Legal Question in Real Estate Law in California

Re: Eminent Domain

Eminent domain is a process based upon the power of 'the sovereign' to take land for public purposes; it is the means by which rights-of-way are obtained for freeways, etc. The power is also granted by law to private parties when they need the land for a public purpose (railroads, pipeline companies, electric utilities, etc.).

In the U.S., the Constitution (5th Amendment) forbids taking private property without 'just compensation.' An entire body of law has arisen around the proper definition of 'just compensation' and how it is determined in each situation.

In general, if the parties are not able to agree upon a purchase price, the condemning party must file an action in court asking the court to determine the Constitutionally-required payment to the property owner for the taking. The court may first require the condemning party to prove that it has the power of eminent domain and/or that the property to be condemned is really necessary. When satisfied, the court then hears evidence about the fair market value of the land. Usually, independent appraisals are required. The question (of value) often goes to a jury. The proper value is based upon the 'highest and best' current possible use. For example, if the land is currently pasture but is zoned for single family homes, it should be valued as residential property (with adjustment for the fact that it hasn't been prepared for building yet, of course). However, speculative future possibilities are not properly considered. Being 'in the path of future development' should not be a factor except to the extent it affects what a buyer would be willing to pay today in an arms-length deal.

It's difficult to impossible to stop an eminent-domain taking; in fact, the taker can often come in and take over the land before the price is finally set by the court. However, a landowner has substantial rights with respect to the price paid by the taker and the fairness of the appraisal process and price determination.

The issues and procedures are very technical and no property owner facing an eminent domain taking involving property of significant value should ever try to 'go it alone.' Retain experienced legal counsel upon the first official word (such as being served with a summons) that condemnation proceedings are being instituted.

For some background, see California Code of Civil Procedure sections 1260-1273 at your county law library or public library.