Eminent Domain refers to “the power possessed by the state over all property within the state, specifically its power to appropriate property for a public use.”

The valuation principal behind this is the idea that the highest and best use for the property will benefit the public which supercedes the private property rights of the property owner. This has been unnerving to many because property ownership is perceived as a basic tenent of citizenship in this country.

Last week, the Supreme court announced that it would not re-visit [Note: Paid Subsc.] the controversial ruling made in the eminent domain case, KELO et al. v. CITY OF NEW LONDON et al.

In the original decision, the Supreme Court found that local governments have the right to take private property if it faciliates economic growth. The New London case was controversial because the area to be taken was comprised of residential homes that were not blighted or crime-ridden. Another sore point was the fact that developers are making a profit against the loss of private property.

Before the New London case, the Poletown case in Michigan 20 years ago was seen as a leading symbol of eminent domain abuse.

There is the potential for abuse by government authorities in these takings and the fear of a land grab by developers who have strong political connections with local governments. This ruling has begun to prompt states to examine when a government should take private land, what methodologies should be used for fair compensation as well as others

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2 Responses to “Eminent Domain: Nice Home, I’ll Take It”

  1. Jack Smith says:

    Clearly the recent Supreme Court ruling is having an impact on sales throughout the country. Whether it will permanently result in lower prices or delayed purchases remains to be seen. I would like to see a thoughtful analysis of the potential impact on the Manhattan market. Anyone up for this?

  2. Ashish Shah says:

    I think analyzing the potential impact of eminent domain in Manhattan is kinda tricky, due to the varied ownership nature of the Manhattan market – coops, condos, rentals and project housing. If you think the government would be using eminent domain to usurp property owned by a coop or a condo, then think again. The oppostion, lawsuits and the backlash would be significant.