What Is Condemnation in Real Estate? Who Can Take My Home?

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Written By Justin McGill

DealBloom aims to share the latest tips and strategies to help realtors, brokers, loan officers, and investors navigate the world of real estate.

If you’re a property owner, you may have heard the term “condemnation” in real estate. But what does it actually mean? In this blog post, we’ll explain what is condemnation in real estate and why this should matter to you.

I remember when I first heard the term “condemnation” I was at a meeting with my city’s planning commission and they were discussing a new development that was going to be built near my home. One of the commissioners mentioned that some of the homes in the area would need to be condemned in order for the development to move forward.

At first, I didn’t really understand what is condemnation in real estate. But after doing some research, I realized that condemnation is a process that involves the government taking private property for public use without having to go through traditional negotiation or purchase processes.

In other words, if your home is located in an area where the government wants to build something like a highway or school, they can force you to sell it – even if you don’t want to!

Needless to say, this can be quite upsetting for homeowners who are suddenly faced with having their property taken away from them.

What Is Condemnation in Real Estate?

Condemnation is defined as the process of taking privately owned real estate for public use by a public or private entity with the powers granted from eminent domain.

Condemnation is not the same as a property being “condemned” or declared unsafe for human habitation.

This applies if a property has some kind of violation, such as not being up to code for construction. The government does not actually take the title of a condemned home, it just prohibits any people from living in it until it is fixed.

Condemnation and eminent domain are similar terms. The only difference is that eminent domain is the right of the government to take privately owned land for public use while condemnation is the action to exercise that right.

Condemnation Example

Condemnation is a process that the government uses to acquire land for public projects. This process is often used when the government needs to expand roads or build new infrastructure.

If the town you live in has poor road conditions, your local government may expand them.

To complete the expansion of its facilities, it has to purchase a number of neighboring homes, including one in your neighborhood.

You may not want to give up your home, but the expansion of the road will make it much safer for all residents of the town. Therefore, you must sell your property to the government in order to help contribute to this safety.

This is called condemnation.

The government’s first settlement proposal is known as the pro tanto award. Although this may seem like an appropriate amount of compensation, it may not have taken into account certain factors about your house that increased its value.

You can hire a lawyer to help negotiate a higher price for your property if you feel that it is not a fair price for your home.

If you find yourself in the unfortunate position of having to sell your home, find a mortgage calculator to help you figure out your new payment.

What Types of Property Can The Government Take?

Common targets for eminent domain are undeveloped plots of real estates, such as farms, forests, and vacant fields. They may also take partial or full ownership of businesses, such as factories, warehouses, and office complexes.

You can only challenge the authority’s decision on what you need to provide for a project if you can prove the decision was arbitrary and capricious.

Can They Really Take My Property?

In most cases, the condemning agency can seize property through eminent domain.

A governmental body can take private property through the power of eminent domain so long as there is a valid reason for doing so and the owner is compensated fairly.

These reasons include the construction and expansion of new roads, schools, and utility transmission systems. One of the most controversial condemnation projects is for economic development purposes.

Who Can Take My Property?

Eminent domain is the power that governments, including federal, state, and local governments, have to seize private property for public use.

Other entities that regularly use their condemnation power are state agencies, toll roads, utility companies, pipelines, water districts, and schools.

Do I Need a Lawyer?

While certain eminent domain proceedings can be challenged by landowners, most are centered around the determination of just compensation.

“Just compensation” is a legal term that refers to the fair market value of the property taken by the government, plus any damage to the remaining property.

A lawyer experienced in condemnation can help you get the most money for your property by ensuring that you are fairly compensated. They know how to negotiate with the condemning authority and have access to resources that can help support your case.

What is Inverse Condemnation?

Inverse condemnation is a legal process that compensates property owners for damages caused by a government agency or public utilities.

In inverse condemnation, the party whose property has been damaged or diminished in value files a lawsuit against the responsible party in order to recoup their losses.

Here are a couple of examples.

  • Your once-busy business is now suffering because the new local airport has constructed a flight path that passes over your location. The noise is so loud and disruptive that your customers are leaving in droves.
  • The power company starts digging next door and leaves large sinkholes on your land.
  • A government project caused a major influx of pollution that negatively impacted your waterways.
  • You’re the owner of a store on a very busy road and the government widens the street right in front of your store.
  • The city wants your land to build a road, but that means you won’t have any parking spaces for your clients. The city is offering to pay you for the fair market value of your lot, but you’ll still lose business.

You can pursue an inverse condemnation claim to get compensated for this injustice.

Property owners can file a lawsuit against a government agency or private company that has damaged or devalued their property.

If you believe your land has been negatively impacted by government action, you should speak with a knowledgeable and experienced commercial real estate lawyer.

Conclusion

If you’re a property owner, it’s important to know what is condemnation in real estate and be aware of the process. While it can be disruptive and upsetting, it is a legal process that allows the government to take private property for public use. If you find yourself in this situation, make sure to consult with an experienced attorney who can help protect your rights.

Justin McGill