Businesses may invest in real estate as a means of diversifying their portfolios or controlling operational costs. Some companies acquire vacant parcels or unoccupied residential properties with the intent to sell them later for a higher price. Other times, companies rent properties out to others to generate revenue. Many businesses also acquire real property for their business operations. After a business acquires real property, the expectation is that the business has control over those holdings until leadership decides to sell those assets.
Do businesses have to worry about the state interfering in their property rights by making an eminent domain claim against commercial real estate?
Any real property is subject to eminent domain claims
The unfortunate reality for businesses that have invested in real estate or acquired their own facilities is that no type of property is automatically exempt from eminent domain rules. When the state wants to acquire private property for a project intended for the public good, the entity overseeing the project can make offers to acquire any real estate parcels necessary for the completion of the project.
Typically, property owners have a right to receive fair compensation for the property. If they refuse to sell, then the state may begin condemnation proceedings to force the sale of the property.
There are several ways for businesses to respond to eminent domain purchase offers. Businesses might start gathering evidence that a project is not truly for public benefit. They might also work with professionals to establish that the amount offered for the transaction is inappropriately low.
Learning about eminent domain laws can help business owners and executives respond effectively to a pending purchase offer. Commercial property and investment properties are theoretically vulnerable to eminent domain claims, but there are ways that they can potentially fight back.
