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What constitutes “just compensation” in an eminent domain taking?

On Behalf of | Apr 3, 2023 | Real Estate

Eminent domain is the government’s Constitutional right to take a landowner’s private property for public use. In exchange, the government pays the landowner “just compensation” equivalent to the damages caused by the taking. How does the government arrive at the amount of just compensation to pay, and what can a landowner do if they do not like this offer?

Calculating just compensation

When determining the damages that a landowner will experience due to the taking, the government will consider the property’s fair market value and the reduced value of the property due to the taking.

The fair market value of the property is the price at which it would be sold in the free market. This price is often calculated by a professional appraiser. Some factors the appraiser will consider include:

  • The value of buildings, standing timber and crops on the property taken
  • Rental values
  • The value of the “highest and best use” of the property taken

Just compensation includes recovery of basic real estate rights and for any loss of improvements that might have been made on the land. Any damage caused by the taking must impact the total value of the property taken.

However, the value of the property taken does not include damage caused by zoning changes, damage to the surrounding area and damage to the community as a whole. Case law has also determined that there can be no recovery for imaginary losses, remote possibilities and loss of sentimental value.

Is just compensation fair?

Whether a just compensation offer is fair depends on the opinion of the landowner. If a landowner believes the government’s just compensation offer is insufficient, they can reject the offer. If a landowner rejects the government’s offer of just compensation, the matter can go to court for a final calculation of damages.

What constitutes just compensation can be difficult to calculate, and the final offer may not seem fair. The government has Constitutional eminent domain taking rights, but landowners also have the right to receive an appropriate amount of damages for the property lost.