Eminent Domain: Know Your Rights When Uncle Sam Comes Knocking

eminent domain

Imagine this: you’re living the American dream. You’ve got the job you’ve always wanted; living in domestic bliss with your partner, maybe a couple kids and a dog, and of course, your dream house with your dream mortgage. Sounds amazing, right? Then suddenly, Uncle Sam shows up for the first time in years (aside from his manipulative, annual “help your uncle out” pity letter every April) and he demands that you hand your dream home over to him because he’s older and knows what’s best for you and your property. This is eminent domain.

The truth is that this scenario is not entirely fictitious. If you are a property owner in the US, the government can actually come and seize your property at any time under the law of eminent domain, founded in the 5th amendment. In fact, from 1998 to 2002, 10,000 properties over 41 states faced condemnation, only to be handed over to private developers. Unfortunately, this could all have been perfectly legal, as eminent domain gives the government the right to claim any property without the owner’s consent as long as appropriate compensation is paid and it is claimed for public use.

What defines public use? The definition seems pretty straight forward, but the implications can be very broad. There are two types of “public use” properties; those for direct public use, and for private use that benefits the public. Direct public use could include roads and freeways, municipal buildings and schools, and preservation of historic sites. Private properties that benefit the public are things such as railroads, utilities sites, and renovation of “blighted” sites.

The term “blighted” is one that has been used particularly loosely by the government in order to take hold of personal properties. For instance, in Toledo, OH in 1999, an entire neighborhood of 83 well-maintained homes and 16 businesses were “blighted” in order to free up land for a Chrysler plant. Chrysler was granted millions of dollars to build the plant, based on the promise that it would provide 5,000 new jobs; only 2,100 jobs ever came to fruition.

You might think that a potential upside for eminent domain coming into play for “blighted” areas is that there would be new construction and developments with up-to-date technologies and energy efficiency. However, lawsuits from private property owners fighting the use of eminent domain have actually harmed the progress of newer technologies being implemented in some cases. For instance, the development of a 300,000 acre wind farm in Oklahoma has been halted due to legal battles between the Oklahoma land owners and the government. It’s just another sad reality of this problematic law.

Another sad outcome of eminent domain is that it affects minorities and poverty stricken areas the most. The median income in eminent domain areas is $19k, compared to $23k in surrounding areas. Eminent domain areas are 58% minorities, compared to 48% in surrounding areas. Twenty-five percent live in poverty, compared to 16% in surrounding areas. Fifty-eight percent are renters, compared to 45% in surrounding areas. From 1949 to 1963, 177,000 families and 66,000 individuals (78% racial minorities) were displaced for “urban renewal”, but only 48k new housing units were built in that time frame. Of those, only 20k were low-income housing.

It’s true that property owners rarely succeed in combating government takeover, but there are things you can do. The first thing to do is to seek legal counsel. An attorney can help you understand your rights as a property owner, can help you negotiate for better compensation, and can even take your case to trial if necessary.

Eminent domain may be the law of the land, but it’s important to know how best to deal with Uncle Sam when he comes knocking.

eminent domain infographic
Source: Dallas & Turner, PLLC

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