based on the government’s recent investment in your neighborhood,” Del Rio comments.

Weigh professional fees with the reward

On average, real estate attorneys charge between $150 to $350 per hour for their services, though the cost may be higher depending on the attorney’s experience. You’ll need to weigh the cost of those fees against the potential payoff to determine if hiring an attorney is beneficial for your situation.

In some cases, the cost is well worth the reward. Andrew Winters, attorney and co-founder of the New Hampshire-based firm Cohen & Winters, shares how he supported a homeowner with an elderly tenant in an eminent domain instance: “The initial offering to the landlord of $50,000 was increased to $200,000 plus $51,000 in compensation to relocate the 93-year-old tenant.”

Homeowners rarely fight off eminent domain

If you’re dead set against selling your property to the government, you have the right to fight eminent domain in court. However, the only way to pull off this feat is to prove the government does not plan to use your land for justified public use — an unlikely outcome.

“Provided that the government complied with procedural requirements to exercise the power of eminent domain, it is generally very difficult to overcome a claim that the taking is for public use,” explains Saadeh.

In layman’s terms, this means that the government needs to go through layers of internal approval to initiate the eminent domain process. By the time the homeowner is involved, the government’s case is usually airtight — making it extremely tough for the homeowner to fight.

So, if you find yourself in an eminent domain situation, your best bet is to lawyer up, get a skilled real estate agent on your team, and work to negotiate the best price and terms you possibly can in the deal.

Header Image Source: (Ben Turnbull / Unsplash)