Just compensation has almost always been a point of disagreement between the government and the property owners. What may seem like fair compensation to the government, may seem inadequate in the eyes of the property owner whose property has been acquired against their will by the state.
Just Compensation is the fair market value of a property that a property owner is entitled to receive when their property is taken from them by the government for public use. This power of the government to acquire real properties of the private property owners is called ‘eminent domain.’ The government acquires the property for the benefit and use of the public, such as to build highways, hospitals, set up industries etc.
The just compensation is paid to compensate the owner as if the property was never taken. It is defined as the fair market value of the property and also the best possible use the property in question could have been put to.
No property owner would want to part with their property against their will. However, when the government exercises its power of eminent domain, they are forced to give it up. And if the owner is not satisfied with the compensation, they have the right to contest the compensation in court. But before that it is important to understand some issues that are taken into consideration to determine the just compensation:
The idea of just compensation is to put the property owner in the same position as they would be if the property was never taken.
Just compensation can be determined under three approaches. They are the market approach, income approach and cost approach.
The fair market value should be considered keeping in mind the price a reasonable buyer would have been willing to pay for the property if it was not taken against the seller’s will.
Any improvements made on seized land should be considered in the evaluation. Any fencing on a lot, or expenses incurred for renovation in the case of houses, all these factors play a role in determining the fair market value.
If instead of the entire property, only a part of the parcel has been seized, the compensation made is for the residual damages that the property owner will face. For example, the inability to use the remnant land as it was originally intended by the owner, because a part has been seized.
