By law in the United States, your state and federal governments can take a portion of land that you legally own. This government power is called “eminent domain.” The government can then do whatever they want with the land. They can build roads on it, designate it for government buildings or even give it to another person or business who has government-approved plans for it. Whatever they do with the land, it must provide some value to the public.

Whether you own the property as part of a business or as an individual, you likely invested a sizable amount of money into that land. When the government takes it, you may feel as though you wasted that investment on land you can no longer use.

However, by law, the government has to give you “just compensation” for the land they took.

What is just compensation?

In a perfect world, “just compensation” would mean that you would receive the same amount of money you originally paid for it.

Unfortunately, we do not live in a perfect world.

The government determines the amount of compensation based on fair market value. The state of New York claims that fair market value corresponds to the highest amount of money you could get for the land if you sold it. Since the real estate market fluctuates constantly, the government’s definition of fair compensation could change based on when the appraisal occurs.

If the government only takes part of your land, you may receive “severance damages.” When you lose a portion of your land to eminent domain, the land that remains may see a decrease in value. By paying severance damages, the government seeks to repay you for that reduced value.

What if I disagree with the offer?

Landowners and the government do not always agree on the fairness of just compensation and severance damages. If you disagree, you can file an appeal through the State Court of Claims. You have three years from the date you received the eminent domain notification to file a claim.

If you want to contest a compensation offer, speak with an eminent domain professional to learn more about your legal options.