Can the government really take my house?

John W. Schoen Senior Producer • Profile • E-mail

The recent Supreme Court ruling that upheld the right of a city government to take away people's homes and give them to a private developer has given a bad case of the jitters to a number of Answer Desk readers, including Kevin, a recent home buyer in Florida. While the chances of losing your home this way are still pretty slim, it doesn't hurt to be prepared.

Scott in Virginia, meanwhile, is trying to come find a retirement calculator on the Web that will help put him on "Easy Street" when he quits working. But he's not sure the numbers add up.

PROPERTY WRONGS
Since the Supreme court ruling on Kelo v. City of New London  I have been wondering how they calculate "just compensation"… We are concerned a developer is going to want to buy our whole neighborhood since it is mostly low income and mobile homes. It is directly behind (a neighborhood) in which the houses start at $1 million or more. Even building mediocre scale apartments will generate more tax revenue than the 50 or less mobile homes … If your mortgage shows you owe $100,000 can you be compensated for LESS than you still owe? … What happens even if they give you enough to pay off your mortgage, you still have to have money to move, and a down payment for a new home. What if you are on a fixed income with minor savings and they take your land on you only have five or ten thousand left over after your mortgage is paid off? What then?
Kevin B., Panama City Beach, Fla.

A lot of people -– including the four dissenting justices in the high court’s recent ruling -- share your concern. And while it may be premature to pick out a tree to chain yourself to when the bulldozers show up, it never hurts to be prepared.

The process of taking private property – known as “eminent domain” – has a long history. Though the U.S. Constitution guarantees that private property can’t be taken “for public use without just compensation” the definition of “public use” has changed over the years. In the past, property has been taken to build railroads or highways. But with cash-strapped cities and towns looking for new sources of tax revenue, some have decided that developments that generate higher taxes fit the definition of “public use.”

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The case that has riled property rights advocates involved the city of New London taking property from homeowners for a development that would generate higher tax revenues. Some homeowners didn’t want to move and sued. In a recent 5-4 ruling, the Supreme Court sided with the city, raising fears that no one is safe from the threat of a developer tearing down their home to build a big box retailer or another cluster of McMansions.

But before you start digging a trench in the front yard to defend your home, consider the barriers that remain in place to slow down any government agency that gets ideas about seizing your property. The recent high court ruling also upheld the idea that state and local governments have the ultimate authority over the taking of private property, including the regulations spelling out when it is –- and is not -– okay to do so. Some states (Florida is one of them) have passed laws barring towns from taking property and handing it over to developers unless the neighborhood is “blighted.” The court’s decision also generated a move in Congress to enact federal laws to blunt the impact of the ruling.

Even if your town government decides that a cluster of pink trailers is “blight” and wants them replaced with McMansions, you still have a few cards in your hand. First of all, if you and your neighbors make enough noise, the town may back down. Condemning private property is not a politically popular move because it makes other voters nervous. Even if the government goes ahead with a condemnation order, you can appeal it. And if a judge and jury side with you, you win.

In the relatively rare case in which you lose your property, you still don’t have to take what the government offers you. When it comes to valuing a property, the only true way to know its worth is to sell it. In the case of a taking, that’s not possible. So the government will hire an appraiser.

Appraisers have fairly wide latitude in the value they come up with. At the very least, you’ll want to hire your own expert, along with a good, local attorney who specializes in eminent domain cases. (In Florida, if the government tries to seize your property, it also has to pay your legal fees.) You’ll have several chances during the condemnation process to negotiate a settlement. You can, and should, ask for relocation expenses. If you still don't like the offer, you can go back to court. Somtimes, even the threat of a suit (which will add to the government’s cost) can help boost your home's "fair market value."

And if you ever get that far, the more homeowners you can get to join you the better. So once you get settled, throw a block party and find out if any of your neighbors share your concerns. Subscribe to the local paper and keep up with news of any proposed developments. Go to public meetings. At the first sign that you might be sitting in the way of development, get a lawyer.

In the meantime, go ahead and start fixing the roof and sheet-rocking those old walls. If other homeowners around you start sprucing up their houses too, you may soon find yourself in a much more "upscale" neighborhood. That should keep the town from getting any ideas about taking away your new house.

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