Real Estate Terms

Eminent Domain, Condemnation, and Inverse Condemnation

Eminent domain is the government’s right to take over privately owned real estate for public use. Eminent domain is a government power granted by the constitution and protected under the fifth and fourteenth amendments. This article also covers the difference between condemnation and eminent domain. Make sure to read all the way through to understand the difference!

What is Eminent Domain?

Definition: The right of the government to take over privately owned real estate for public use.

It’s worth noting, in some cases, private entities may also have the power of eminent domain for projects considered public use.

Eminent domain is the government’s constitutional right to take over privately-owned real for public use (usually despite the owners’ wishes). Eminent domain for the federal government is protected under the Fifth Amendment of the Constitution, while for state governments, it is protected under the Fourteenth Amendment.

Eminent Domain Example

Here is a quick and easy example.

Let’s say Mr. Johnson lives on a property right next to a bridge. The state wants to widen the bridge due to the higher amounts of traffic reported. The state needs the space on either side of the bridge to widen the road.

The government then seizes Mr. Johnson’s property and gives him $150,000 for it. Mr. Johnson does not have the opportunity to say no; it’s the law. However, he can challenge whether that $150,000 is a fair market value.

Public Use and Other Uses of Eminent Domain

When you hear the term, public use think of infrastructure like highways, major pipelines, railroads, etc.

There are some other more unique circumstances where eminent domain can be used, though. For instance, all real estate in Centralia, Pennsylvania, was claimed by the state government under eminent domain in 1992. It was claimed due to the city’s dangerous environment having constant fires from a mining accident.

What is Condemnation?

Definition: The procedure used by a public or private entity with the powers granted from eminent domain to take privately owned real estate.

Try not to confuse condemnation with a property being “condemned.” That is when a building is legally unfit for a human to live in, typically due to safety measures. This comes into play if a building is not up to code or has some zoning violations; however, the definitive difference is the government does not take the title of the property; it just forbids anyone from living there until the homeowner fixes the problem.

What is the Difference Between Eminent Domain and Condemnation?

Condemnation and eminent domain are almost the same things. The only difference is one is the right while the other is the action to do that right. Or in other words, eminent domain is the right which grants the government to take privately owned land from someone, while condemnation is the action of taking that land.

What is Inverse Condemnation?

Definition: The event in which the government takes private property but fails to pay compensation or just compensation.

Remember earlier in our example when I told you Mr. Johnson could challenge whether what he received for his home was the fair market value? Well, that’s inverse condemnation. A property owner can sue to obtain the required just compensation through the process of inverse condemnation.

What to Know for the Real Estate Exam

While understanding condemnation and even inverse condemnation are essential for your real estate career, understanding eminent domain is vital for exam day. Most importantly, you have to distinguish what eminent domain is and understand when it is happening. An example of what you might see on exam day is a question describing a situation where the government comes in and takes someone’s land for public use. You have to know that is an instance of eminent domain.

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