Even the most complete ownership the law allows is limited by public and private restrictions. These restrictions are intended to ensure that one owner’s use or enjoyment of her property does not interfere with others’ use or enjoyment of their property or with the welfare of the general public.

GOVERNMENTAL POWERS

Ownership rights are subject to certain powers, or rights, held by federal, state, and local governments. These limitations on the ownership of real estate are imposed for the general welfare of the community and, therefore, supersede the rights or interests of the individual.

The state and local government powers discussed in this section are all held by the state of Illinois and various county and municipal governing bodies.

Police Power

Every state has the power to enact legislation to :

  1. preserve order,
  2. protect the public health and safety,
  3. promote the general welfare of its citizens.

That authority is known as a state’s police power. The state’s authority is passed on to municipalities and counties through legislation called enabling acts.

Eminent Domain

Eminent Domain is the right of government to acquire privately owned real estate for public use.

 

CHICAGO REAL ESTATE SCHOOL                   Chapter 2 — Ownership, Interests and Encumbrances
38

Condemnation is the process by which the government exercises this right, by judicial or administrative proceedings. Just compensation must be paid to the owner and the rights of the property owner must be protected by due process of law.

Ideally, the public agency and the owner of the property in question agree on compensation through direct negotiation, and the government purchases the property for a price considered fair by the owner. In some cases, the owner may simply dedicate the property to the government as a site for a school, park, or another beneficial use. In cases where the owner’s consent cannot be obtained, the government agency can initiate condemnation proceedings to acquire the property.

Quick Take

Local units of government and quasi-governmental bodies are given the power of eminent domain by the Illinois Constitution and by the Illinois Code of Civil Procedure. In certain situ­ations, Illinois law permits a summary proceeding in which a plaintiff/condemner may obtain immediate fee simple title to real property, including the rights of possession and use. Such a proceeding in Illinois is termed a quick take.

In quick-take, the plaintiff must deposit a sum with the county treasurer that is preliminarily considered by the court to be just compensation; this can be litigated later. A quick take might be appropriate, for instance, in the following circumstances:

The state of Illinois or the Illinois Toll Highway Authority takes property to construct, maintain, and operate highways or an airport authority takes property to provide additional land for airport.

Delegation of Eminent Domain Power

Generally, states delegate their power of eminent domain to quasi-public bodies and publicly held companies responsible for various facets of public service.

Supreme Court Redefinition of Eminent Domain

In the past, the proposed use for taking property was to be for the public good. However, in June 2005, the U.S. Supreme Court in Kelo v. City of New London, significantly changed the definition of public use. The court held that local governments can condemn homes and businesses for private or economic development purposes.

Illinois Law Refining Eminent Domain

The Equity in Eminent Domain Act became effective in Illinois on January 1, 2007, following the Kelo v. New London Supreme Court case. The law places the obligation on government to prove that an area is blighted before forcing property owners to sell their property for private development projects. In addition, the act:

  1. helps property owners receive fair market value for their property,
  2. requires relocation costs for displaced residents and businesses,
  3. pays attorneys’ fees when property owners successfully sue to keep their property.

Taxation

Taxation is a charge on real estate to raise funds to meet the public needs of a government. Taxes on real estate include annual real estate taxes assessed by local and area governmental entities, including school districts; taxes on income realized by individuals and corporations on the sale of property; and special fees that may be levied for special projects. Nonpayment of taxes will give government the power to claim an interest in the property.

 

CHICAGO REAL ESTATE SCHOOL                         Chapter 2 — Ownership, Interests and Encumbrances
39

Escheat

Escheat (revert) is a process by which the state may acquire privately owned real or personal property. Illinois State law provides for ownership to transfer, or escheat, to the County in which the property is located, when an owner dies and leaves no heirs (as defined by the law) and there is no will or living trust instrument that directs how the real estate is to be distributed.