In my last post, “Real Estate Alphabet Soup: I is for Improvements” I continued my primer on the “alphabet soup” of real estate. This post continues to stir the “alphabet soup” with the letter “J.”
J is for “just compensation.” In the realm of real estate, “just compensation” relates to the government’s “taking” of a property under its power of eminent domain. A government can exercise its power of eminent domain to “take” a property for a public purpose. The Fifth Amendment to the United States Constitution requires, however, that “just compensation” must be paid to the property owner when property is taken by the government for public use.
“Just compensation” is the full remuneration for the fair market value of the property taken, whether it is the entire property or just a part of the property. The government and the affected property owner can negotiate to determine the fair market value of the property to be “taken.” If the parties are unable to come to an agreement, however, as to the fair market value of the property, the government can file eminent domain proceedings, in the circuit court for the county in which the property is located, to have a determination made as to the fair market value and “just compensation” to be paid by the government to the property owner for the property “taken” by the government. In either case, real estate appraisals conducted by licensed real estate appraisers usually bear heavily on the ultimate determination of the fair market value of the property.
While nobody wants to have their property “taken” by the government, at least there are laws in place to protect the property owner by requiring that the property owner be fairly and justly compensated for the “taking” of the property.
In my next post, I will move on to the letter “K”, the next letter in this real estate “alphabet soup.”
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