As COVID-19 spreads throughout the globe and the United States, our national, state and local governments are taking wide-reaching but necessary actions to respond to this novel coronavirus.

On March 4, 2020, Governor Gavin Newsom declared a State of Emergency and on March 12 issued Executive Order N-25-20, which, in part, allows the California Health and Human Services Agency and the Offices of Emergency Services to enter into contracts or, if agreements cannot be reached, “commandeer” property, such as hotels, medical facilities and other facilities that are needed “for quarantining, isolating or treating individuals” who are either carrying or potentially carrying COVID-19.

If COVID-19 spreads in California at a rate comparable to that of other countries, and more and more people require medical care, treatment and hospitalization, there may come a time when the number of individuals in need of a hospital bed will exceed the number of beds available. At this point, the government may choose to utilize its commandeering powers. The question then becomes, does the government have to pay just compensation as if taking property by eminent domain?

Government Code section 8565 et seq. provides the Governor with these emergency powers and specifically section 8572 provides the emergency power to commandeer property with the payment of the “reasonable value” of the property taken. It isn’t clear if “reasonable value” is the same as “just compensation,” which requires payment of the “highest price” that would be agreed to in an open market transaction, but an owner whose property is commandeered should be compensated.

How are property owners compensated? A property owner may be able to bring an inverse condemnation claim in court but, first, the claim must be presented to the Department of General Services. (See Gov. Code, §§ 8652, 900 et seq.) If the government denies the claim, a property owner may be able to bring a lawsuit if certain conditions are met.

Property owners impacted would be prudent to understand the provisions governing the presentation of claims against the state, and the state should be prepared to respond to the claims presentation. It will be interesting to see how the rights of private property owners are balanced with the government’s use of its emergency powers in this unprecedented time.