Eminent Domain and What It Can Mean for Property Owners

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  2. Eminent Domain and What It Can Mean for Property Owners
Real Estate

Under legal principles of eminent domain or condemnation, the federal, state or municipal government can take land that belongs to private property owners and convert it for public use. However, the government only can take private land if it pays the property owner just compensation for the land. This right derives from the Fifth Amendment to the U.S. Constitution.

Reasons for the Government to Exercise Eminent Domain

Eminent domain can occur when the government takes private property to specifically use it as a public road or another form of development. However, it also can occur when the government takes steps to make private property useless, such as by placing environmental restrictions on land so that its owners can never develop it.

A.R.S. § 12-1111 sets out the legally valid public purposes that can justify the state, a county, city, town, village, or other political subdivision exercising eminent domain. The reasons generally are very broad in scope. Some examples of valid public usage include:

  • All public uses authorized by the federal government
  • Any buildings or grounds for the use of the county, city, town, or school district
  • Roads, streets, and alleys to benefit counties, cities, towns, or villages
  • Reservoirs, canals, ditches, flumes, aqueducts, and pipes to benefit counties, cities, towns, or villages, or to use for transportation, irrigation, or to generate electricity

Eminent Domain Proceedings

A.R.S. § 12-1116 outlines the procedures that governments must follow to begin eminent domain proceedings. First, they must get one or more property appraisals and offer to purchase the property from the property owner. In many cases, the government will make an attractive offer to the property owner to expedite the process and avoid litigation and attorneys’ fees.

If the property owner rejects the offer, the government can file a condemnation lawsuit. The government then will ask the court to immediately take possession of the property and use it for the stated public purpose. Next, the court will consider whether the government intends to use the property for a legitimate public purpose authorized by the state’s eminent domain statute and establish just compensation for the property.

As is the case with any civil suit, the parties can reach a settlement at any time through negotiations. Although many private property owners vow to fight back against eminent domain proceedings at all costs, they always should consider the likelihood of success with the expenses and time involved in protracted litigation.

Determining Just Compensation for Property

Just compensation for private property generally refers to the fair market value of the property. However, for many private property owners, the fair market value may not fully reflect how much they value the property. They may have invested a lot of time and money into the property that the fair market value doesn’t necessarily reflect. They also may have sentimental or familial attachments to the property that are absent from a fair market value calculation.

One way to increase the just compensation would be to obtain an independent appraisal of the property. In many cases, the government appraisal may be flawed. However, another appraisal value can assist in the negotiations process and potentially increase the government’s offer of just compensation.

We Are Here to Help You with Your Legal Needs

Our goal is to help you understand how to establish and maintain your tax-exempt status and reinstate it, if necessary. In addition, we can help you take proactive steps to avoid problems with the laws and rules that govern these issues. Contact the offices of Provident Law today at (480) 388-3343 and schedule an appointment to speak with us about your legal matter.

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