Eminent domain is the government's constitutional power to take private property for public use, provided the owner receives "just compensation" — typically defined as the property's fair market value. This power is rooted in the Fifth Amendment to the U.S. Constitution ("nor shall private property be taken for public use, without just compensation") and is exercised by federal, state, and local governments as well as certain authorized entities like utility companies and transportation authorities.
Common public uses that justify eminent domain include highways and roads, schools, government buildings, public utilities (water, sewer, power lines), parks and recreation areas, airports, and public transit systems. In the controversial 2005 Supreme Court case Kelo v. City of New London, the Court broadened the definition of "public use" to include economic development — meaning governments can, in some circumstances, take private property and transfer it to private developers if the project benefits the public. Many states subsequently passed laws limiting this broader interpretation.
The eminent domain process — also called condemnation — typically begins with the government or authorized entity making an offer to purchase the property. If the owner accepts, the transaction proceeds like a normal sale. If the owner rejects the offer or cannot reach agreement on price, the government files a condemnation lawsuit. A court determines whether the taking serves a legitimate public purpose and sets the compensation amount, often based on competing appraisals from both sides. Property owners have the right to challenge both the necessity of the taking and the amount of compensation offered.
Even partial takings are common — where the government acquires only a portion of a property (for example, a strip along the front for road widening). In these cases, the owner receives compensation for the land taken plus any diminution in value to the remaining property caused by the taking. This can be a complex valuation process requiring specialized appraisers and attorneys.
An eminent domain action or pending condemnation proceeding is discovered during the title search and significantly affects a property's marketability. Title insurance policies typically exclude coverage for government actions, so buyers should be aware of any pending proceedings or planned public projects in the area. At Beycome Title, our title search identifies any recorded condemnation notices or lis pendens related to eminent domain. Get your free title quote.