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Constitutional Law • Takings
CONLAW#070
Legal Definition
Just compensation is measured in relation to the loss of the owner in reasonable market value terms.
Plain English Explanation
When the government takes private property through eminent domain, the Constitution requires the owner be paid "just compensation." But how do you calculate fair payment?
The courts use the property's reasonable market value. This means what a willing buyer would reasonably pay a willing seller for the property at the time of the taking. The focus is on the loss to the owner, not what the government gains.
For example, let's say the state needs to take Bob's land to build a new highway. The court will look at things like the recent selling price of comparable land in the area. The court will consider appraisals estimating the value. This aims to determine the fair market value of Bob's property that was lost, to provide Bob just compensation through that amount.
The court won't consider special value Bob may attach to his land beyond its objective value on the market. The goal is to compensate Bob's financial loss, not subjective personal loss. Market value attempts to objectively measure Bob's loss to determine just compensation.
The courts use the property's reasonable market value. This means what a willing buyer would reasonably pay a willing seller for the property at the time of the taking. The focus is on the loss to the owner, not what the government gains.
For example, let's say the state needs to take Bob's land to build a new highway. The court will look at things like the recent selling price of comparable land in the area. The court will consider appraisals estimating the value. This aims to determine the fair market value of Bob's property that was lost, to provide Bob just compensation through that amount.
The court won't consider special value Bob may attach to his land beyond its objective value on the market. The goal is to compensate Bob's financial loss, not subjective personal loss. Market value attempts to objectively measure Bob's loss to determine just compensation.
Hypothetical
Hypo 1: Bob's property in Hypofornia is taken by the government to build a new highway. The property was valued at $300,000 in the current market. Result: The government pays Bob $300,000, which is the reasonable market value of his property, ensuring he is fairly compensated for his loss.
Hypo 2: Sam owns a small piece of land in New Hypoland that the government decides to use for a public park. An appraisal shows the land's market value is $100,000. Result: Sam receives $100,000 from the government, equal to the market value, so he is not financially hurt by the government's action.
Hypo 3: Bob owns a vacant lot in Hypofornia, and the local government takes it to expand a school. Bob believes the lot is worth more due to its potential for development and asks for $500,000. However, market analysis shows its value is $200,000. Result: The government pays Bob the $200,000 market value, not the inflated price he requested, ensuring just compensation is based on objective market value.
Hypo 2: Sam owns a small piece of land in New Hypoland that the government decides to use for a public park. An appraisal shows the land's market value is $100,000. Result: Sam receives $100,000 from the government, equal to the market value, so he is not financially hurt by the government's action.
Hypo 3: Bob owns a vacant lot in Hypofornia, and the local government takes it to expand a school. Bob believes the lot is worth more due to its potential for development and asks for $500,000. However, market analysis shows its value is $200,000. Result: The government pays Bob the $200,000 market value, not the inflated price he requested, ensuring just compensation is based on objective market value.
Visual Aids
Related Concepts
Can a property owner challenge pre-existing regulations?
May the federal government take private property?
What is a possessory taking?
What is a regulatory taking?
When are government conditions on development a taking?
When is a temporary denial of use a taking?
When is property considered to have been taken for public use?
