What Is Condemnation in Real Estate?

February 25, 2022

Usually, property owners will have some indication in advance that their property is identified for condemnation. “There’s going to be some warning signs,” Feldman says. In most states, there will be a public hearing at the start of the process and affected property owners will be notified.

“There’s a line between project planning and acquisition,” Thornton says. Eminent domain can only be used once that line has been crossed and a project is ready to proceed.

At that point, the government agency involved in the project may work to negotiate with property owners for a private sale. If an agreement cannot be made, the agency will file a petition with the court to condemn the property under eminent domain. As part of the court proceedings, a property owner may argue that the taking doesn’t meet the requirements of eminent domain – such as that it is not needed for a public use – or that the amount offered for the property is too low.

“You are entitled to what is just compensation,” Feldman says. That isn’t necessarily based on the current use of a property, but rather its highest and best use. For instance, a vacant lot may be zoned in such a way that a big box retailer could be built there or a residential lot could be used for apartments.

“They’re not just taking that plot of land, but they are taking your development rights,” according to Feldman. And by law, you need to be paid for the highest valued use of the property.

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