Requirements for Eminent Domain in Indiana

If you’re facing a potential threat of eminent domain, you don’t have to go through it alone. Our Indiana eminent domain attorneys work with people across the state to make sure they’re treated fairly.

Let’s break down what eminent domain is, the conditions that allow it, and how the process works in real estate.

What Is Eminent Domain?

Eminent domain is the legal authority of federal, state, and local governments to acquire private property, residential or commercial, for public use, as long as the owner receives fair compensation. While this may sound like an extreme power, it’s rooted in the Fifth Amendment of the U.S. Constitution, which requires that private property cannot be taken for public use without “just compensation”.

Eminent domain can allow the state to widen highways, build public schools, extend utility lines, or develop parks. Indiana law also allows certain private companies, such as utility providers, to exercise eminent domain if their projects serve the public good.

What Are the Three Elements of Eminent Domain?

For the government to lawfully use eminent domain in Indiana, three requirements must be met. These protections are designed to balance the needs of the community with the rights of individual landowners.

Public Purpose or Use

The first requirement is that the taking must serve a public purpose. Traditionally, this meant projects such as roads, bridges, or schools. Today, courts have interpreted “public use” broadly, sometimes allowing land to be taken if the project will promote economic development, create jobs, or benefit a community as a whole.

However, the government cannot take land simply to benefit a private party. The project must provide some genuine public advantage. This requirement is often the most debated aspect of eminent domain cases.

Just Compensation

The second requirement is that the landowner must receive “just compensation”, which means the fair market value of the property at the time of the taking. In Indiana, however, a 2022 change in the law increased that standard, where property owners are now entitled to 120% of fair market value in condemnation cases.

To assess fair market value, courts and appraisers look at a property’s highest and best use — not just what it’s currently being used for, but what it could reasonably be used for in the near future. Factors that play into this analysis include:

• How much interest there is in that type of property right now.
• Whether the land is close to areas already being used in a way that fits with the proposed project.
• Economic trends or new projects that may increase the property’s value.
• Any proposals or intentions from businesses or individuals to develop the land.
• Improvements or preparations already made that show the property is on its way to a higher use.
• How hard it is to find comparable property in the same area.
• Serious offers or negotiations that suggest what the property could realistically sell for.
• How the property is actually being used at the time the government moves to take it.

Determining fair market value can be complicated. Property owners may feel that the government’s offer undervalues their land, especially if it has sentimental value, development potential, or unique characteristics. Disputes often arise, leading to negotiations or even a trial where both sides present appraisal evidence.

Due Process of Law

Finally, the taking must follow due process. This means property owners must be given notice, an opportunity to be heard, and a fair chance to challenge the government’s decision.

Due process prevents arbitrary seizures of land. It ensures transparency and allows owners to contest whether the taking is truly for public use and whether the offered compensation is fair.

Types of Takings

In eminent domain law, the word “taking” refers to any situation where the government uses its power to claim private property. There are several types of taking:

• Physical taking: This is the most straightforward type: the government physically takes over private property for its own use. Even a small, permanent occupation, such as installing utility equipment on private land, can qualify.
• Regulatory taking: Even without physically seizing land, overly restrictive regulations may deprive an owner of its use, which can qualify as a “taking”.
• Complete taking: The government acquires the entire property.
• Partial taking: Only a portion of the land is taken, such as a strip needed to widen a road.
• Permanent taking: The land is permanently transferred to public ownership.
• Temporary taking: The government uses the land for a limited time, such as during a construction project, before returning it to the owner.

What Is a Condemnation Proceeding?

When the government and a property owner can’t agree on whether land should be taken or how much it’s worth, the dispute usually ends up in court through what’s called a condemnation proceeding.

In this process, the government files a lawsuit asking for permission to take the property. It will present its reasons for the project, explain how it serves the public, and state what it believes the property is worth. As the property owner, you have the right to respond by challenging either the government’s authority to take your land or the amount it is offering as compensation.

Often, these cases come down to a disagreement over value. Both sides bring in appraisers, and it can turn into a battle of expert opinions. Ultimately, the court decides whether the taking is lawful and what “just compensation” should be. While it can feel overwhelming, condemnation proceedings give landowners a chance to be heard and to push back against unfair offers.

What Is Inverse Condemnation?

Inverse condemnation occurs when the government takes one property for a public project, but the changes made end up harming the value of nearby properties that are still privately owned.

For example, if the state builds a facility that produces noise, traffic, or pollution that lowers nearby property values, owners of those properties may have a valid claim. Zoning decisions or restrictions that strip land of nearly all its practical uses can also qualify.

In these cases, the property owners can file a lawsuit against the government, asking for compensation for the damages caused.