What does condemnation real estate mean?

Did you know, all condemned real estate need not be unsafe to live in? Even those in perfect condition may be subject to condemnation by the local government. So, what does condemnation of real estate mean, exactly? And how does this concept work for landowners? Let’s find out. 

What’s condemnation real estate in simple terms?

Government agencies possess the authority to employ eminent domain. This legal mechanism allows them to acquire residential properties or parcels of land in the pursuit of the public good.

That is to say, the authority enables the government to appropriate land for projects, both public and private. The projects are considered advantageous for the broader community, without necessitating the property owner’s agreement. 

Some of the objectives prompting the government’s acquisition of land include:

• Establishing a new educational institution in the area.
• Enhancing or expanding the network of roads.
• Installing or upkeeping public utility infrastructure.
• Building a local hospital.

What does condemnation of real estate mean for the landowner?

The local governing authority cannot take a piece of land as they please. They have to ensure that the owner is compensated as per the property’s fair market value. Generally, the court decides whether the takeover is legal or not, and the appropriate compensation in a condemnation proceeding.

The Fifth Amendment of the U.S. Constitution explicitly states that private property cannot be seized for public use without just compensation. The government can use it only when the property owner is fairly compensated. When a government entity initiates a condemnation process, the property owner gets an offer equivalent to the property’s market value. If the property owner believes that the offered amount is insufficient, they can challenge the appraisal in court.

What is a good example of condemnation in real estate?

Condemnation often occurs when the government needs to use a particular land for projects that benefit the public. For instance, due to growing traffic in a town or city, the government might decide to make new roads or the existing ones wider. But to do that, they may need to buy some houses that are in the way. You might not want to sell your home, but because making the road safer is good for everyone in town, the government can use an eminent domain case to make you sell. This is condemnation in the real estate industry. 

The first offer the government gives you for your home or property is a “pro tanto award.” If you think this offer isn’t fair, you can hire a lawyer to try and get a better price.

Sometimes, condemnation can happen on a really big scale. For example, during World War II, the government took over more than 20 million acres of land using eminent domain for building military bases, airports, and testing areas.

What are the different types of condemnation real estate?

Here are some common types of condemnation in real estate:

• Eminent domain: It allows the government to take private property for a public project, such as building roads, schools, or other infrastructure. 
• Inverse condemnation: When a government action or regulation significantly diminishes the value of a property or interferes with a property owner’s rights, without the government officially taking ownership. 
• Regulatory taking: When government regulations, such as zoning laws or environmental restrictions, limit a property owner’s ability to use or develop their property, resulting in a loss of value. 
• Temporary condemnation: Sometimes, the government may temporarily take possession of a property for a specific period, often for construction or maintenance projects. After completion, the property is returned to the owner. 
• Partial condemnation: In cases of partial condemnation, only a portion of a property is taken by the government for public purposes. The property owner may get compensation for that portion and any resulting diminution in the property’s value.
• Total condemnation: When the condemning authority acquires the entire property for public use. 
• Quick take condemnation: Some jurisdictions allow for a “quick take” process, where the government can take possession of the property before a final determination of compensation.
• Blight condemnation: The government may condemn and take possession of properties that are deteriorated to promote urban renewal and redevelopment. 

How does the property condemnation process work?

Condemnation in real estate involves a complex legal process. Fortunately, property owners have the right to challenge the government’s actions and seek fair compensation. They can consult with legal professionals experienced in eminent domain and condemnation cases to protect their rights and interests. Keep in mind that laws regarding condemnation may vary by jurisdiction. In most cases, property owners can demand that the government formally condemn the property. And, compensate them for any loss or damage based on fair market value. 

When the government seizes property that belongs to a private entity, they have to follow the rules of the state where the property is. But in all of this, the government has to prove its case. This means they have to convince a judge, and sometimes a jury, that taking the property is necessary for a good reason. They also have to show that they’re offering a fair amount of money for the property, it’s worth in the market.

After that, the property owner can go to court to talk about whether the government’s actions are legal or not. 

If it’s legal, the owner can still argue about how much money they get for it. In court, there is usually a tussle between the government’s appraiser and the owner’s appraiser to determine the property’s worth.

Read more:  What is a lis pendens in real estate?

Key takeaway

Condemnation is a legal concept where the government takes control of private property for the benefit of the public. And in return, they must provide fair compensation, usually in line with the property’s market value. This commonly arises in cases involving community-enhancing projects such as the construction of new roads, schools, and hospitals.

Read more: Important things to look for in a neighborhood

Condemnation in real estate: FAQs

How different are condemnation and eminent domain?

Condemnation happens when the government or an agency with special powers wants to take someone’s private property. This special power is eminent domain. It lets the government seize the property for certain reasons.

How do I ensure proper compensation from the government?

If you want to sue the government for damaging your property or not paying you enough for it, especially in the case of inverse condemnation, you have to prove that they did something wrong. This can be tricky, but an experienced real estate attorney can assist you if your property is subject to condemnation. 

What should I do if I get a notice of condemnation?

A condemnation notice indicates that the government authorities are beginning legal actions to transfer your property status from private to public-use property. Upon receiving such a notice, you should immediately consult with a real estate attorney. They will be able to guide you through this complex process – encouraging you to have a private property appraisal and negotiate the amount offered by the government.

Written by Ramona Sinha. November 13, 2023

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.