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Eminent Domain Rules Officially Changed

This article was written by in Economy, Real Estate and Home. 6 comments.

Let’s say you own a home, like many people in this country do. Let’s go further and say that you own the property completely. Maybe you had a mortgage, but it’s completely paid off. The property is yours.

Well… as Jon Stewart is fond of saying, not so much. If your state government decides that your property is in a location better suited for a road, park or school, it will try to buy your propoerty from you. That’s fine, of course, let them make an offer. However, if you do not wish to sell, the government can exercise eminent domain and seize your property.

(Let’s forget for a moment that many Americans live where they live only because many generations ago natives were forcefully uprooted when they migrated to this land, and many the natives believed that the land cannot be owned in the sense our culture understands. But the immigrants didn’t want “savages” to get in the way of life, liberty, and the pursuit of property.)

So the state government can take your property, but only if when doing so plan on creating something public, like a highway or school (like the Fifth Amendment of the U.S. Constitution says), right? Correct, until today.

The Supreme Court ruled [decision and dissention text and SCOTUSblog entry] that the government can exercise eminent domain in any situation where there is an economic benefit for the state. Some things that provide an economic benefit are hotels, casinos (if legal in the state), offices, and malls. The state simply transfers the power of eminent domain to a corporate entity.

This is what has already happened in New London, Connecticut.

If you’re interested in eminent domain issues, there’s a blog tracking news around the country: Eminent Domain Watch. And added later, here is CNN’s take on the decision. Also appended, Gothamist shows how this decision could affect New Yorkers.

Updated February 6, 2012 and originally published June 23, 2005.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

avatar 1 Anonymous

Your home is only yours after the mortgage is paid off AND you pay the TAX on it every year.
So you are essentially renting. Don’t pay the tax/rent and you wont live there much longer.

avatar 2 Anonymous

Its unfortunate that this practice has been going on for years and local courts have for the most part upheld it. The decision, however, makes this type of eminent domain practice unconditionally legal. Its a sad day for land owners.


avatar 3 Anonymous

This is especially bad in recent times because of the skyrocketing housing prices (ignoring the gross unfairness factor). Lots of folks can’t afford to “upgrade” homes in the first place… so anyone caught by “eminent domain” (unfair or otherwise) would be double screwed.

avatar 4 Anonymous

You might want to check out or for commentary on the decision. While the court upheld the use of eminent domain, I wouldn’t characterize the holding as a change. Since 1954, the Court has pretty much said that public use is coterminous with the state’s police power (public health, safety, welfare, and morals) and you look at why the government is using eminent domain and not the end user. BUT that is referring to the 5th Amendment to the U.S. Constitution. It says nothing about the limits that states can impose through their own constitutions. For example, both Michigan and Illinois supreme courts have, within the last 3 years, interpreted “public use” more restrictevely than the U.S. Supreme Court. What happened to Mrs. Kelo probably couldn’t happen in those two states.

avatar 5 Anonymous

I’m struggling with the impact of the phrase “economic benefit for the state”.

… just thinking about how far this could theoretically go … Government has valued my land and land-assets in order to levy taxes against me. At some point they feel my property is undervalued, given the larger, more expensive homes around me. Does this decision technically validation the possibility that the government could take my land, compensate me “fair value” (according to their assessment), tear down the house, rebuild a new larger house and sell the house? They may see an economic benefit on the sale itself, and they’d definitely see an economic benefit from the new taxes imposed on the property, given that a re-assessment would be performed.

The example may not actually happen on a single home, but given the propensity for local governments to use this rule, I could see it happening for entire neighborhoods. Is this legal justification for government flipping?

avatar 6 Luke Landes