Not necessarily. If we and the client agree to pursue legal actions, then we mutually agree to split those costs. We have found legal proceedings may be hurtful to a pure negotiation path. Your circumstances will vary. We are brokers, so we are entirely committed to negotiating for higher values in all our owner representation assignments. As brokers, we have access to off-market transaction data that others outside the commercial real estate industry would not. And if needed, we know which attorneys in this field have the credibility and competence to execute on your behalf. 

What is Eminent Domain in Texas?

Eminent domain is the government’s power to take private property for public use, as granted by the Fifth Amendment of the U.S. Constitution. While this authority is fundamental to the development of infrastructure and public projects, it comes with a significant condition: the property owner must receive just compensation. In Texas, eminent domain is governed by both federal and state laws, ensuring a structured process that balances the public’s needs with private property rights.

Under eminent domain, various entities, including state and local governments, utilities, and private companies acting under governmental authority, can acquire property for purposes like highways, railroads, pipelines, or schools. While the concept aims to serve the public good, it often leaves property owners feeling overwhelmed, underrepresented, and unsure about their rights.

The State of Texas is one of the largest taking entities in the United States. 

Eminent domain can disrupt lives and livelihoods, making it essential for property owners to understand the legal framework, their rights, and the processes involved. Consulting with professionals experienced in eminent domain law is critical to navigating this complex terrain effectively.

Examples of Eminent Domain in Texas

Eminent domain has played a key role in shaping Texas’s infrastructure. The state’s booming population and expanding industries require constant development, often involving the acquisition of private property. Here are some notable examples:

TXDOT Highway Expansion Projects

The Texas Department of Transportation has an extensive highway system that requires ongoing expansion and maintenance to accommodate increasing traffic. Projects like the I-10, I-45, and I-35 corridor expansions have involved the acquisition of numerous private properties in downtown Houston and beyond. While these projects improve transportation efficiency, they often displace businesses and families.

Pipelines, Electric Lines, & Energy Infrastructure

As an energy powerhouse, Texas frequently sees eminent domain cases related to oil and gas pipelines, wind farms, and power transmission lines. For example, the construction of the Trans-Pecos Pipeline in West Texas required the acquisition of private land for transporting natural gas. These projects are essential for maintaining energy independence but can lead to disputes over land value and environmental impact.

Urban Development

Eminent domain has also been used for urban renewal projects in cities like Houston, Dallas, and Austin. These initiatives often involve the acquisition of older properties to make way for new commercial or residential developments. While such projects can revitalize neighborhoods, they can also lead to controversies over fair compensation and displacement.

Border Wall Construction

Another high-profile example involves the federal government’s use of eminent domain to acquire land for constructing sections of the border wall along Texas’ southern border. These cases often raise unique challenges due to their political sensitivity and the impact on ranchers and other landowners in the region.

Can You Fight Eminent Domain?

Yes, property owners in Texas have the right to challenge eminent domain actions. While the government or authorized entity holds the power to acquire property, they must strictly adhere to legal requirements. Property owners can contest the process and the compensation offered in several ways.

Understanding the Burden of Proof

Entities seeking to exercise eminent domain must demonstrate that the project serves a legitimate public use. In Texas, this includes infrastructure improvements, utilities, or other public-benefit projects. Property owners can challenge whether the project meets this standard, particularly if it appears to benefit a private interest more than the public.

Negotiating Just Compensation

Just compensation refers to the fair market value of the property at the time of the taking. However, government appraisals often undervalue properties, leaving owners at a disadvantage. Consulting with independent appraisers and legal experts can help ensure you receive adequate compensation for not only the land but also any associated damages or losses.

Challenging Procedural Issues

Eminent domain proceedings involve strict procedural rules. Failure to follow these rules can invalidate the acquisition. Property owners can challenge:

1. Improper notice of condemnation proceedings.
2. Insufficient documentation supporting the public use claim.
3. Failure to negotiate in good faith before initiating legal action.

Litigation and Court Challenges

If negotiations fail, property owners can challenge the eminent domain action in court. Texas law allows owners to contest the necessity of the project, the legitimacy of the entity exercising eminent domain, or the adequacy of compensation. Having experienced legal representation is crucial during this phase.

Special Considerations for Texas Commercial Real Estate Landowners

Texas provides specific protections for property owners under the Landowner’s Bill of Rights. This document outlines your rights during an eminent domain process. You have the right to receive a bona fide offer and to hire a lawyer to represent your interests. Familiarizing yourself with these rights is an essential step in fighting eminent domain.

What does the Constitution say about eminent domain? Is it lawful?

The Fifth Amendment of the United States Constitution contains the Takings Clause, which prohibits the government from taking private property for public use without just compensation. This provision ensures that property owners are compensated fairly when their property is appropriated for projects like infrastructure or public utilities.

Similarly, Article I, Section 17 of the Texas Constitution reinforces property rights. It states that no person’s property shall be taken, damaged, or destroyed for public use without adequate compensation. In Texas, this provides an additional layer of protection for property owners, including commercial real estate owners.

Rights for Commercial Real Estate Owners

1. Fair Market Compensation: Commercial property owners are entitled to receive compensation equivalent to the fair market value of their property. This includes considerations for the property’s current use, potential future uses, and the value of any improvements or structures.
2. Relocation and Loss Compensation: Beyond the property’s value, commercial property owners may claim compensation for relocation costs and lost business income if the taking disrupts their operations.
3. Challenge Public Use: Owners can dispute whether the proposed project truly serves a public purpose. For example, if a project primarily benefits a private entity rather than the community, it may not meet the standard for eminent domain.
4. Due Process: Property owners have the right to receive proper notice, review the condemning entity’s offer, and negotiate before any legal proceedings are initiated. Failure by the condemning entity to follow these procedural steps can invalidate the action.

5. Legal Representation: Texas law explicitly allows property owners to hire legal counsel to challenge eminent domain proceedings. This ensures a fair opportunity to dispute valuations and procedural compliance.

Key Takeaway for Commercial Real Estate Owners

Understanding your rights under the Fifth Amendment and Article I, Section 17 is crucial when facing eminent domain. Hiring experienced legal representation can help ensure compliance with these laws and maximize compensation for any losses incurred. If your commercial property is at risk, seeking professional assistance early in the process can make a significant difference in the outcome.