What is the Difference Between Eminent Domain and Inverse Condemnation?

If you own real estate, you might someday receive a metaphorical knock on the door from the government to take some or all of your property. The state might tell you they are going to take it outright, or they may do something that effectively takes your property or a portion of it. The difference between these two approaches parallels the difference between eminent domain and inverse condemnation.

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Eminent Domain

Like it or not, the power to force the sale or take private property for public use has a long history as one aspect of the sovereign power of government. This is called the power of eminent domain. Both the California and United States constitutions couple this power with a governmental obligation to pay “just compensation” for the property.

Eminent domain is initiated by the government. In rare instances, the property owner can challenge the ability of the government to take the property under constitutional or statutory law, but those challenges rarely succeed. The “public use,” restriction, for example, has been interpreted quite broadly.

In the vast majority of cases, the battle in eminent domain is over the value of the property—the “just compensation.” California statute defines the fair market value as “the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obligated to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.” California Code of Civil Procedure § 1263.320.

As you might expect, this can lead to a battle of the expert appraisers. Like any other dispute, depending upon the proclivities of the parties and the distance between their respective views of the value, an eminent domain matter can go the route of either litigation or negotiation (or a little bit of both).

Inverse Condemnation

Eminent domain is initiated by the government. By contrast, inverse condemnation is initiated by the property owner when the government exacts a taking without following the eminent domain procedures. These are often land-use disputes in which a property owner challenges development restrictions. This is commonly called a “taking” and, like eminent domain, it requires the government to compensate the real-estate holder.

A taking, however, may not necessarily result from a forced transfer of ownership from the property holder to the government. It can also result from damage or some other diminution of the property’s use or value because of government conduct. It can even occur if the “taking” or damage to the property is merely temporary, such as the flooding of land by a governmental entity.

A taking can also result from a government regulation that goes too far. This is a complex area that is beyond the scope of this article, but look for the following types of impacts: physical invasions, direct appropriations, deprivation of all economically viable uses of the property, substantial interference with the property owner’s ability to satisfy investment-backed profit expectations, and certain conditions to land-use approvals where there is not an essential nexus between the permit condition and a legitimate state interest or where the condition is disproportionate to that interest (including monetary fees).

You can read about a law review article on Takings that Jarod Bona co-authored in the Georgetown International Environmental Law Review here.

If the government is threatening your property—either directly or indirectly—we might be able to help. Please call us at 858-964-4589 if you have any questions. Bona Law PC is a boutique law firm that focuses on real-estate litigation, business litigation, appellate litigation, antitrust, and challenges to government conduct. You can contact us here.