Eminent Domain Proceedings
When the government needs to seize private property to use it for public benefit, the government may begin an eminent domain lawsuit. Eminent domain allows the government to present evidence at a hearing that it wants the property for a valid public use, and that it attempted to purchase the property before commencing suit. At this hearing, the private property owner has the right to present evidence against the government's claims.
Fifth Amendment Considerations
The Fifth Amendment of the U.S. Constitution prohibits the government from taking private property for public use, unless the private property owner receives just compensation. In effect, this prohibition prevents the government from using its right of eminent domain to seize property indiscriminately, or from trying to pay less than the property is worth. Fifth Amendment rights protect the private property owner from being cheated if he loses his land. If the owner feels that the government is trying to undervalue his land, he can also present evidence dealing with land valuation at the hearing.
Valid Public Use
Eminent domain demands that the government demonstrate a valid public reason for taking the property. However, in most states, eminent domain case law has placed very few limits on what constitutes a valid public use. Recently, in the case of Kelo v. New London (2005), a city wanted to take private property to make the property conform with a broad plan for economic redevelopment. The U.S. Supreme Court declared that "valid public use" even includes seizure of property to economically redevelop the property. However, should a property owner believe that the government is taking his property for an invalid use, he has a right to challenge the use in court.
The "just compensation" required by the Fifth Amendment demands that the government pay the private property owner fair market value for his property. Typically, if the government and property owner disagree on the value, they can negotiate a price or ask the court to set a fair value. Just compensation may cover more than the retail value of the property. Particularly in the case of a business operating on eminent domain property, the government may also need to pay for the loss of value to the business in losing its character.