Definition:
Expropriation is the process in which the government takes someone’s private property for public use if it is in the best interest of society.
What is expropriation?
According to the doctrine called eminent domain, the government has the right to seize a person’s private property against his wishes if it can prove that it is in the public interest. However, under the Fifth Amendment to the U.S. Constitution, the government cannot transfer private property to public use without just compensation. For this reason, the government must pay owners when their property is taken by expropriation. The owner can take steps to challenge the seizure, but they may still end up losing their property. A common reason for expropriation is the development of infrastructure such as roads, bridges, and utilities.
Purposes of Expropriation
The primary purpose of expropriation is to enable the government to force the sale of private property when a legitimate public need arises. Federal, state, and local governments have the power of expropriation.
The most common use of expropriation by the government is for infrastructure development. Building roads, railroads, utilities, parks, schools, or public health buildings are the most common reasons for expropriation.
The government does not need the owner’s permission to proceed with expropriation, but they must pay for the property. The Fifth Amendment includes a clause which states that governments cannot take land for public use without just compensation. In most cases, “just compensation” is the fair market value of the property.
How does expropriation work?
When the government decides to appropriate someone else’s property, the first step is condemnation. In this part of the process, the government declares that the property has a legitimate public use and that they intend to acquire it. The government then arranges for an appraisal. As the Constitution requires the owner to be fairly compensated, an appraisal is required to determine fair market value.
After the appraisal, the government makes an offer to the property owner based on the appraised value. At this point, there may be room for negotiation. The property owner could accept the amount offered, or they could counter with a higher figure.
Regardless of the price the government offers, the property owner could sue to challenge the sale. They may do so because they don’t think the offer the government is making qualifies as fair compensation. It may also be that they do not believe there is a legitimate public benefit from expropriation.
Is it possible to challenge the expropriation of one’s property?
Individuals can contest the expropriation of their property, but the results of historical decisions have been mixed. In many of these cases, courts (including the U.S. Supreme Court) have upheld the government’s right to force the sale of private property for the public good.
A well-known case in Connecticut involved a controversial lawsuit that reached the Supreme Court. In 1998, a major pharmaceutical company announced plans to build a research center in New London, Connecticut, a town that was in economic decline. The area chosen for the facility was residential, meaning that people still lived there.
The town decided to use the government’s expropriation powers to force the sale of the land so that a pharmaceutical corporation could build its facility. Most of the homeowners agreed to the deal, but a small fraction did not.
They argued that the city’s use of eminent domain was inconsistent with its intended purpose, given that they were expropriating the property for sale to a private company, not for public use. The case went through the state trial court and the Connecticut Supreme Court before finally reaching the U.S. Supreme Court. The court ruled that because the facility would provide economic development for the town, there was a legitimate public benefit.
Direct VS. indirect expropriation
Expropriation can be classified as direct or indirect. Direct expropriation refers to cases in which the government takes property and transfers ownership to the current owner. It is the most common type of expropriation when the government forces the sale of private property for public use.
Indirect expropriation occurs when the government deprives homeowners of their ability to use the property without fully taking title to it. This is more common in indirect expropriation and can refer to an example where increased regulation prevents a foreign government or corporation from using its assets.
Consequences of expropriation
If the government has used its expropriation power to force the sale of your private property, you will have to move. Depending on the type of property, the consequences could be even greater than if it were just a single-family home.
Unfortunately, expropriation has huge consequences for the tenants of the building as well. Not only are they forced to move out of their home or apartment, but they receive no compensation from the government for their problems or moving expenses.