I have seen the topic of government takings under both Constitutional Law and Property.
What Is a Government Taking?
The government is allowed to take private property if it’s used for some public purpose. In some instances the private property owner is entitled to just compensation (usually the fair market value of the property). In other instances the private property owner is entitled to no compensation. Whether the government is obligated to compensate the private property owner is often the issue on an MBE question.
Actual Takings Versus Regulatory Takings
There are two types of takings, actual takings and regulatory takings.
Actual Taking
An actual taking occurs when the government actually physically uses a private property owner’s land for some public purpose. The government might either permanently take all or part of the private property, or permanently place something on the private property. If it’s an actual taking the private property owner is entitled to just compensation.
Note: With an actual taking the amount of land the taken by the government, whether the private property owner even uses this portion of the land, and the economic impact (or lack thereof) of the actual taking on the value of the land are all irrelevant. If an actual taking occurs the private property owner is entitled to fair compensation.
Example: The government permanently places a small, lighted disco ball on a tiny corner of my property to help commercial airline pilots see where they are going. I never use this part of my property and the lighted disco ball does not reduce the value of my property at all. Am I entitled to just compensation? YES. It’s an actual taking, and that’s all we need to know. The private landowner (me) is entitled to fair compensation.
Regulatory Taking
If the government does not actually physically take private property (there is no actual physical invasion of the private property) to use it for a public purpose but the government’s actions still affect the value of the private property, it might be a regulatory taking. If it is indeed a regulatory taking the private property owner will be entitled to just compensation.
It is very important to understand that a regulatory taking requires the actions of the government to effectively completely destroy the economic value of the land. If the actions of the government merely reduce the value of the land (even substantially), it is not a regulatory taking and the property owner is not entitled to any compensation.
Example: I own an apartment worth $200,000 that I rent out for $1,500 a month. The government decides to build an airport across the street. The constant sound of airplanes flying directly above my apartment makes it difficult for anyone to sleep or concentrate. This reduces the value of my apartment to $30,000, and I can now only rent it out for $300 a month. Am I entitled to compensation for either the reduction in value to my property or the loss of expected profits in the form of rent (both of which are quite significant)? NO. I am entitled to neither because my property still has some economic value. It’s certainly a tough break for me and it might not seem entirely fair, but I am entitled to nothing. The airport must basically render my property economically useless and worthless (it’s a difficult standard to meet) for it to be a regulatory taking.
When you encounter a fact pattern that does not involve an actual physical invasion of private property by the government (an actual taking), the property owner is not entitled to compensation unless the government’s actions effectively render the land economically useless.
What To Understand
When you encounter an MBE question about takings:
- Determine whether it’s an actual taking (permanent physical invasion of the land).
- If it’s an actual taking you don’t care about the impact on the value of the land, or anything else for that matter. It’s an actual taking and the private property owner is entitled to just compensation, plain and simple.
- If it’s not an actual taking, look carefully at what the facts tell you about the impact on the value of the private property owner’s land.
- If the government’s actions render the land completely useless and worthless it is a regulatory taking, and the private property owner is entitled to just compensation. If the government’s actions merely reduce the value of the land and it still has some type of use, it is not a regulatory taking and the private landowner is not entitled to any compensation.