According to U.S. law, the government can seize private property for public use. This power is called eminent domain. However, according to the U.S. Constitution, the government must provide the landowner “just compensation” for the land it condemns.

But determining what exactly is “just compensation” property can be a complicated process.

What does “just compensation” mean?

Ideally, “just compensation” makes the landowner whole. This means that the landowner should receive enough compensation so that they do not feel any financial loss from the condemnation.

Thus, determining what is just, depends on the fair market value of the house. There are several factors to consider when determining what a piece of property is worth, including:

  • Size
  • Level of development
  • Current and potential usage
  • Unique characteristics
  • Accessibility

Establishing what a fair market value of the property is can be contentious. Often, both the landowner and the government will hire professionals to offer testimony about the property’s value.

It is important to remember that “just compensation” does not include compensation for non-economic factors such as emotional attachment to a piece of property or a neighborhood. It also typically will not cover the expenses associated with moving.

Ways to determine fair market value

There are three typical ways to determine the value of a property. These are:

  • Market-based approach: This approach considers recent sales of comparable pieces of property as the basis for a fair valuation.
  • Income approach: This approach is better suited for properties that produce income for the owner. This approach calculates the projected future income of the property and uses it as the basis for valuation.
  • Cost approach: This approach is appropriate for properties that contain structures that are designed for a specific purpose. The idea behind this approach is that the value of the property lies in its unique structure. Thus, a fair valuation must account for the cost of replacing the structure. In this calculation, the value of the land as a vacant lot and the cost of replacing the existing structure together determines the market value of the property.

While you may not always be able to prevent the government from seizing your land through eminent domain, you can make sure that you receive “just compensation.” Using an eminent domain lawyer can help you both verify that the condemnation is legitimate and that you receive a fair bid on your property.