When it comes to eminent domain, property owners often have very little choice in surrendering their property. The government has determined that it needs to take that property for a reason that benefits the public. Common examples are the construction of an interstate highway system or the building of government facilities. Eminent domain can be used to compel someone to sell their house when they otherwise would not want to do so.
That said, the government does have to compensate the property owner when using eminent domain. They are supposed to be paid just compensation, which is intended to “make them whole” after they lose their property. They may not get to keep the real estate, but they should retain the financial value of that real estate. One of the main reasons for litigation in these cases is when both sides do not agree on what fair compensation actually looks like.
Determining the market value
There are a few different steps used to determine the market value of a property, which may start by simply looking at comparable properties that have sold in the area. If the government can look back at the last 10 houses that had similar specifications, they can get an idea of what the property is worth and make that offer to the owner.
But this is not always satisfactory. Some property owners believe they are being lowballed and that their specific property is actually worth more than those comps.
In other cases, property owners may be looking at the future. Say that the housing market has been trending upward. They were already planning to sell their property, but they were not going to do it for 10 more years. By then, they believe the value will be much higher, so they feel like they are losing out on the investment by being forced to sell early and for a lower price.
Litigation in these cases is complicated and nuanced. Property owners must know exactly what legal steps to take.