Fighting Chance

When the government wants your land, prepare to fight for fair payment.

In the U.S. Constitution, the right to property ranks right up there with life and liberty. The government may not deprive people of life, liberty or property without due process of law. However, the law also recognizes a legal concept called "eminent domain," which is the right of federal, state and local governments to take private property when it's needed for a public purpose. If a government agency decides to widen a road or build a fire station and needs the property your business is on, there's not much you can do to stop it. With a well-organized strategy and many hours of negotiation, however, you may be able to have the project altered enough to save your business. If not, the agency must pay you for the property. The key question, then, is how much?

The government's goal is to acquire the land for the lowest possible cost. That means paying an amount equal to an appraiser's estimate of the land value, which likely doesn't match the value of the location to your business. When you have a thriving business, it can be enormously expensive to move. You may not be able to find a suitable location nearby, and moving across town could cost you your customer base plus lost income because of the disruption.

Fortunately for business owners, courts have been increasingly sympathetic in recent years to the plight of the landowner or business owner whose land is snatched by the government. "I think the courts are less willing to let the condemning authority trample the rights of the landowner," says Michael Nolan, an attorney with Pitney, Hardin, Kipp & Szuch in Morristown, New Jersey, who has represented various businesses in eminent domain cases. Only a fraction of eminent domain condemnation cases ever go to trial, but the trend in the courts makes it more likely that the agency in question will be open to reasonable arguments--and to making a reasonable offer.


Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

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This article was originally published in the November 1998 print edition of Entrepreneur with the headline: Fighting Chance.

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