Inverse condemnation in real estate involves a private property owner suing for just compensation by the government or a public agency that has taken the property for economic development or public improvement through the law of eminent domain.
Eminent domain vs. inverse condemnation
The Fifth Amendment of the Constitution allows the government to take or use private property through the right of eminent domain. The process by which it's acquired from the original owner is known as condemnation. While the government doesn't need permission to take the property, the owner is supposed to be compensated for the property's fair market value by the same amendment. The property owner has a right to challenge the value, which will be ultimately determined by a court of law.
Eminent domain may comprise the complete, partial, or temporary taking of a property. Furthermore, when the government seizes real property, it can be either a physical taking or a regulatory taking. If there's a physical taking by the condemning authority, the property owner will no longer have access to all or part of their property. However, there might instead be such strict regulations put in place that the property is not able to be fully used or sold.
In either case, the owner must be justly compensated or else they have the right to initiate inverse condemnation; here, they will then be the plaintiff instead of the defendant, as in the original condemnation case.
An example of inverse condemnation
In a situation where the government takes part of a property in such a way that the property is damaged and therefore greatly devalued, the property owner has the right to initiate an inverse condemnation proceeding in a court of law. The property owner would argue the damages add up to the loss of the entire property and therefore should be paid accordingly.
Here's an example of inverse condemnation involving the partial yet permanent taking of a private property: A town's government decided to make one of its roads wider. In doing so, the expansion work will take over most of the parking lot of a popular restaurant. The city is willing to pay the owner for the loss of the parking lot based on the fair market value. However, the owner says he deserves more because business has dropped off considerably since restaurant patrons no longer have easy parking access. The owner institutes an inverse condemnation claim in a court of law, asking to be compensated for the total value of the property and the building.
When inverse condemnation goes to the Supreme Court
While not all condemnation cases result in inverse condemnation claims, when they do, they're usually handled at the state level. But there's been a precedent of a property owner taking their fight to a higher court with success.
In fact, the 2019 case of Knick v. Twp. of Scott, Pennsylvania made it all the way to the Supreme Court. The township had ruled that all cemeteries in the area had to be open and available to the public during daylight hours. Rose Mary Knick, who owned a 90-acre piece of land that contained a family graveyard, was found to be in violation of this rule.
Knick's battle for more just compensation for her private property was a losing one at lower levels of the court until she initiated inverse condemnation. Knick's case still met with obstacles, but it was ultimately brought to the Supreme Court, where it was upheld by a 5-4 decision; Chief Justice John Roberts wrote the majority opinion, and Associate Justice Elena Kagan wrote the dissenting opinion.
The bottom line
If you're a property owner who's been notified of a condemnation proceeding, you must seek the advice of an eminent domain lawyer. It's wise to choose an attorney who's also experienced in inverse condemnation law to protect your property rights.
While the government does have the ability to seize your property through eminent domain, you also have the right to fair compensation, whether through an appeal during a condemnation action or an inverse condemnation lawsuit, depending on the situation.