How does eminent domain work?
September 29, 2009 8:55 PM   Subscribe

Question about eminent domain. We had an offer on a house accepted, and in a cursory search, I found plans for a hotel to be built on the block that this house is on.

Ok, sorry for the length.

The house is in a mixed-use neighborhood. Actually, the area is only about 2% residental (all single-family detached houses). The rest of the buildings are mostly small, independently-owned businesses (mechanics, a cab company, machinist), with a few large ones (rockery, some sort of cement.... factory(?)) thrown in. Despite all of this, for a lot of tl;dr reasons, I like the house and the neighborhood.

When our offer was accepted, I went online and looked at the permit history for this place (I know, I should have done this before I made the offer, but it was a short-sale, and I honestly didn't think it would ever be accepted). I found prelimnary plans to raze the whole block and build a hotel. In this economy, I doubt that that's going to happen now, but eventually it could. It doesn't help that my city has abused eminent domain before, and I would guess that in better times probably will again.

So, finally, my question: how does eminent domain work? If I bought this house, and the city decides that they would rather have a hotel there, what are my rights? Do they just offer me appraised value and I have to take it? Is it realistic to think I could get more than what I paid for it?

(I will most likely pass on the house, which is disappointing, but I am curious how this all works, and I know none of you are my lawyer)
posted by dogmom to Law & Government (8 answers total)
Seek the advice of a competent lawyer in your jurisdiction. I'm a lawyer and I know that I lack any knowledge of the actual facts of your case or your jurisdiction and the law thereof. Other users answering this question may not be so aware of that.
posted by Ironmouth at 9:05 PM on September 29, 2009 [1 favorite]

They'd probably offer you appraised value, but you don't have to take the first offer. Typically, they first make an offer. If you take it, it's open and shut. If you don't, you go to court to determine the property value. Once the judge makes the determination of property value, though, you have to take that.

I'm not a lawyer, but I do a lot of eminent domain work for state transportation agencies.

It's also sketchy that the city would use eminent domain for a private development, though, for what it's worth.
posted by hwyengr at 9:10 PM on September 29, 2009

It's also sketchy that the city would use eminent domain for a private development...

Sketchy, yes, but also the law of the land. Sucks to be American sometimes.
posted by spacewrench at 9:20 PM on September 29, 2009 [1 favorite]

A relevant point, besides the lawyerly stuff, is how your building department operates. If the plans were just "preliminary", that might mean that the hotel was still just in the planning phases and was just submitted to the building department for "entitlements". Entitlements are basically the City or whatever jurisdiction saying "yes, it's okay to build a building of this sort here, so long as it meets the following requirements..." with a bunch of stuff about how the building looks, and how big it can be, and what kind of activities can go on there. If the hotel never got entitled, then there's no reason to worry. If it did get entitled, then the hotel developers would have had the okay to start going for construction permits after that. If you're correctly describing the plans as just being preliminary, they probably didn't get into the construction drawing part of the project before it got iced.

But, here's the thing: No matter where they were in the process when the plans were shelved, most building departments have a set length of time for you to do something with any permit you're given - in my area you have to get your first inspection within a certain time frame after being granted the permit. Even the entitlement permits have a deadline, and you even have make progress towards pulling whatever permit once you've submitted plans for it. The building department doesn't want you to submit plans or pull a permit and then just have you sit on it for as long as you want (especially if they can charge you fees all over again). So, if the plans for the hotel were abandoned long enough ago, there really wouldn't have been anything to worry about from that set of developers unless they decided they wanted to go through the entire process again from the start. At that point, your block would be as vulnerable to misuse of eminent domain as any other; the thing making your block more attractive is probably just the character of development that's already there - it's somewhat commercial already instead of being a strictly residential neighborhood.
posted by LionIndex at 10:05 PM on September 29, 2009

Best answer: Heh, I think I know where that is (howdy neighbor). I can't answer any of the legal aspects of your question but as far as that particular block, find out if it's in one of San Jose's Strong Neighborhood Initiative project areas. The SJ Redevelopment Agency has made a lot of noise about pressuring the city council to *not* authorize using eminent domain on single-family owner occupied homes in their SNI areas. Not sure I believe them since that's the same Redevelopment Agency that got slapped hard over the Tropicana but it couldn't hurt to call up someone at SNI and ask what's up.

There's also Prop 99, which passed last fall, though it has ample critics.

All that said, if it's the neighborhood I'm thinking of, that area is going to forever be the target of the RA because of it's proximity to 280/87, downtown, the Shark's pavilion, light rail and Caltrain.
posted by jamaro at 11:52 PM on September 29, 2009

As the first commenter, a lawyer, said - not enough data to firmly answer.

But, as you've been warned the Kelo decision could very well result in the city's use of eminent domain in a case like yours. Thus, to fully evaluate the risk requires a lot of local knowledge not present in your question (nor could it be).

However, be aware that If eminent domain is validly used you cannot fight to keep the land and house. You can only get fair compensation. THAT is not at all necessarily the same as what the house would sell for on the market. Thus, you need competent local real estate counsel before you ever commit to buy this property.

Good luck.
posted by BrooksCooper at 12:10 AM on September 30, 2009

spacewrench says that allowing eminent domain for private development is "the law of the land". Not quite. The Kelo decision held that it was not a violation of the Federal constitution for a state or community to allow it. His comment overlooks the fact that many states have adopted constitutional prohibitions against the practice. And jamaro tells us that California is one of them. Prop 99 "has ample critics", but it apparently is the "law of the state".
posted by megatherium at 3:48 AM on September 30, 2009

Response by poster: Thanks all. I had pretty much decided not to buy this house, but now I'm going to officially turn it down. It just doesn't seem worth the hassle. Even if this hotel isn't built, jamaro (who was spot on about where it is) has a point. This neighborhood will probably always be a target for redevelopment.
posted by dogmom at 4:50 AM on September 30, 2009

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