Did you know the Government has power over YOUR property?
Owning property gives you some basic ownership rights, including the right to possession, the right to control your property within legal limits, the right of quiet enjoyment, the right to exclude others from your property, the right to encumber the property by lessoning the rights of one’s ownership, and the right to dispose of the property (sell, transfer, will, etc.).
The government also holds rights, or powers over your real estate property because it needs to ensure that you do not infringe on the rights of others. It also needs regulations in place for numerous situations that we will discuss further. These government powers can fall into four main categories: Police Power, Eminent Domain, Escheat, and Taxation.
Police Power
Police Power is derived from the “police power” clause in the federal and state constitutions that provides for the government’s authority to make laws and regulations to the conduct and property of individual real estate owners to promote and support the public health, safety, morals, aesthetic beauty, and general welfare of the public.
Some examples where the government uses police power to restrict property ownership rights would be:
- Zoning- where the government divides a city or county into different zones, and regulates land use, design, improvements, height of buildings, setbacks, and more. Zoning is the primary tool for implementing Master Plans, which shows current and projected zoning patterns within a city or county. The four main land-use zoning codes boil down to commercial, industrial, residential, and agricultural. Sometimes it is a mix of these, and would then be labeled mixed-use.
- Building Codes- minimum standards of construction in plumbing, electrical, load limits, materials, etc. Building codes are enforced by local governments with building permits and inspections during and after completion.
- Subdivision Regulations- Lot sizes could be regulated, as a plat map must be filed for approval. Other restrictions will also be regulated, such as setbacks, height requirements, etc.
- Regulation of Special Land- areas such as flood zones and areas prone to natural disasters may have another set of regulations to follow as well.
- Housing Codes- This establishes acceptable minimum housing standards for safe and healthy occupancy of existing and newly constructed buildings. Housing codes encompass the condition and structural quality of the building.
- Environmental Impact- if a project may have a huge impact on the environment, an Environmental Impact Report may be required for the planning commission to know the facts prior to approving the project. This report will recommend steps to minimize impact and suggest alternatives. Police Power includes the right to regulate pollution and environmental control.
Eminent Domain
Eminent Domain refers to the right or power of the government, both state and federal, public corporations, public utilities, and public service corporations to take a citizen’s private property, or to take their rights in their property, as long as it is taken for government or public use. This is done without the owner’s consent, but with just compensation paid to the owner. The most common use of eminent domain is taking land to add railroads, public utilities, and streets or highways.
If the government and the owner cannot settle on a voluntary acquisition of the property, the government can initiate condemnation - a lawsuit initiated by the government against a private property owner who fails to consent to the government taking their property through eminent domain, in order to find just compensation. Eminent Domain is the power to take property, and condemnation is the procedure the government uses to exercise this right.
Sometimes the government imposes regulations that make it so that a landowner is unable to use their property, or severely lessens the value of the property, in which case a property owner can initiate proceedings, saying the government has taken his property without paying just compensation. This is called inverse condemnation. Compensation is determined by market value of the property, and then consideration is given to losses taken by the owner in the process of the government exercising eminent domain.
With eminent domain, no private property is exempt from this exercise of government power. However; you are entitled to due process of law. In some cases, the right to take a property may be challenged by the owner on the grounds that the attempted taking is not for public use, if the compensation is not just, or if the government is trying to take the entire property when only a portion is needed. Legislature or the courts will decide what is considered public use, purpose or benefit.
Escheat
Escheat is government powers that cause unclaimed property to transfer to the state. It usually occurs when a home owner dies without a will and without any known heirs (relatives). The power of escheat is put in place so that properties do not become ownerless, but is revocable in case an heir is located.
Taxation
Taxation is a charge on real estate that the government then uses for services provided by the government. The powers related to taxation include the power to:
- Set the tax rate (assessments) on property (ad valorem tax, which is levied in proportion to the value of the property) and on special projects (charged by the government for public services such as streets, storm drains, etc.)
- Place liens on properties where taxes go unpaid (property tax liens, federal tax liens, and special assessment liens)
- Force the sale of a property to satisfy any lien (a tax sale)
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