As long as there has been government, there has been a system of land ownership. Historically, many people lived under a feudal system in which the king or a noble owns the land and the people rent it from them. In the United States, we have an allodial system. Under the allodial system, the government grants rights of land ownership to the people but retains the right to tax to meet the public needs of the government.
The government has four powers inherent to the allodial system, which are taxation, escheat, police power, and eminent domain. Under the Fifth Amendment of the United States Constitution, the government reserves the right to acquire private property for public use. This is called eminent domain. This applies to all levels of government, including local municipalities. If a government wants to acquire private property under eminent domain, they will first attempt to negotiate a sale.
A well-informed property owner knows if the government is attempting to take private land, they are willing to spend a significant amount of money, whether it is $500,000 on the property or $300,000 on the property and an additional $200,000 in court costs. With that said, the best way to deal with eminent domain is to negotiate for a significantly higher price and sell. However, if the property owner does not want to sell the government can still take the land after following a condemnation proceeding.
Depending on the owners’ estate in the land, eminent domain may prove to be too large of a headache for the government. The condemnation proceeding must demonstrate that the land is for public use, that the owner is getting just compensation, and that the owner has been afforded due process. Due process in this case refers to a two-step process. Firstly, the government must demonstrate that their acquisition of the land serves a legitimate purpose for the public good. Secondly, the legitimate purpose may not be vague or overbroad.
The procedural process followed after the government has given due process involves three steps. Firstly, the property owner must be given notice of the government’s intent of acquisition. Secondly, the property owner must have an opportunity to be heard. Thirdly, the property owner must be heard before an impartial tribunal.
Sometimes, government action can render a property valueless or make it otherwise inhabitable. In these cases, the property owner may file an inverse condemnation lawsuit. Under an inverse condemnation lawsuit, the property owner sues the government to force them to acquire the private property and afford the owner compensation. For example, if a city constructs a sewage plant in a residential neighborhood, resident may file an inverse condemnation lawsuit to receive compensation in exchange for their properties. This compensation is called consequential damages.
In some cases, the government may want to take a portion of private property for the public good instead of the entire property. For example, the expansion of a road may require taking an amount of land from each front yard. Since it is difficult to put a dollar amount on a few square feet of yard, property owners can negotiate for higher compensation. If a property owner receives compensation exceeding the value of the land, it is called severance damages.
The government may take private property through another means called escheat. Depending on a state’s laws of intestate succession, which determine a citizen’s heirs in the absence of a will, escheat can revert a property into the state’s possession. A state’s police power may dictate how private property can be used. An example of this would be a zoning board or any environmental protection statute.