As the population of a community grows, it is only natural that utilities and other government services must expand to meet the increase in demand. If possible, most municipalities try to use the land and other resources that they already own to meet the needs of the community. However, it is not possible to do this in all instances. This means that there must be a way for the government to acquire more property, and some of this is likely to be privately owned.
The method for how the government takes property is officially called “eminent domain.” The modern version of this concept has its roots in the U.S. Constitution, but it has been used by governments and societies for hundreds of years. Every state in America and most county and city governments also have laws relating to eminent domain. Typically, these laws are aimed at finding an acceptable balance between the need of governments to acquire private property and the right of citizens to own property without being unfairly deprived of it.
It is not an easy balance to strike, which is why the laws are constantly evolving. Courts also have an important role to play as they often settle disagreements that arise between government agencies and property owners. Decisions reached by judges and juries may affect future eminent domain laws to further define what the government can and cannot do as well as solidifying the rights of the property owner.
Several restrictions are placed on the government’s ability to claim eminent domain. The property they take must be for public use and they must offer just compensation to the owner of the property. Both of these restrictions are subject to broad interpretation, and they can form the basis of administrative and civil lawsuits.
A government agency may spend months planning for improvements like new roads, the expansion of utility services or any number of other projects that are aimed at improving the lives of the public. As the plans are drafted, government personnel will carefully determine which parcels of private property are likely to be affected by the project. This can mean that the owner will lose all of their property. However, it is more common for only a portion of the owner’s land to be affected. For instance, a road-widening project may mean that several business owners will lose 10 feet of their parking lots, though their operations will remain largely intact.
The government works with appraisers to determine the fair market value of any property that they plan to seize. If they will not be claiming the entire parcel, then they offer an amount that is in proportion to the amount of land being seized. Should the owner agree to the initial offer, then the transaction proceeds as a straightforward purchase.
The owner also has the right to dispute the amount that is being offered. Typically, the best way to do this is by obtaining another appraisal. Many owners also enlist the services of a lawyer or real estate professional to help them with the negotiation process. When an owner disputes the amount of compensation offered by the government, condemnation proceedings begin.
Numerous factors can affect the value of a particular piece of property. Some of these factors may be:
-The size of the parcel
-How the parcel is currently used
-Whether or not the land holds valuable natural resources
-Uses and values of neighboring properties
-The presence of structures
-Whether or not there are tenants or lessees currently on the property
Appraisers generally use one of three valuation methods to determine how much property is worth. The market approach relies on recent sales of similar properties while the cost approach determines the expense of the owner replacing existing structures and a comparable parcel of land. Under the income approach, the appraiser looks at the property’s income potential from tenants and lessees.
Only a professional appraiser is able to determine which valuation method is appropriate. It is critical for property owners to be aware that government agencies tend to offer initial amounts that are lower than the true fair market value. It also may be that the government’s appraiser did not use the correct valuation method for their calculations. A lawyer or real estate professional can offer critical advice about getting a second valuation opinion.
The government agency is required to provide the property owner with adequate notice of their intentions. This gives the owner time to consult with professionals who can help them to determine the fairness of the offer. When it comes to how the government takes property, it is wise to proceed with caution and to obtain assistance from legal and real estate professionals.