One of the stipulations regarding eminent domain is that the government has to pay fair market value to the property owner. That owner may not have wanted to sell, so in this sense, the government is “taking” the land. But they don’t take it for free. They determine what the price would be if it were sold on the open market and pay the homeowner that amount in exchange.
But this can cause some significant issues. For instance, some reports claim that real estate prices in Tennessee have gone up by 122.6% in the last decade. Rising real estate prices can complicate the process, especially if these trends continue.
What does fair market value look like?
The problem that property owners face is that they may be paid the fair market value today, but they see their property as a long-term investment. Maybe they thought that the price was going to double over the next 10 years. Even if the government pays them the amount of money they would get today, they still feel like they are losing a substantial amount of money because they’re forced to end their investment.
This is just one of the reasons that eminent domain disputes often revolve around just compensation. The government may propose a certain price based on their market valuations, but an individual homeowner may feel that they are being vastly underpaid.
Negotiations over the final price that should be paid during the transaction can certainly be complicated. Homeowners need to know exactly what rights they have and what legal options are available as they work through this process.