Eminent Domain

Quick Definition

Eminent domain is the power of federal, state, and local governments to take private property for public use, even without the owner's consent. The Fifth Amendment to the U.S. Constitution requires that the government pay "just compensation" (defined as fair market value) and that the taking serve a legitimate "public use."

What It Means

A city can take your home for a highway. A state can take farmland for a pipeline. A federal agency can take commercial property for a military base. The government does not need your permission. It does need to pay you fair market value.

This power is rooted in the Takings Clause of the Fifth Amendment: "nor shall private property be taken for public use, without just compensation." The Legal Information Institute at Cornell Law School provides the full text and historical context.

Most eminent domain disputes center on two questions:

1. Is the taking actually for a "public use"?
2. Is the compensation offered truly "just"?

Constitutional Foundation

Public Use Requirement

The government can only take property for "public use," but courts have interpreted this broadly:

Kelo v. City of New London (2005): The Supreme Court held 5-4 that economic development (transferring land from one private owner to a developer) constitutes public use. This controversial decision sparked backlash. Over 40 states subsequently passed laws restricting economic development takings.

The 2026 Supreme Court: Property Rights at the Center

Two major property rights cases reached the Supreme Court in 2026, both with direct implications for eminent domain law.

Hoffmann v. WBI Energy Transmission (2026)

The Supreme Court agreed in June 2026 to hear a case brought by North Dakota ranchers against a pipeline company. Leonard Hoffmann and his neighbors had their land seized in 2018 by WBI Energy Transmission, which holds a certificate of public convenience that confers eminent domain powers under the federal Natural Gas Act. WBI offered the ranchers about half of market value, according to the Institute for Justice, the public-interest law firm representing the plaintiffs.

The ranchers sued, and after a judge confirmed they could introduce evidence of fair market value, the parties settled. The district court also ruled that WBI was obligated to pay the plaintiffs' attorney fees, which came to approximately $383,375. The 8th Circuit Court of Appeals reversed that determination, creating a split with the Third, Fifth, Sixth, and Eleventh Circuits.

The Supreme Court will decide whether state or federal law governs attorney fees in Natural Gas Act condemnations. The plaintiffs argue that for over 40 years, lower courts consistently held that private companies exercising federal eminent domain power must follow the compensation rules of the states where the condemned property sits. The case has implications for millions of property owners along the approximately 3 million miles of natural gas pipelines in the United States.

Pung v. Isabella County (2026)

In a June 2026 decision, the Supreme Court unanimously held that "just compensation" under the Fifth Amendment is measured by the proceeds from a tax sale of foreclosed property, not the property's hypothetical fair market value. The case involved Michael Pung, whose home (assessed at $194,400) was auctioned to recover $2,241.93 in unpaid property taxes. The home sold for $76,008. The County initially kept all proceeds.

The Court, in an opinion by Justice Alito, reaffirmed its 2023 decision in Tyler v. Hennepin County that the government must return surplus proceeds from tax foreclosure sales. But it held that the constitutional baseline for just compensation in tax sales is the auction price, not fair market value, when the sale is fairly conducted. The Court noted that property owners can generally avoid tax foreclosure by paying taxes, refinancing, or selling the property themselves before foreclosure.

While Pung involved tax sales rather than traditional eminent domain, the decision reinforces that "just compensation" is context-dependent. Even in eminent domain cases, the Court has "refused to designate market value as the sole measure of just compensation," recognizing situations where the standard is inappropriate.

Types of Takings

Partial takings: When only part of a parcel is taken (e.g., a strip for road widening), the owner receives compensation for the taken portion plus "severance damages" if the remainder is diminished in value, minus "special benefits" if the remainder is enhanced.

The Condemnation Process

Just Compensation: What the Owner Receives

Fair market value is the standard: what a willing buyer would pay a willing seller in an arm's length transaction, with both having reasonable knowledge. It does NOT include:

The Hoffmann case highlights a real-world problem: a pipeline company offered ranchers about half of market value, and the owners had to spend $383,375 in attorney fees to fight for fair compensation. If the Supreme Court rules that federal law governs (and does not require the company to pay those fees), property owners could be left with substantial legal costs even after winning fair compensation.

Challenging just compensation: Property owners can hire their own appraiser and present evidence of higher value at trial. Government appraisals often favor the taking authority. Independent appraisal and legal representation typically result in higher compensation.

Inverse Condemnation

When the government takes or damages property without formal condemnation proceedings, the property owner can sue for compensation:

Penn Central Transportation Co. v. New York City (1978): Established the balancing test for partial regulatory takings. Courts weigh economic impact, interference with investment-backed expectations, and the character of the government action.

Quick Reference for Property Owners

If you receive an eminent domain notice:

1. Do not accept the initial offer immediately. Government appraisals often undervalue properties.
2. Hire your own appraiser. An independent appraisal frequently comes in 20% to 50% higher.
3. Consult an eminent domain attorney. Many offer free initial consultations.
4. Document everything. Photograph property, gather tax records, compile business records if applicable.
5. Understand what is NOT compensated. Business losses, moving costs, and emotional distress are generally not covered.
6. You can challenge public use. Though difficult post-Kelo, you can argue the taking does not qualify as public use.
7. You can challenge compensation. You are entitled to a jury trial on the amount of compensation in most states.

If you are buying a property, title insurance can protect against certain title defects. Understanding zoning laws and easements on the property can reveal whether the property is subject to future condemnation risk. Check whether any assessments or public projects are planned that could affect the property.

Key Points to Remember

• Eminent domain allows government to take private property for public use with just compensation
• The Fifth Amendment requires both public use and fair market value compensation
• Kelo v. New London (2005) expanded public use to include economic development, sparking over 40 states to pass restrictive laws
• The Supreme Court in 2026 is hearing Hoffmann v. WBI Energy, which could determine whether pipeline companies must follow state compensation rules
• Fair market value does not include sentimental value, business losses, or relocation costs
• Owners should never accept the first offer without getting an independent appraisal
• Inverse condemnation allows owners to sue when government action effectively takes property without formal process

Common Mistakes to Avoid

• Accepting the first offer: Government appraisals frequently undervalue properties. The Hoffmann case shows that pipeline companies have offered landowners as little as half of market value. Always get an independent appraisal.
• Assuming you cannot fight the taking: While challenging public use is difficult, challenging the amount of compensation is your right. A jury trial is available in most states.
• Forgetting that business losses are not compensated: If you own a business on the taken property, the value of the business itself, its goodwill, and relocation costs are generally not covered. Plan for this gap.
• Not understanding attorney fee rules: The Hoffmann case demonstrates that attorney fees can exceed $380,000, and whether the condemning authority must pay them depends on whether state or federal law applies. Clarify this with your attorney before proceeding.
• Ignoring easements and zoning that signal condemnation risk: Properties with utility easements or in areas targeted for public projects face higher condemnation risk. Research this before buying. Use our house affordability calculator to factor in all costs of homeownership.

Frequently Asked Questions

Q: Can I refuse to sell my property in an eminent domain proceeding? A: You cannot ultimately refuse if the government has valid authority. That is the nature of eminent domain. However, you can: (1) challenge whether the taking meets the "public use" requirement; (2) challenge the amount of compensation offered; and (3) delay the process through litigation. In many states, post-Kelo reforms require stronger justification for economic development takings. Consulting an eminent domain attorney is essential. They often recover significantly more than the government's initial offer.

Q: What is a "quick take" proceeding? A: A quick take (or immediate possession) allows the government to take possession of property before final compensation is determined, by depositing the estimated value with the court. The government gets the land to start construction immediately. The property owner can still contest the compensation amount in court. Most states allow quick take proceedings for infrastructure projects to prevent project delays from litigation.

Q: Does eminent domain apply to rental properties and commercial properties? A: Yes. Eminent domain applies to all real property regardless of use. For commercial properties, the compensation may be more complex because business value, goodwill, and equipment relocation must be addressed separately from real estate value. For rental properties, the value typically reflects the income stream (income approach valuation). Some states provide additional compensation for displaced tenants and business owners beyond the real estate fair market value.

Q: Can a private company use eminent domain? A: Yes, if the company is performing a function that qualifies as a public use. The most common example is utility companies and pipeline companies, which are often granted eminent domain authority by state or federal law. The Natural Gas Act delegates federal eminent domain power to pipeline companies for infrastructure projects. The Hoffmann v. WBI Energy case before the Supreme Court in 2026 involves exactly this scenario.

Q: What is inverse condemnation? A: Inverse condemnation is when the government effectively takes or damages your property without going through the formal condemnation process. You sue the government, claiming a taking has occurred. Common examples include flooding from a government dam or regulations that eliminate all economically viable use of your property.