Copyright

What is Eminent Domain? - Definition, History & Examples

Instructor: Temante Leary

Temante has taught college Business, Law and Criminal Justice courses. He has a master's degree in business and a juris doctorate (law) degree.

In this lesson, we will learn about the meaning of eminent domain, the government's right to exercise the power of eminent domain and examples of eminent domain.

Background

Eminent domain permits federal, state, county or city governments in each state to take ownership of private property for it to be used for general public use. The idea behind this concept is that it serves a general public benefit for the population as a whole instead of deferring to the benefit of private land owners. Eminent domain is often a controversial issue because people feel that their sentimental connection to their property is dismissed and isn't included in the government's decision to seize their land or in the courts' consideration of what a fair price is for their property.

What is Eminent Domain?

The Fifth Amendment of the United States Constitution provides a range of protections for citizens, and it also requires federal, state, county and city governments to pay a fair price, also known as fair market value, when they purchase all or part of a parcel of private property for the general public's use. If a government entity determines that public interest requires the use of a privately owned piece land, then they can use eminent domain to justify the purchase of that land, even if the person who owns the land doesn't want to sell it.

What is Public Use?

Private property purchased under eminent domain must be used only for a general public purpose. Eminent domain doesn't give the government the right to, for example, buy your grandma's house in order to build a members-only spa for the Senate. Examples of a general public purpose are to build a dam, a highway or a national park. These are important resources that benefit the general public. Eminent domain can also be used for economic development in a community. For example, eminent domain has been used to acquire land for building a shopping center, housing development, stadium or arena.

Fair Market Value

A person must receive a fair price for their property when the government uses eminent domain. This fair price is described in the Fifth Amendment as 'just compensation.' Just compensation - that's 'just' as in 'justice' - is normally determined by the fair market value of the property. The fair market value of a property is supposed to be impartial, benefitting neither the buyer nor the seller, meaning it may be lower than the value the property is actually worth in its given market. For example, in a city like San Francisco, where housing prices are wildly inflated by demand rather than the size and quality of the property, fair market value is likely to be lower than the price the property would fetch if competition caused the selling price to skyrocket. However, fair market value is typically determined by a consideration of what price a buyer would pay and a seller would accept in a low-pressure situation, so though this price may be lower than what a seller could theoretically get in an ordinary property sale, they are still likely to be paid an acceptable amount of money thanks to the protections provided by the Fifth Amendment.

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