Eminent Domain vs. Inverse Condemnation: What’s the Difference?

Owners’ Counsel of America member-attorneys are dedicated to assisting private property owners defend their property rights when those rights are threatened by government intrusion or overreach. We realize that many of terms we discuss here and the concepts involved in eminent domain law are complex and can be confusing.  To shed some light on this “dark corner of the law” we have answered some of the frequently asked questions landowners may have relating to eminent domain and the condemnation process here and here.  In this article, we discuss the differences between eminent domain and inverse condemnation.

Eminent Domain vs. Inverse Condemnation

Eminent Domain

There are two types of government acquisition or “taking” of private property.  One form of property acquisition includes the government’s exercise of its eminent domain power to force the sale of private property for a public project or use.  Eminent Domain – also referred to as “condemnation” – is the power of local, state or federal government agencies to take private property for public use provided the owner is paid just compensation. Sometimes, private corporations such as oil and gas companies, railroads or redevelopment authorities may be granted eminent domain power to construct projects providing a benefit to the public.

The use of eminent domain power to take property is referred to by many terms and varies from state to state as well as internationally.  The acquisition may be referred to as a “condemnation” or “direct condemnation,” “expropriation,” “appropriation” or simply a “direct taking.”  In a direct condemnation or direct taking scenario, the government agency or other entity using the power of eminent domain follows certain procedures to acquire the property, establish the amount of just compensation due for the property taken and provide payment of that compensation to the owner.

The Eminent Domain Process

The eminent domain process and the procedures condemnors must follow differ from state to state.  Further, the federal government and federal agencies may follow a process that is different from that which agencies within your state may follow.  It is important, therefore, to consult with a skilled eminent domain attorney experienced in the state or federal jurisdiction in which your condemnation case will be litigated.

There are some basic steps, which may be similar across the country, such as:

• The government or agency having the power of eminent domain identifies a public project or use which may require the the acquisition of private property
• The government, agency or company (also known as “condemnor”) notifies the potentially affected property owners that their property is needed for this purpose
• The condemnor may make an offer to purchase, request a dedication of private property or may try to negotiate a price for the sale of the property
• If negotiations are not successful, the condemnor will file suit to acquire the property using the power of eminent domain in exchange for just compensation
• Depending upon the state-specific procedures, an independent commission, a sitting judge or a civil jury will determines the amount of just compensation due to the owner for the loss of the property and possibly for damages, if any, to remaining property.  In some states, the loss of business good will or profits may also be a component of just compensation and some states also provide for the recovery of attorneys fees, appraisal fees, and/or defense costs.  (We have written about the financial compensation available to property owners in eminent domain here and about attorneys fees.)

Inverse Condemnation

The second type of taking is referred to as inverse condemnation.  A taking of property by inverse condemnation occurs when the government acquires or appropriates private property without following eminent domain procedures and without paying just compensation.  An inverse condemnation taking may or may not be a physical acquisition of private property.  If land has been acquired by the government or other condemning authority without following the proper procedures, the landowner has the right to file an inverse condemnation claim against the government to recover just compensation for the property taken.

Inverse condemnation is not limited to the permanent physical taking of property.  Rather, it can include a temporary taking or occupation of private property, such as flooding, and also includes government regulation which burdens your property in such a way that you can not derive any economical use out of it.  When government regulation significantly burdens private property the inverse condemnation may be referred to as a “regulatory taking.”  Most importantly, in an inverse condemnation or regulatory taking scenario the government has failed to pay just compensation for the private property rights that have been taken.

The Inverse Condemnation Process

When government acquires property without following the eminent domain procedure, the affected property owner has the right to bring an inverse condemnation lawsuit against the government entity that has taken his or her property.  The suit filed by the owner is “inverse” rather than “direct” because it is brought by the property owner, not by the government agency or other entity having eminent domain power.  Therefore, the property owner carries the burden of proof that property rights were acquired without the payment of compensation.  This differs from a direct condemnation following eminent domain procedures which places the burden of proof upon the condemnor to show that the acquisition is necessary and that the project has a true public purpose.

As in the eminent domain process discussed above, each state may follow different procedures and may have differing statute of limitations for inverse condemnation. Because your property rights are at stake, we recommend consulting with an experienced inverse condemnation attorney before proceeding with an inverse condemnation or regulatory takings claim.

Owners’ Counsel of America: Skilled Eminent Domain and Inverse Condemnation Lawyers

If you are a property owner facing eminent domain or if you believe that you may have a potential inverse condemnation claim, learn more about how to protect your rights by contacting a lawyer with Owners’ Counsel of America.

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