Realty Times August 4, 2005

Principal Of Eminent Domain Trumps Individual Rights
by George W. Mantor

The Supreme Court recently issued its decision in the long awaited eminent domain case of Kelo vs. the City of New London, Conn., in which homeowners were attempting to stop the city from taking their homes to make way for a private development project involving a hotel, condos, and offices.

The court ruled that economic development, i.e., profit and progress, are more vital to the American fabric than the concept of a man's home is his castle, which should now be amended to read: until somebody with closer ties to local government wants it. Meet the new king, same as the old king. This smacks of imperialism and further underscores the disconnect between the elitists who have seized control of our country and the citizens on whom they inflict their vision of world order.

The fourth amendment to the U.S. Constitution should also be rewritten to read, "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, except for the house itself, which can be seized at any time in the name of public good."

Eminent domain law asserts that governments should be able to take the real property of citizens, for just compensation, if the property is needed for the public good such as a hospital, library or park.

But the vagueness of what constitutes the "public good" and what is "just compensation," have continued to pit competing interests against each other and have lead to heartbreak and despair for many Americans who learned the hard way that you can't fight City Hall or Capital Hill.

The right to own property would seem to be the ultimate personal freedom, well beyond the value of free speech. If governments can take away the real property of citizens, the right to complain about it isn't much of a consolation.

Individual real estate owners control only a very small percentage of the land in America so a strong argument could be made that alternatives could easily be found. But many times developers simply want to take advantage of what existing owners have been improving for decades.

What twisted logic would lead to the predicament in which owners of more desirable property would be at greater risk of a taking? Watch out if you own waterfront property. Developers love waterfront. From hotels to industrial parks, from timeshares to casinos, they all know that waterfront property brings the highest return per square foot.

The potential for abuse is obvious. I've seen enough to know that no matter how lofty the espoused ideals of many politicians, if you wave enough money or hookers under their noses, they'll fold-up like a cardboard suitcase and someone's ancestral home is going to be replaced by a Wal-Mart or a strip joint.

The duty of the Supreme Court is to faithfully administer the spirit and the intent of the constitution. Our nation was founded by people who wanted the opportunity to own property and pursue their goals with limited intrusion by governments. Both their words and their deeds support this conclusion. It's all right there in the 5th and the 14th amendments, which state that no citizen can be deprived of property without just compensation and due process, respectfully.

Further, the fourth amendment guarantees the right of citizens to be secure in their homes against unreasonable seizures. Nothing seems more unreasonable than governments seizing the real property of its citizens as is now the case in China.

Real estate ownership is legally defined as a bundle of rights. Having title to those rights ought to preclude anyone, greedy developers and politicians alike, from ever depriving the rightful owner of those rights.

But more and more it is less about the public good and more about a totally illegal transfer of wealth from the owner to the coveter.

Take the case of Ahmad Mesdaq, owner of the Gran Havana Cigar and Coffee Lounge, who 14 years ago took a risk on a rundown, seedy part of downtown San Diego, spent 2.5 million to buy and renovate his building, and has been forced to close to make way for a Marriott Residence Inn.

The public good in this case is the burning need for another hotel. For years the citizens of San Diego have been clamoring for a Marriott and finally…

Most eminent domain cases boil down to how we as individuals value different aspects of life. Some value money and power, others value family and friends, while others still value peace and fulfillment. When the seeker of money and power is thwarted by the preserver of the status quo, the government should remain neutral and let the principals resolve their own issues.

Money isn't always just compensation if it's a family home, unique property, or tied to one's business or livelihood.

Because of my profession, I happen to believe that once you own real property you are entitled to all the benefits including not selling it if you don't want to.

Like most really bad decisions made by government officials, little thought has been given to the adverse consequences of this decision and they are many.

  1. Market values will decline. Market value requires free negotiation. If the developer no longer has to negotiate with a property owner, why should he? It's cheaper to bribe an official.

  2. Gentrification will be impaired. The first investors in blighted areas are usually small investors. They will be wary of the possibility that once an area is revitalized, bigger businesses can force them out.

  3. Corruption will increase. Officials sell out so cheaply that it's hard to imagine a developer willing to negotiate fair market value when a few thousand dollars under the table will net a far lower acquisition price.

  4. Exemplify a bill of rights empty of real rights.

  5. More litigation. The stakes will be higher for property owners and they will lawyer-up earlier in the process and make every step of the development process difficult and protracted. Lawyers will as always be the other class of winners in this transfer of wealth.

  6. Confusion. The Supreme Court had the opportunity to clarify what has been ambiguous and confusing legislation in this area of property rights but instead did the opposite.

  7. No good can come of it. It smacks of bad Karma. Cities that take the assets of others to solve economic problems are likely to become festering cesspools of debauchery, hedonism, envy, and fall below the curve on the national SAT's. The average obesity rate will hover at around 85 percent, personal hygiene will be neglected by all residents and a local inhabitant will win the crown as "the world's ugliest woman." She will have an uncanny resemblance to a cross between Jay Leno and Billy Bob Thornton.

The very idea smacks of the worst in us, and makes everything about money. What is the value of the trees planted by your great grandfather or the view from the kitchen window?

Economic development is more important than family, history, security, and justice. We don't really need a Supreme Court judge to say its okay. We know in our hearts that it is wrong, mean spirited, and ultimately self destructive. As a lifelong property rights activists I believe that the justices are constitutionally out of bounds on this one and we all need to fight for each other and fight back.

It's time to take back our towns, our states, and our borders and say to career politicians and their appointed lackeys, we've seen enough.



George W. Mantor is known as "The Real Estate Professor" for his consumer education show on AM 1000 KCEO Keepin' It Real ("real talk about the real thing, real estate!"), possesses over 25 years in the industry and is founder, president, and CEO of The Associates Financial Group, an independent, locally-owned, full service real estate and mortgage brokerage, headquartered in Carlsbad, California and dedicated to developing long-term relationships with clients.


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