Under the rules of eminent domain, the condemning authority is supposed to declare a taking when it acquires private property without the owner’s consent. That declaration then grants rights to the public property owner in the eminent domain process. Sometimes, though, a taking occurs and no declaration of taking is made. In this situation the law allows the property owner to seek a court order declaring that a taking occurs in order for the property owner to receive the rights and benefits of the eminent domain law. The process for obtaining this order is called inverse condemnation. In many states, when a landowner successfully obtains the inverse condemnation order, the condemning authority must pay all the costs and legal fees that the owner incurred to obtain the order.
Examples of inverse condemnation situations:
1) The government physically occupies private property without delivering a taking. When this occurs, it is most often associated with a temporary taking. A temporary taking requires payment by the government just like a permanent taking. A failure to declare a taking when a permanent taking occurs is quite rare.
2) A property owner loses some or all access to property because of a government project and no taking is declared. Loss of access requires compensation if the owner is left with less than a reasonable access. Where all access is lost, the condemning authority will usually recognize a taking and make a declaration. Failure to make a declaring of taking most often occurs where only partial access is taken without any accompanying acquisition of real estate.
3) Regulatory taking. The government passes a regulation, law, or ordinance that deprives the owner of all or part of the value of real estate. To claim a total taking by the regulation, the owner must show that the affected property has no economic value after the taking. To claim a partial taking the owner must show that his/her reasonable investment backed expectations have been denied because of the regulation.