Eminent Domain
The power of government to take private property for public use, with the requirement to pay the owner just compensation.
Full Definition
Eminent domain is the inherent power of federal, state, and local governments — and some quasi-governmental entities like utilities and redevelopment agencies — to take private property for a public purpose in exchange for just compensation (typically fair market value). The legal process of exercising eminent domain is called condemnation. The 5th Amendment to the U.S. Constitution requires just compensation, and the 14th Amendment applies this requirement to states. The owner has the right to contest either the government's authority to take the property or the amount of compensation offered. A regulatory taking (also called inverse condemnation) occurs when government regulations are so restrictive that they effectively deprive the owner of all economically viable use without actually taking the property.
Real-World Example
A city uses eminent domain to take a strip of private farmland to build a new road. The city pays the farmer fair market value for the taken land — the farmer cannot refuse the taking but can dispute the compensation amount.
How Eminent Domain Appears on the Real Estate Exam
Common question types, tested concepts, and what to watch out for
Eminent domain requires just compensation (fair market value). Distinguish from police power (zoning, building codes — no compensation required) and taxation. The process of exercising eminent domain is called condemnation. PETE = Police power, Eminent domain, Taxation, Escheat — the four government powers over private property.
Related Terms
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