What Is Eminent Domain?

By Jeremy Bowman – Updated Feb 26, 2025 at 1:29 PM EST

Key Points

Eminent domain lets government take private land for public use, requiring fair compensation.
Courts often decide what qualifies as public use and fair value in eminent domain cases.
Investing in real estate may expose you to eminent domain uncertainties.

The U.S. federal government has tremendous powers that no private organization can match. Among its foremost powers are waging war, collecting taxes, printing money, and regulating commerce. According to the Constitution, the government has several additional powers. One of the more controversial is eminent domain.

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A freight train traveling down the railroad tracks. — Image source: Getty Images.

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Eminent domain was also used to help build the Hoover Dam and AT&T Stadium, home to the National Football League's Dallas Cowboys. The practice was common in the construction of the interstate highway systems and involved in the destruction of a large number of neighborhoods in cities across the country when it was built.

Because eminent domain involves the real loss of individual properties and homes, it's controversial and often litigated in the courts, where judges must decide what constitutes public use and fair value.

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Eminent domain procedures often occur when a government condemns a property or decides it's blighted, which makes it easier to convert to something new.

If the government is interested in seizing your property, you'll likely receive a letter of intent. If you don't believe you're being offered fair value, you can sue the government for fair compensation. Although you may get more money, you'll be unlikely to stop the government from taking your property.

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The case of Kelo v. the City of New London in 2005 may be the most famous eminent domain case because the Supreme Court established the right of private businesses to seize land that could, in theory, be used to "create jobs and increase tax revenues." This expanded the legal reach of eminent domain, and its application continues to be litigated.

For instance, in a 2021 case, PennEast Pipeline Co. v. New Jersey even gave the pipeline company the right to use state-owned lands for private development.

Eminent domain will likely continue evolving as new use cases are tested in court. Although it's unlikely to affect you personally, it's a concept worth understanding, especially if you're a real estate investor or interested in the limits of the government's reach.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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