If you own a business, you’re likely well aware of the numerous challenges of operating one. But what if the city knocked on your door and claimed eminent domain over your property?
The situation can become a reality for many business owners in cities looking to revitalize certain areas. While there are certainly benefits to redeveloping a neighborhood or community, it’s important to be aware of the possible implications this could have on your business.
Can you fight city hall?
The Fifth Amendment to the U.S. Constitution gives the government the right to seize private property for public use through a process known as eminent domain. This power is delegated to individual states, and California has its own laws governing the seizure of property.
In general, the government must satisfy the following requirements to exercise the power of eminent domain to take a business owner’s property:
- The project is for the public and is necessary for roads, schools or other public buildings such as a library or fire station.
- The planned project is compatible with the greatest good of the public while causing the least private injury.
- It is necessary for the project for the government to acquire the property.
In some cases, the government may claim eminent domain for redevelopment purposes, such as when a city wants to revitalize a run-down neighborhood.
Regardless of the justification, landowners impacted by the government taking their property are entitled to receive just compensation for their losses. However, many times the government’s offer is below fair market value.
Business owners who do not want to sell their property to the government can challenge the claim in court. Even if the challenge is unsuccessful, it may result in a higher compensation offer from the government.