Buyer Beware

February 18, 2014


By:  Rob Jones

I was looking at some local news, here in Harrison County, and came across a story about a Clarksburg family, that the City of Clarksburg is trying to force out of their home. A home that has been in their family since 1967! No, there isn’t any back taxes. No, there isn’t any trash piled around the property. Nope, just old fashioned greed. The City of Clarksburg is more concerned with business, than they are with what really builds a community, which is families. Take away all of the families and replace their homes with businesses, who are you going to have to shop there? Who’s going to utilize those services?  Just who do you think you’re going to advertise to? So, yes, good old fashioned greed. Clarksburg officials are using “eminent domain”, as a legal way to force this family from their family home. Yep… legal, just very immoral.

We’ve all heard of eminent domain and have a general idea of what it is, but after doing some research, I found that I didn’t know what I thought I knew. Eminent domain is defined as: The power to take private property for public use by a state, municipality, or private person or corporation authorized to exercise functions of public character, following the payment of just compensation to the owner of that property.

Federal, state, and local governments may take private property through their power of eminent domain or may regulate it by exercising their Police Power. The Fifth Amendment to the U.S. Constitution requires the government to provide just compensation to the owner of the private property to be taken. A variety of property rights are subject to eminent domain, such as air, water, and land rights. The government takes private property through condemnation proceedings. Throughout these proceedings, the property owner has the right of due process. Eminent domain is a challenging area for the courts, which have struggled with the question of whether the regulation of property, rather than its acquisition, is a taking requiring just compensation. In addition, private property owners have begun to initiate actions against the government in a kind of proceeding called inverse condemnation.

Eminent domain has existed since biblical times, when King Ahab of Samaria offered Naboth compensation for Naboth’s vineyard. In 1789, France officially recognized a property owner’s right to compensation for taken property, in the French Declaration of the Rights of Man and of the Citizen, which reads, “Property being an inviolable and sacred right no one can be deprived of it, unless the public necessity plainly demands it, and upon condition of a just and previous indemnity.” Shortly after the French declaration, the United States acknowledged eminent domain in the Fifth Amendment to the Constitution, which states, “… nor shall private property be taken for public use, without just compensation.” The Fifth Amendment grants the federal government the right to exercise its power of eminent domain, and the due process clause of the Fourteenth Amendment makes the federal guarantee of just compensation applicable to the states. State governments derive the power to initiate condemnation proceedings from their state constitutions, except North Carolina, which gains its power through statute. The constitutional and statutory provisions require federal, state, and local governments and subdivisions of government to pay an owner for property taken for public use at the time the property is taken. The power of eminent domain was created to authorize the government or the condemning authority, called the condemnor, to conduct a compulsory sale of property for the common welfare, such as health or safety. Just compensation is required, in order to ease the financial burden incurred by the property owner for the benefit of the public.

To exercise the power of eminent domain, the government must prove that the four elements set forth in the Fifth Amendment are present: (1) private property (2) must be taken (3) for public use (4) and with just compensation. These elements have been interpreted broadly.

Private Property: The first element requires that the property taken be private. Private property includes land as well as fixtures, leases, options, stocks, and other items. The rifle that was used to kill President John F. Kennedy was considered private property in an eminent domain proceeding.

Taking: The second element refers to the taking of physical property, or a portion thereof, as well as the taking of property by reducing its value. Property value may be reduced because of noise, accessibility problems, or other agents. Dirt, timber, or rock appropriated from an individual’s land for the construction of a highway is taken property for which the owner is entitled to compensation. In general, compensation must be paid when a restriction on the use of property is so extensive that it is tantamount to confiscation of the property.

Some property rights routinely receive constitutional protection, such as Water Rights. For example, if land is changed from waterfront to inland property by the construction of a highway on the shoreline, the owners of the affected property are to be compensated for their loss of use of the waterfront. Another property right that is often litigated and routinely protected is the right to the reasonable and ordinary use of the space above privately owned land. Specifically, aircraft flights over private property that significantly interfere with the property owner’s use may amount to a taking. The flights will not be deemed a taking unless they are so low and so frequent as to create a direct and immediate interference with the owner’s use and enjoyment of the property. Actions by the government that courts do not consider takings include the publication of plans or the plotting, locating, or laying out of public improvements, including streets, highways, and other public works, even though the publicity generated by such actions might hinder a sale of the land.

The courts have traditionally not recognized the regulation of property by the government as a taking. Regulating property restricts the property owner’s use and may infringe on the owner’s rights. To implement a regulation, the state exercises its police power and is able to control the use of the property. Although the courts recognized a regulation as a taking in 1922, they have been inconsistent in their later rulings on this issue. In a case examining a Moratorium imposed on development in the Lake Tahoe area, the U.S. Supreme Court has decided that a moratorium on development is not necessarily a taking, and that regulatory takings cases must be decided on a case-by-case basis rather than on categorical rules.

Public Use: The third element, public use, requires that the property taken be used to benefit the public rather than specific individuals. Whether a particular use is considered public is ordinarily a question to be determined by the courts. However, if the legislature has made a declaration about a specific public use, the courts will defer to legislative intent. To determine whether property has been taken for public use, the courts first determined whether the property was to be used by a broad segment of the general public. The definition of public use was later broadened to include anything that benefited the public, such as trade centers, municipal civic centers, and airport expansions. The U.S. Supreme Court continued to expand the definition of public use to include aesthetic considerations. State courts have also expanded the definition of public use. The Michigan Supreme Court even allowed property to be condemned for the private use of the General Motors Company, under the theory that the public would benefit from the economic revitalization a new plant would bring to the community.

Just Compensation: The last element set forth in the Fifth Amendment mandates that the amount of compensation awarded when property is seized or damaged through condemnation must be fair to the public as well as to the property owner. Because no precise formula for determining it exists, just compensation is the subject of frequent litigation. The courts tend to emphasize the rights of the property owner in eminent domain proceedings. The owner usually has not initiated the action but has been brought into the litigation because his or her property is needed for public use. The owner must participate in the proceedings, which can impose an emotional and financial burden. The measure of damages is often the fair market value of the property that is harmed or taken for public use. The market value is commonly defined as the price that reasonably could have resulted from negotiations between an owner who was willing to sell it and a purchaser who wanted to buy it. The value of real property is assessed based on the uses to which it reasonably can be put. Elements for consideration include the history and general character of the area, the adaptability of the land for future buildings, and the use intended for the property after its taking. Generally, the best use of the land is considered to be its use at the time it was condemned, even though the condemnor might not intend to use the land in the same manner as the owner. Crops, grass, trees, minerals, rental income, and all other items that fairly enter into the question of value are taken into consideration when determining just compensation. The amount of compensation should be measured by the owner’s loss rather than by the condemnor’s gain, and the owner should be placed in as good a financial position as he or she would have been in had the property not been taken (Monongahela). The compensation should be paid in cash, and the amount is determined as of the date title vests in the condemnor. Interest is paid on the award until the date of payment.

Condemnation proceedings vary according to individual state and federal laws. In general, the proceedings should be conducted as quickly as possible. A proceeding does not require court involvement if the condemnor and landowner enter into a contract for the taking of the property for a public use. A seizure pursuant to such a contract is as effective as if it were done through formal condemnation proceedings. Condemnation usually consists of two phases: proceedings that relate to the right of the condemnor to take the property, and proceedings to set the amount of compensation to be paid for the property taken. The commencement of the proceedings does not curtail ordinary use of the condemned property by the owner as long as the use does not substantially change the condition of the property or its value.

States require special procedures for certain cases, categorized by either the purpose for which the property is sought or the character of the party seeking to take it. For example, a special procedure is required when property is to be taken for a street, highway, park, drain, levee, sewer, canal, or waterway. In a procedure called a quick taking, the condemnor is permitted to take immediate possession and use of the property, and the owner must receive cash compensation in advance of the proceeding. The owner has the right to due process during condemnation proceedings. He or she must be notified in a timely manner and must be given a reasonable opportunity to be heard on the issues of whether the use for which the property is expropriated is public and whether the compensation is just. Due process considerations mandate that the landowner receive an opportunity to present evidence and to confront or cross-examine witnesses. The owner has an automatic right to appeal.

Due process does not require a jury trial in condemnation proceedings, although various state constitutions and statutes provide for assessment by a jury. Absent contrary state provisions, a court has the discretionary power to grant or refuse a motion for view of the premises by a jury. A condemnation judgment or order must be recorded.

An increase in environmental problems has resulted in a new type of eminent domain proceeding called inverse condemnation. In this proceeding, the property owner, rather than the condemnor, initiates the action. The owner alleges that the government has acquired an interest in his or her property without giving compensation, such as when the government floods a farmer’s field or pollutes a stream crossing private land. An inverse condemnation proceeding is often brought by a property owner when it appears that the taker of the property does not intend to bring eminent domain proceedings.

Are there cases of “eminent domain” being abused? You bet there are. How wide spread is the abuse? No one really knows, but Dana Berliner and Scott Bullock, attorneys with the non-profit group called “The Institute for Justice” say, “This is a nationwide epidemic. We have documented more than 10,000 instances of government taking property from one person to give to another in just the last five years. It is fundamentally wrong, and contrary to the Constitution for the government to take property from one private owner, and hand it over to another private owner, just because the government thinks that person is going to make more productive use of the land. Everyone knows that property can be taken for a road. But nobody thinks that property can be taken to give it to their neighbor or the large business down the street for their economic benefit. People are shocked when they hear that this is going on around the country.”

The use of eminent domain to seize mortgages from investors has been in the news recently. But, because of efforts to rescind protections enacted by state courts and legislatures, we’re likely to hear more about traditional eminent domain abuses: the seizure of modest, well-maintained homes and businesses to benefit wealthy, politically connected developers. Eminent domain abuse has dropped off considerably since its high-water mark in 2005 when the Supreme Court ruled that local officials can condemn property solely because they can imagine an alternate use for it that might generate greater tax revenue. Faced with outraged electorates, legislators in some 45 states have now rewritten their eminent domain laws to protect property owners from grabby local governments, or at least give the appearance of doing so. Some of the most abusive states—Florida, California, and Ohio—have enacted the strongest reforms by statute, initiative, or court ruling.

There is no doubt that the economic downturn played a role by dampening developers’ appetites for property. Even in states like New York, which have done precisely nothing to rein in abuse, new takings are rare. But as the economic recovery gains steam, takings threaten to re-emerge. In March, Alabama reneged on its reforms, which had provided significant protections for property owners. Lawmakers, perhaps inadvertently, included condemnation authority in a statute that expands tax subsidies for industrial parks. In California, under the guise of promoting “transit-oriented development” and affordable housing, legislators are plotting to revive eminent domain authority for private projects. The effort failed this fall but will be taken up again in January.

A bill in New Jersey that would weaken protections for property owners sailed through the legislature, bolstered by support from the New Jersey League of Municipalities and the New Jersey Builders Association. Governor Chris Christie signed it into law last month. According to the bill’s authors, the law codifies two state court rulings requiring cities to prove that property is a threat to public health and safety before seizing it and also provide “fair and adequate” notice to property owners when eminent domain is authorized. In reality, the law attempts to remove the protections proponents say it codifies. “This law is transparently an attempt to go back to the old way of doing business,” says Peter Dickson, a New Jersey-based land-use attorney. For instance, far from demanding cities prove a property is a threat to health and safety, the law says officials need only assert that the property somehow impedes land assembly—a standard that puts virtually every property in the state at risk.

The law also allows for the creation of “non-condemnation redevelopment areas” where officials do not have eminent domain authority—unless a property owner refuses to sell. In the case of such refusal, a non-condemnation area can be transformed into a condemnation area. The intended effect of the provision is to confuse property owners. “If you’re in a non-condemnation area,” says Dickson, “you’re going to say, ‘why should I go hire a lawyer and spend tens of thousands of dollars to challenge this designation if it doesn’t put me under eminent domain?’” But failing to challenge the designation within 45 days means you lose the right to challenge it, even if condemnation occurs many years later.

In New London, Connecticut, after tens of millions of dollars in public spending, the redevelopment zone is a barren waste. Pfizer Inc., the intended beneficiary of the plan, abandoned the city after its tax incentives expired. “Successful” projects still rely on public subsidies for years after completion, and their contribution to the tax rolls remains debatable at best. As a new chapter in urban renewal history begins, post-recession, there is some cause for optimism. People across the political spectrum despise eminent domain abuse. And, when legislators have yielded to powerful interests, state courts are increasingly skeptical of calling private development a public use. But without effective safeguards, this chapter may look suspiciously like the last.

Have you seen the common thread here? This is greed, plain and simple. This boils down to money. More money for the property owners? No! More money for the government, in the form of taxes. Who decides the rules, regulations, or statutory language used to deem property as “blighted” or otherwise non-useful? That’s right, the same government that takes your property under “eminent domain”. How much of this illegal, underhanded, and immoral activity are we going to allow to forced upon our friends and neighbors, or God forbid, ourselves, before we all stand up? Think about this column. You may think that you own your home or your family business, but you don’t. If your city, town, village, or township want it, they can legally take it!! All to benefit their pockets, at your expense. God Bless You! God Bless West Virginia! God Bless America!



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