What Is Inverse Condemnation in Real Estate?

Inverse condemnation occurs when the government damages or effectively takes private property without formally exercising eminent domain. In these cases, the property owner—not the government—initiates legal action to seek just compensation.

How Inverse Condemnation Works

Inverse condemnation arises when government actions—intentional or unintentional—cause a loss in property value, physical damage, or restrict the use of land. Because the government did not initiate a formal eminent domain process, the property owner must file a claim to obtain compensation.

Common situations that may lead to inverse condemnation include:

  • Flooding caused by poorly designed public drainage systems
  • Government construction that damages nearby structures
  • Utility infrastructure lowering property value
  • Environmental contamination from public projects
  • Noise or vibrations caused by airports, highways, or transit expansions

In each case, the owner must prove that government actions directly caused the damage or diminished property value.

Example of Inverse Condemnation

A homeowner experiences repeated flooding after the city installs a new stormwater system.

  • The flooding did not occur before the project.
  • The city's drainage design redirects water onto the homeowner's property.
  • The government does not offer compensation or acknowledge responsibility.
  • The homeowner files an inverse condemnation claim seeking compensation for repairs and reduced property value.

If successful, the government must pay the homeowner just compensation for the damage.

Why Inverse Condemnation Matters for Homeowners

  • You may be entitled to compensation if public projects damage your property
  • Property owners, not the government, must initiate claims
  • Compensation can cover repairs, lost value, and diminished use
  • Documentation is critical for proving government-caused harm
  • Real estate disclosures may require reporting damage or legal claims

Selling a Property Impacted by Government Actions?

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