What is Just and Adequate Compensation?
Eminent domain in North Carolina allows the government to take private property for public use. Although North Carolina has the only constitution that does not expressly require compensation for doing so, the right to compensation has long been treated as a fundamental principle of state law. Accordingly, when the government takes private property for public use, property owners are generally entitled to compensation that accounts for both the damages caused by the taking and any benefits conferred on the remaining property.
What Issues Give Rise to Compensation?
A physical occupation taking occurs when the government physically occupies or appropriates private property for a public purpose. When only a portion of the tract is taken, the owner is generally entitled to compensation for the fair market value of the property taken, plus any decrease in the fair market value of the remaining property caused by the taking.
When an existing street or highway is converted into a controlled-access highway, nearby landowners may lose some ability to enter or exit the road directly. A controlled-access highway is a road designed to limit where drivers can enter and exit, such as an interstate. Instead of allowing direct access from every adjoining property, access is controlled through designated entrances, exits, ramps, or service roads. Landowners whose property directly borders the road generally have a property right to reasonable access, and if the government substantially interferes with that access, it may be considered a taking that requires compensation. However, non-abutting parcels, or owners whose reasonable access to the abutting street remains intact, are generally not entitled to compensation for diminished property value caused by changes in traffic flow, bypass projects, cul-de-sacs, or limitations on access to a new or limited-access highway.
Inverse condemnation occurs when the government substantially interferes with private property rights in a way that amounts to a taking, even though the government has not initiated formal condemnation proceedings. To bring this type of claim, a property owner must show that the government substantially interfered with a recognized property right and that the interference decreased the fair market value of the property. Examples include recurring government interferences, such as repeated firing over a home from a government fort, the erection and maintenance of a nearby city water tank, leakage from a school septic tank onto adjacent private land, repeated blasting near a property, or similar recurring harms caused by government action. Inverse condemnation generally does not include isolated or unintended government acts. The remedy is compensation measured by the impairment in property value caused by the injury.
A regulatory taking occurs when a government regulation or temporary occupation effectively deprives a property owner of all meaningful economic use of their property. Courts have used the following factors in evaluating a regulatory taking claim:
- The economic impact of the regulation on the claimant; and
- the extent to which the regulation has interfered with distinct investment-backed expectations.
A property owner's personal expectations or hopes for how the property could be used are not enough to establish a taking. Regulatory takings are rare, but when a court finds that one has occurred, the owner is entitled to just compensation, typically measured by the fair market value of the property interest taken.
For more information about just and adequate compensation under North Carolina eminent domain law, please contact Ivy N. Cadle, Kayla L. Pfeifer, or any member of Baker Donelson's Commercial Litigation team.
The authors acknowledge with appreciation the assistance and research from Baker Donelson Summer Associate Joseph Uribe.