Eminent domain is the power to take private property for public use by the United States, states, municipalities, and private persons or corporations authorized to exercise functions of public character. "Eminent domain" is also sometimes referred to as "condemnation".
Eminent domain is "an inherent attribute of sovereignty, constitutional provisions merely place limitations upon its exercise." People v. Chevalier (1959) 52 Cal.2d 299, 304. The Fifth Amendment to the United States Constitution provides that private property shall not "be taken for public use, without just compensation." Similarly, the California Constitution Article 1, Sec. 19 provides in part that "[p]rivate property may be taken or damaged for a public use only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner." The power of eminent domain is exercised through an eminent domain proceeding.
Assuming the power of eminent domain is being properly exercised, the typical eminent domain proceeding centers on the determination of "just compensation". Just compensation is the "fair market value" of the property being taken by the public agency. If it is a taking of only a portion of the owner’s property, it also includes damages to the remaining property, if any. If a business is being damaged or acquired, issues to be determined in an eminent domain proceeding will also include possible loss of goodwill.
"Fair market value" in an eminent domain proceeding is defined as follows:
"(a) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.
"(b) The fair market value of property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable." (CCP Sec. 1263.320)