It's Your Property, Or Is It?

The Balance between the Government’s Power of Eminent Domain and Your Fifth Amendment Protections

Background: Eminent domain is the power to take property for public use. Not only is this a power of the federal, state and local governments, but it is also a power that may be delegated by the state to municipalities or even private persons or corporations (such as electric or utility companies). The Fifth Amendment to the United States Constitution allows the government to take private property for public use as long as the private landowner is afforded just compensation for the taking of his/her property.

In North Carolina, Chapter 40A deals with the eminent domain process. Two tests must be satisfied in North Carolina.

  1. The first test determines if the public has a right to a definite use of the condemned property.
  2. The second test asks whether there is some benefit for the public as result of the condemnation.

Just compensation is determined at the time of the taking and is the property’s “fair market value” (§40A-64(a)).

Fairly recent Supreme Court cases addressed the gray area between the government’s eminent domain powers versus the protections afforded under the Takings Clause. In Kelo v. City of New London (2005), the Supreme Court expanded the government’s eminent domain power by holding that the government may use this power to seize property whenever the government deems it necessary for “economic development.” This case received a lot of criticism for providing such an expansive view of the Takings Clause and affording the government the discretion to determine what is necessary for “economic development.” Then, on June 21, 2019, the Supreme Court decided Knick v. Township of Scott, Pennsylvania and afforded private property owners more protection against eminent domain. Specifically, the Supreme Court held that plaintiffs may proceed directly to federal court without seeking state litigation first.

Impact on Private Landowners Facing Eminent Domain

As you can imagine, a private landowner dealing with eminent domain will likely have a lot of questions such as:

  • What should I do? Seek legal advice as soon as you hear your property could be taken for public use. The process will involve a lawsuit. An experienced attorney in eminent domain cases will guide you on the proper steps to take so that you don’t unknowingly waive your rights.
  • Can I stop the process? Not if the above-referenced tests are met; however, the government cannot dictate the purchase price. The government will have the property appraised to calculate its fair market value. You should get a second opinion from an appraiser that you select.
  • Can I assume the government will officer fair market value for my property? No. Although appraisers are supposed to be non-biased, there is not an exact formula for real estate valuation. The government or entity taking your property should be expected to negotiate the value of your property, just like a buyer would.

Citizens are afforded a constitutional right to private property. Therefore, the fear of an eminent domain lawsuit or lack of understanding regarding the process should not prevent anyone from opposing the eminent domain process or arguing that he or she is not being afforded just compensation. If you are facing loss of property due to eminent domain, seeking legal counsel should be your first step.

Published by Jessica Bertovich on July 3, 2019.