What is eminent domain?
Eminent domain is a legal process that allows the government to take title and possession of private property from the landowner for a public purpose or necessity. Both the Federal and Colorado constitutions grant the government the right to take private property for a public purpose. However, the government is required to pay the landowner just compensation for the taking of private property. Eminent domain is also called a taking or condemnation.
Who can exercise eminent domain powers?
In Colorado, the state or local government can exercise eminent domain powers. Additionally, certain private entities can also exercise the power. Private entities must be regulated by the government and serve the public in order to exercise eminent domain power. A few examples of private entities with eminent domain power are:
- Water conservations, and
- Utility providers.
When private entities exercise eminent domain powers they are using the land for public benefit.
What are the limitations on the government’s eminent domain power?
The government is limited in its ability to take private property from landowners in three major ways:
- The government must act in good faith for a public purpose. A public purpose is generally a public use, necessity or benefit.
- The government must notify the landowner of its intent to exercise eminent domain and the landowner has the right to be heard in court.
- The government is required to pay just compensation for the taken property. Just compensation is the fair market value for the property.
What is a public purpose?
In order to exercise the power of eminent domain, the government must use the land for a public purpose. The public purpose may be a public necessity, a public use or a public benefit.
In Colorado, there is not a specific list or description of an acceptable public purpose, so the issue is often litigated in court. The court’s role is to determine whether the government’s real purpose for the taking is actually a public purpose. Some examples of previous acceptable public purposes are:
- Public roads,
- Water treatment plants,
- Public facilities,
- Waterways, and
- Land development for urban renewal.
Through case law, the definition of what constitutes a “public purpose” has significantly expanded throughout the years. Perhaps surprisingly, even private businesses can exercise the power of eminent domain through the government if they can show that doing so would provide some type of public benefit. Examples of the kinds of private entities that may be able to exercise the power of eminent domain include:
- Oil and gas companies;
- Utility providers;
- Real estate developers; and
- Water companies.
So long as the government, or the private entity exercising the government’s power of eminent domain, has a legitimate use for the land for the benefit of the public, the government can exercise eminent domain power over any private property.
What does the government do when it wants to exercise eminent domain powers?
Before the government can exercise eminent domain powers, the government must negotiate with the landowner to purchase the private property. When it decides that it needs a property, it will notify all interested parties and make a reasonable offer to purchase the property. The offer should be based on the fair market value of the property. This fair market value is determined by an appraisal, paid for by the government.
If the government and the landowner cannot reach an agreement, the government can start eminent domain proceedings. At trial, the court will determine if the taking is for a valid public purpose. If it is, the court will ensure that the owner is justly compensated for the private property and the title to the private property transfers to the government.
Are there any defenses or ways to stop the eminent domain process?
Eminent domain may only be stopped if the court determines that the government did not meet its requirements. A government will not meet its requirements if the reason for taking the property is not a public purpose or if the owner is not justly compensated.
For example, the local government might want to build a house for the Governor’s best friend near the Governor’s favorite lake. A private party owns the land that the government wants to build the house on, and, in order to build the house, the government will need to take the landowner’s property. A court would likely find that the government is not allowed to exercise its eminent domain power because building a house for the Governor’s friend is not a public purpose. Therefore, the landowner may successfully stop the eminent domain process.
What is just compensation?
The government must pay just compensation to the landowner in order to take a piece of private property. Just compensation is the fair market value of the property at the time of the taking. Fair market value is based on the appraisal and generally represents the price a buyer is willing to pay for the property. In the event that the land produces income, the owner might be able to recover some of that lost potential income.
Just compensation should result in the owner being in the same financial position after the taking, as he or she was before the taking. For example, a local government might want to build a new courthouse. In order to build the courthouse, the government needs to take some private property. If the private property’s value is appraised at $100,000, the property owner is entitled to receive $100,000 from the government.
In many eminent domain cases, there is a significant disagreement between the government and the landowner regarding the fair market value of the land. When this occurs, the government may start an eminent domain proceeding in court requesting a judge determine the legitimacy of the proposed taking and determining what just compensation would be in a particular case.
Because of the complexity of the law surrounding eminent domain, the government is at a distinct advantage when attempting to take private property. For this reason, any landowner who is involved in an eminent domain case should retain an attorney as soon as possible. Doing so will ensure that you receive the full and fair value of your land and that you can defend against an illegal exercise of eminent domain if the government attempts one.
What if only part of the private property is taken?
It is possible that the government will not want all of the landowner’s private property. For example, a local government might be widening a public road. The public road that the government wants to widen is bordered by a suburban neighborhood and, in order to widen the road, the local government will need to take some property from the backyard of some of the properties. The government does not have to exercise eminent domain powers over the entire property. Rather, it can take only the part of the property that it needs.
When the government takes only part of the landowner’s private property, the government must compensate the landowner for the actual value of the private property taken and any additional damages to the value of the remaining private property.
When does the government take possession of the private property?
Generally, the government takes possession of the private property upon payment of just compensation to the landowner. Payment of just compensation may occur at any point in the eminent domain proceedings: negotiations, settlement, after the hearing, etc.
The government may take immediate possession of the private property before the hearing either by an agreement or after a contested hearing. The immediate possession cannot take place until, at least, 30 days after the government serves notice for the eminent domain hearing.
How can an attorney help during the eminent domain process?
The eminent domain process can be complex and intimidating. When the government threatens to use its eminent domain power many landowners believe there is nothing they can do to protect themselves. However, seeking counsel to help landowners protect themselves. An attorney can help:
- Ensure the government does not take advantage of the landowner,
- Ensure the owner receives the fair market value for the property,
- Challenge the government’s right to take the property,
- Ensure the government has a public purpose for taking the property, and
- Recover additional damages to any remaining property.
Overall, an attorney can help protect the landowner’s rights during the eminent domain process.
Eminent domain is a powerful constitutional right that allows the federal, state, and local governments to take private property for a public purpose. Once the government decides to take a property, an eminent domain proceeding can only be stopped when a court determines that the land is not being used for a legitimate public purpose. An attorney can help protect the landowner’s rights and make sure the government is not taking advantage of the landowner during the eminent domain process.
For help defending a property in an eminent domain proceeding or ensuring that just compensation is received, contact us at (303) 688-0944.