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What business owners should know about eminent domain

When most people hear the term commercial litigation, their thoughts immediately turn to complex court cases concerning everything from contract disputes and shareholder disagreements to valuation issues and even antitrust violations.

While there is technically nothing inaccurate about any of these depictions of commercial litigation, it's important to understand that it's a fairly nebulous term, meaning that it can actually center around other legal issues that people might not otherwise associate with the business world, including eminent domain.

In recognition of this reality, today's post, the first in a series, will spend some time discussing this complex -- and frequently controversial -- topic.

What exactly is eminent domain?

At its core, eminent domain essentially refers to the inherent power of the state or federal government to take ownership and possession of private land for public use provided the property owner is paid just compensation for the seizure.

Does Tennessee set forth any limitations on what constitutes "public use?"

In response to the landmark decision of the Supreme Court of the United States in Kelo v. City of New London, the state legislature passed a law expressly dictating that public use, as it relates to eminent domain, precludes the following: "private use or benefit, or the indirect public benefits resulting from private economic development and private commercial enterprise, including increased tax revenue and increased employment opportunity."

What then is considered to be for "public use?"  

Tennessee law has set forth a rather limited definition of what constitutes public use, providing that it's only permissible under the following circumstances:

  • When the land is acquired for transportation projects
  • When the land is acquired to facilitate the functioning of a utility
  • When the land is acquired by a housing authority/community development agency for redevelopment of blighted areas
  • When the land is acquired for an industrial park
  • When the land is acquired for private use that's merely incidental to a public use, provided no land is condemned or taken for the primary purpose of conveying or permitting the incidental private use

We'll continue this discussion in future posts …

If you have any manner of legal question or concern as it relates to your business, consider speaking with a skilled legal professional who can provide answers and pursue solutions.

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