Eminent domain (United States), compulsory purchase (United Kingdom, New Zealand, Ireland), resumption/compulsory acquisition (Australia), or expropriation (South Africa and Canada) is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent. The property is taken either for government use or by delegation to third parties who will devote it to public or civic use or, in some cases, economic development. The most common uses of property taken by eminent domain are for public utilities, highways, and railroads; however, it may also be taken for reasons of public safety, such as in the case of Centralia, Pennsylvania. Some jurisdictions require that the government body offer to purchase the property before resorting to the use of eminent domain.
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The term "eminent domain" was taken from the legal treatise, De Jure Belli et Pacis, written by the Dutch jurist Hugo Grotius in 1625[1], who used the term dominium eminens (Latin for supreme lordship) and described the power as follows:
"... The property of subjects is under the eminent domain of the state, so that the state or he who acts for it may use and even alienate and destroy such property, not only in the case of extreme necessity, in which even private persons have a right over the property of others, but for ends of public utility, to which ends those who founded civil society must be supposed to have intended that private ends should give way. But it is to be added that when this is done the state is bound to make good the loss to those who lose their property."
Some U.S. states, including New York and Louisiana, use the term appropriation as a synonym for the exercising of eminent domain powers.
The term "condemnation" is used to describe the formal act of the exercise of the power of eminent domain to transfer title to the property from its private owner to the government. This use of the word should not be confused with its sense of a declaration that property is uninhabitable due to defects. Condemnation via eminent domain indicates the government is taking ownership of the property or some lesser interest in it, such as an easement. After the condemnation action is filed the amount of just compensation is determined. However, in some cases, the property owner challenges the action because the proposed taking is not for "public use", or the condemnor is not authorized to take the subject property, or has not followed the proper substantive or procedural steps as required by law.
The exercise of eminent domain is not limited to real property. Governments may also condemn personal property. Governments can even condemn intangible property such as contract rights, patents, trade secrets, and copyrights. Even the taking of professional sports team's franchise has been held by the California Supreme Court to satisfy the "public use" constitutional limitation, although eventually, that taking was not permitted because it was deemed to violate the interstate commerce clause of the U.S. Constitution.[2]
The practice of condemnation was transplanted into the American colonies with the common law. In the early years, unimproved land could be taken without compensation; this practice was accepted because land was so abundant that it could be cheaply replaced. When it came time to draft the United States Constitution, differing views on eminent domain were voiced. Thomas Jefferson favored eliminating all remnants of feudalism, and pushed for allodial ownership.[3] James Madison, who wrote the Fifth Amendment to the United States Constitution, had a more moderate view, and struck a compromise that sought to at least protect property rights somewhat by explicitly mandating compensation and using the term "public use" rather than "public purpose", "public interest", or "public benefit".[4]
The Fifth Amendment imposes limitations on the exercise of eminent domain: the taking must be for public use and just compensation must be paid. Some historians have suggested that these limitations on the taking power were inspired by the need to permit the army to secure mounts, fodder and provisions from local ranchers and the perceived need to assure them compensation for such takings. Similarly, soldiers forcibly sought housing in whatever homes were near their military assignments. To address the latter problem, the Third Amendment was enacted in 1791 as part of the US Constitution's Bill of Rights. It provided that the quartering of soldiers on private property could not take place in peacetime without the landowner's consent. It also required that, in wartime, established law had to be followed in housing troops on private property. Presumably, this would mandate "just compensation", a requirement for the exercise of eminent domain in general per the Fifth Amendment.[5] All US states have legislation specifying ED procedures within their respective territories.[6]
The power of governments to take private real or personal property has always existed in the United States, being an inherent attribute of sovereignty. This power reposes in the legislative branch of the government and may not be exercised unless the legislature has authorized its use by statutes that specify who may use it and for what purposes. The legislature may delegate the power to private entities like public utilities or railroads, and even to individuals for the purpose of acquiring access to their landlocked land. Its use was limited by the Takings Clause in the Fifth Amendment to the U.S. Constitution in 1791, which reads, "...nor shall private property be taken for public use, without just compensation". The Fifth Amendment did not create the national government's right to use the eminent domain power, it simply limited it to public use.[7]
The U.S. Supreme Court has consistently deferred to the right of states to make their own determinations of public use, although the reason why the constitutional term "public use" should not be subject to judicial interpretation, the same as other constitutional terms, has not been explained. In 1832 the Supreme Court ruled that eminent domain could be used to allow a mill owner to expand his dam and operations by flooding an upstream neighbor. The court opinion stated that a public use does not have to mean public occupation of the land; it can mean a public benefit.[8] In Clark vs. Nash (1905), the Supreme Court acknowledged that different parts of the country have unique circumstances and the definition of public use thus varied with the facts of the case. It ruled a farmer could expand his irrigation ditch across another farmer's land (with compensation), because that farmer was entitled to "the flow of the waters of the said Fort Canyon Creek... and the uses of the said waters... [is] a public use." Here in recognizing the arid climate and geography of Utah, the Court indicated the farmer not adjacent to the river had as much right as the farmer who was, to access the waters.[9] However, until the 14th Amendment was ratified in 1868, the limitations on eminent domain specified in the Fifth Amendment applied only to the federal government and not to the states. That view ended in 1896 when in the Chicago, Burlington & Quincy Railroad v. Chicago case the court held that the eminent domain provisions of the Fifth Amendment were incorporated in the Due Process Clause of the Fourteenth Amendment and thus were now binding on the states, or in other words, the states are required to take property for a public purpose and compensate the property owner for his loss.[10] This was in-tune with the beginning of what is known as the "selective incorporation" doctrine.
An expansive interpretation of eminent domain was reaffirmed in Berman v. Parker (1954), in which the U.S. Supreme Court reviewed an effort by the District of Columbia to take and raze blighted structures, in order to eliminate slums in the Southwest Washington area. After the taking, held the court, the taken and razed land could be transferred to private redevelopers who would construct condominiums, private office buildings and a shopping center. The Supreme Court ruled against the owners of a non-blighted property within the area on the grounds that the project should be judged on its plans as a whole, not on a parcel by parcel basis. In Hawaii Housing Authority v. Midkiff (1984), the Supreme Court approved the use of eminent domain to transfer a land lessor's title to its tenants who owned and occupied homes built on the leased land. The court's justification was to break up a housing oligopoly, and thereby lower or stabilize home prices, although in reality, following the Midkiff decision, home prices on Oahu escalated dramatically, more than doubling within a few years.
The Supreme Court's decision in Kelo v. City of New London, 545 U.S. 469 (2005) affirmed the authority of New London, Connecticut, to take non-blighted private property by eminent domain, and then transfer it for a dollar a year to a private developer solely for the purpose of increasing municipal revenues. This 5-4 decision received heavy press coverage and inspired a public outcry that eminent domain powers were too broad. in reaction to Kelo, several states enacted or are considering state legislation that would further define and restrict the power of eminent domain. The Supreme Courts of Illinois, Michigan (County of Wayne v. Hathcock (2004)), Ohio (Norwood, Ohio v. Horney (2006)), Oklahoma, and South Carolina have recently ruled to disallow such takings under their state constitutions.
The redevelopment in New London, the subject of the Kelo decision, proved to be a failure and as of the early 2010 (over four years after the court's decision) nothing has been built on the taken land in spite of the expenditure of over $80 million in public funds. The Pfizer corporation, who would have been the primary beneficiary of the additional development, announced in 2009 that it would close its $300 million New London research facility, shortly before the expiration of its 10-year tax abatement agreement with the city.[11] The facility was subsequently purchased in 2010 for just $55 million by General Dynamics Electric Boat.[12]
American libertarians argue that eminent domain is unnecessary. Bruce L. Benson notes that utilities, for instance, have a variety of methods at their disposal, such as option contracts and dummy buyers, to obtain the contiguous parcels of land needed to build pipelines, roads, and so forth. These methods are routinely used to acquire land needed for shopping malls and other large developments.[13] Walter Block argues that the problem of recalcitrant landowners ("holdouts") who refuse reasonable offers for the sale of their land is solved in the long term by the fact that their failure to accumulate wealth through such trades will give them a relative disadvantage in attempting to accumulate more land. Thus, the vast majority of land will tend to fall into the control of those who are willing to make profitable exchanges.[14]
American courts have held that the preferred measure of "just compensation" is "fair market value", i.e., the price that a willing but unpressured buyer would pay a willing but unpressured seller for the subject property under ordinary circumstances, with both parties fully informed of the property's good and bad features.[15] Also, this approach takes into account the property's highest and best use (i.e., its most profitable use) which is not necessarily its current use or the use mandated by current zoning if there is a reasonable probability of zone change.
This approach has been severely criticized because it omits from consideration a variety of incidental economic losses that a taking of land inflicts on its owners. The most egregious example of such losses is provided by the American rule that denies any compensation to owners of businesses that are destroyed when land on which they are located is taken, and the business cannot relocate. A small minority of states have provided by statute that at least some business losses are compensable.
Also, attorneys' and appraisers' fees are not recoverable (except in Florida) so the owners of the taken property never recover the full value of the taken land, even if they prevail in the valuation trial, because a part of their recovery must be used to pay those lawyers and appraisers. Some states do provide for limited recovery of such litigation expenses, typically when the owners' recovery substantially exceeds the amount of the condemnor's pretrial offer or the evidence presented by the condemnor at trial by a specified percentage. Also, when a condemnation action is abandoned, the owners are typically entitled (by statute) to be paid reasonable attorneys' and appraisers' fee they had to incur in defending the condemnation action.
When payment of compensation is delayed, the owner of the taken land is entitled to receive interest on the award of compensation, that accrues from the time of taking to the time of payment. The interest must be reasonable, so that when prevailing market rates of interest exceed the statutory rate (as in inflationary times), the former has to be used.
The U.S. Supreme Court takes the position that unlike the determination of what is a "public use," the determination of compensation is a judicial, not legislative, function, but legislatures are free to provide for more liberal awards of compensation than the constitutional minimum determined by courts.
In cases of partial takings of land, the owners are entitled to compensation for the taken part, plus severance damages (the diminution of value of what remains of their property after the taking). If the partial taking creates special benefits (i.e., it causes an increase in the value of the remaining land) their value is offset againt compensation, with the majority of states allowing such offsets only against severance damages, so the owner always gets paid for the taken land. When a partial taking impairs access to the remainder land, that gives rise to a contentious issue because courts take the position that diminution in value caused by impaired access is compensable only when the impairment is substantial. Traffic regulations that affect access (one-way streets, median dividers, etc.) are deemed exercises of the police power and are not compensable.
In addition to fee simple titles, all interests in property (easements, leaseholds, etc.) are compensable. The measure of value of a leasehold is the amount by which prevailing comparable rentals in the area exceed the actual contracted-for rent. This amount is known as "bonus value" of a lease. It is calculated over the remaining life of the lease and then reuced to its present value. The measure of compensation for an easement is the difference in the value of the subject land as unencumbered and as encumbered by the easement.
In determining value, zoning and other land-use regulations are considered, but if it appears that there is a reasonable probability of zone change to a higher use, that may be shown and in that case the owner is entitled to an additional increment of value (the extra amount over and above the value under current zoning, that the market would pay for the probability of rezoning).
The appraisal profession recognizes several different methods of calculating value, but courts are largely stuck in the conventional approach of using three valuation approaches: (a) market data analysis or comparable sales value, (b) the capitalization of rentals, and (c) the reproduction-less-depreciation approach under which the cost of reproducing the improvements on the propery is estimated and then depreciated to allow for wear and tear and functional or economic obsolescence. The value of the land is then added to the value of the reproduced, depreciated improvements. Some states allow compensation as the cost of reproduction without depreciation, but only in cases where the subject property, though privately owned, performs an important public or charitable function.
The U.S. Supreme Court has indicated (U.S. v. Cors) that it is not its intention to make a "fetish" out of market value as the measure of compensation, and that other approaches may be used when conventional methods do not work, or if applied, would create an injustice (Pewee Coal v. United States). These situations, however, are extremely rare.
Sudies in several parts of the country (California, Georgia, Minnesota, New York and Utah) have demostrated that condemning agencies frequetly undercompensate property owners, and that those owners who reject the pre-litigation offers and go to court tend to recover substantially higher awards, whether by judges or juries.
When private property is destroyed, stolen, condemned, or disposed of, the owner may receive a payment in property or money in the form of insurance or a condemnation award.[16] If property is compulsorily or involuntarily converted into money (as in eminent domain) the proceeds can be reinvested without payment of capital gains tax provided it is reinvested in property similar or related in service or use to the property so converted, no capital gain shall be recognized.[17]
On June 23, 2006, the first anniversary of the Kelo decision (see above), President George W. Bush issued Executive Order 13406 which stated in Section I that the federal government must limit its use of taking private property for "public use" with "just compensation", which is also stated in the constitution, for the "purpose of benefiting the general public." The order limits this use by stating that it may not be used "for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken".[18] However, eminent domain is more often exercised by local and state governments, albeit often with funds obtained from the federal government.
In Canada, expropriation is governed by federal or provincial statutes. Under these statutory regimes, public authorities have the right to acquire private property for public purposes, so long as the acquisition is approved by the appropriate government body. Once property is taken, an owner is entitled to "be made whole" by compensation for: the market value of the expropriated property, injurious affection to the remainder of the property (if any), disturbance damages, business loss, and special difficulty relocating. Owners can advance claims for compensation above that initially provided by the expropriating authority by bringing a claim before the court or an administrative body appointed by the governing legislation.
In many European nations, the European Convention on Human Rights provides protection from appropriation of private property by the state. Article 8 of the Convention provides that "Everyone has the right to respect for his private and family life, his home, and his correspondence" and prohibits interference with this right by the state, unless the interference is in accordance with law and necessary in the interests of national security, public safety, economic well-being of the country, prevention of disorder or crime, protection of health or morals, or protection of the rights and freedoms of others. This right is expanded by Article 1 of the First Protocol to the Convention, which states that "Every natural person or legal person is entitled to the peaceful enjoyment of his possessions.". Again, this is subject to exceptions where state deprivation of private possessions is in the general or public interest, is in accordance with law, and, in particular, to secure payment of taxes. Settled case-law of ECHR provides that just compensation has to be paid in cases of expropriation.[19]
In France, the Declaration of the Rights of Man and of the Citizen similarly mandates just and preliminary compensation before expropriation; and a Déclaration d'utilité publique is commonly required, to demonstrate a public benefit.
Notably, in 1945, by decree of General Charles de Gaulle based on the untried[20] accusations of collaboration, the Renault company was expropriated from Louis Renault posthumously and nationalised as Régie Nationale des Usines Renault [20] — without compensation.[21]
After his victory in 1066, William the Conqueror seized virtually all land in England. Although he maintained absolute power over the land, he granted fiefs to landholders who served as stewards, paying fees and providing military services. During the Hundred Years War in the 14th century, Edward III used the Crown's right of purveyance for massive expropriations. Chapter 28 of the Magna Carta required that immediate cash payment be made for expropriations. As the king's power was broken down in the ensuing centuries, tenants were regarded as holding ownership rights rather than merely possessory rights over their land. In 1427, a statute was passed granting commissioners of sewers in Lincolnshire the power to take land without compensation. After the early 16th century, however, Parliamentary takings of land for roads, bridges, etc. generally did require compensation. The common practice was to pay 10 per cent more than the assessed value. However, as the voting franchise was expanded to include more non-landowners, the bonus was eliminated.
Allodial title is the title to land generally held in fee simple by an individual or group that is sovereign on that land. Thus, in English law, only the monarch holds allodial title. All others are tenants of the sovereign through their feudal vassalages. Sovereigns generally gain allodial title either by grant of another sovereign to such title, or through right of conquest.
In England and Wales, and other jurisdictions that follow the principles of English law, the related term compulsory purchase is used. The landowner is compensated with a price agreed or stipulated by an appropriate person. Where agreement on price cannot be achieved, the value of the taken land is determined by the Lands Tribunal, a court consisting of one barrister and two chartered surveyors. The operative law is a patchwork of statutes and case law. The principal Acts are the Lands Clauses Consolidation Act 1845, the Land Compensation Act 1961, the Compulsory Purchase Act 1965, the Land Compensation Act 1973, the Acquisition of Land Act 1981, part IX of the Town and Country Planning Act 1990, the Planning and Compensation Act 1991, and the Planning and Compulsory Purchase Act 2004.
The Basic Law for the Federal Republic of Germany states in its Article 14 (3) the "an expropriation is only allowed for the public good" and just compensation must be made. It also provides for the right to have the amount of the compensation checked by a court.
Esproprio, or more formally espropriazione per pubblica utilità (literally "expropriation for public utility") in Italy takes place within the frame of civil law. The law regulating expropriation is the D.P.R. n.327 of 2001,[22] amended by D.Lgs. n.302 of 2002;[23] it supersedes the old expropriation law, the Royal Decree n.2359 of 1865. Also other national and regional laws may apply. The general provisions for the expropriation stem from article 42 of the Italian Constitution and article 834 of the Codice Civile. Expropriation can be total (the whole property is expropriated) or partial; permanent or temporary.
Nazionalizzazione ("nationalization"), instead, is provided for by article 43 of the Constitution; it transfers to governmental authority and property a whole industrial sector, if it is deemed to be a natural or de facto monopoly, and an essential service of public utility. The most famous nationalization in Italy was the 1962 nationalization of the electrical power sector.
In Australia, section 51(xxxi) of the Australian Constitution permits the Commonwealth Parliament to make laws with respect to "the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws."[24] This has been construed meaning that just compensation may not always include monetary or proprietary recompense, rather it is for the court to determine what is just. It may be necessary to imply a need for compensation in the interests of justice, lest the law be invalidated.[25]
Property subject to resumption is not restricted to real estate as authority from the Federal Court has extended the states' power to resume property to any form of physical property. For the purposes of section 51(xxxi), money is not property which may be compulsorily acquired.. A statutory right to sue has been considered "property" under this section.[26]
The Commonwealth must also derive some benefit from the property acquired, that is, the Commonwealth can "only legislate for the acquisition of Property for particular purposes".[27] Accordingly, the power does not extend to allow legislation designed merely to seek to extinguish the previous owner's title.[28] The states and territories' powers of resumption on the other hand are not so limited. The section 43(1) of the Lands Acquisition Act 1998 (NT) grants the Minister the power to acquire land 'for any purpose whatever'.[29] The High Court of Australia interpreted this provision literally, relieving the Territory government of any public purpose limitation on the power.[30] This finding permitted the Territory government to acquire land subject to Native Title, effectively extinguishing the Native Title interest in the land. As noted by Kirby J in dissent and a number of commentators, this represents a missed opportunity to comment on the exceptional nature of powers of resumption exercised in the absence of a public purpose limitation.[31]
The term resumption is a reflection of the fact that, as a matter of Australian law, all land was originally owned by the Crown before it was sold, leased or granted [32] and that, through the act of compulsory acquisition, the Crown is "resuming" possession.
Art. 19, Nº 24, of the Chilean Constitution establishes that, "No one, in any case, can be deprived of its ownership, the property of such ownership or any of the essential attributes or faculties of the ownership, except by a general or special law that authorizes the expropriation by the cause of public utility or national interest, as qualified by the legislator. The expropriated will be able to claim over the legality of the expropriatorial act before regular Courts and will always have the right to an indemnification for the patrimonial damage effectively caused, which will be established by an amiable agreement o by a sentence handed down according to law for said Courts."
The vast majority of expropriated owners accept the amount of the indemnification, which usually is in line with real estate market values.
The Constitution originally provided for the right to property under Articles 19 and 31. Article 19 guaranteed to all citizens the right to 'acquire, hold and dispose of property'. Article 31 provided that "No person shall be deprived of his property save by authority of law." It also provided that compensation would be paid to a person whose property had been 'taken possession of or acquired' for public purposes. In addition, both the state government as well as the union (federal) government were empowered to enact laws for the "acquisition or requisition of property" (Schedule VII, Entry 42, List III). It is this provision that has been interpreted as being the source of the state's 'eminent domain' powers.[35]
The provisions relating to the right to property were changed a number of times. The 44th amendment act of 1978 deleted the right to property from the list of Fundamental Rights.[36] A new article, Article 300-A, was added to the constitution which provided that "no person shall be deprived of his property save by authority of law". Thus, if a legislature makes a law depriving a person of his property, there would be no obligation on the part of the State to pay anything as compensation. The aggrieved person shall have no right to move the court under Article 32. Thus, the right to property is no longer a fundamental right, though it is still a constitutional right. If the government appears to have acted unfairly, the action can be challenged in a court of law by citizens.[37]
The liberalisation of the economy and the Government's initiative to set up special economic zones have led to many protests by farmers and have opened up a debate on the reinstatement of the fundamental right to private property.[38]
Under the Land Acquisition Act, 1894, the government has the power to compulsorily acquire private land at the prevailing market rate for public purposes such as roads, highways, railways, dams, airports, etc.
Many countries recognize eminent domain to a much lesser extent than the English-speaking world or do not recognize it at all. Japan, for instance, has very weak eminent domain powers, as evidenced by the high-profile opposition to the expansion of Narita International Airport, and the disproportionately large amounts of financial inducement given to residents on sites slated for redevelopment in return for their agreement to leave, one well-known recent case being that of Roppongi Hills.
There are other countries such as the People's Republic of China that practice eminent domain whenever it is convenient to make space for new communities and government structures. Singapore practices eminent domain under the Land Acquisitions Act which allows it to carry out its Selective En bloc Redevelopment Scheme for urban renewal. The Amendments to the Land Titles Act allowed property to be purchased for purposes of urban renewal against an owner sharing a collective title if the majority of the other owners wishes to sell and the minority did not. Thus, eminent domain often invokes concerns of majoritarianism.
Since the 1990s, the Zimbabwean government under Robert Mugabe has seized a great deal of land and homes of mainly white farmers in the course of the land reform movement in Zimbabwe. The government argued that such land reform was necessary to redistribute the land to Zimbabweans dispossessed of their lands during colonialism.[39]
As a controversial issue, compulsory acquisition has been a feature of movies and other pieces of fiction for many years.
Instances of compulsory acquisition in literature and films include The Hitchhiker's Guide to the Galaxy, where first Arthur Dent's home is acquired for the building of a bypass road and then the Earth is acquired (demolished) to make way for a hyperspace bypass; and The Castle, an Australian film, where the Kerrigans' home is sought to be acquired to allow for an airport extension.
In Stephen King's novel Roadwork, published in 1981, the protagonist's house is purchased to make way for a road extension.
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