Word-of-the-Week: Eminent Domain

What is eminent domain?

Eminent domain is the right of the government to take private property for public use.

However, the government is required to pay the owner the fair market value (FMV) of the property taken. [Loretto v. Teleprompter Manhattan CATV Corp. (1982) 458 US 419]

The process of using the power of eminent domain is called condemnation.

Examples of eminent domain include condemning property to:

providing highways and roads;
establish parks;
construct flood control levees; and
provide land for redevelopment.

Editor’s note — firsttuesday experienced eminent domain as a tenant in 2011.

Inverse condemnation

The government’s exercise of police power may become a taking of an owner’s real estate by inverse condemnation if the government surpasses their power of eminent domain.

For example, consider an owner who demolishes their beachfront bungalow. The owner intends to rebuild a better home and submits an application to the coastal commission which has jurisdiction over the use of beachfront property.

A public beach is located nearby, but not directly adjacent to the owner’s real estate.

The coastal commission grants the owner a permit to build, conditioned on the owner granting to the public a frontage easement across their beachfront property. The coastal commission claims its goal is to allow better public viewing of the coastline.

The owner refuses to comply with the condition unless the coastal commission pays for the easement. The coastal commission denies the owner’s application and permit to build, claiming it is reasonably exercising its police power.

Does the coastal commission have to pay for the easement across the owner’s beachfront?

Yes! The coastal commission has not merely restricted the owner’s use of their land, it has required the owner to deed an interest away in the form of a frontage easement. [Nollan v. California Coastal Commission (1987) 483 US 825]

Conditioning a permit to build on the granting of an easement to the public is a taking which requires reimbursement to the owner from the governmental agency. The coastal commission did not show the easement related to a legitimate state interest to constitute eminent domain. Instead, the government agency’s action — in this case, demanding an easement as a condition of administratively granting a permit — leads to the taking of real estate and is inverse condemnation.

However, most California inverse condemnation cases filed by owners fail. California courts do not want to burden local governments with the obligation of paying for any diminution of property values which result each time it regulates or downgrades the use of real estate. [First English Evangelical Lutheran Church of Glendale v. County of Los Angeles (1989) 210 CA3d 1353]

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