What does the term “eminent domain” refer to in real estate?

The term “eminent domain” refers to the government's right to take private property for public use. This legal authority allows governments to acquire land to build infrastructure, such as roads, parks, schools, or other public facilities, even if the owner does not wish to sell. The process typically requires that the government provide just compensation to the property owner, reflecting the property's fair market value.

This concept is rooted in the Fifth Amendment of the U.S. Constitution, which states that private property shall not be taken for public use without just compensation. Understanding eminent domain is crucial for anyone in real estate as it impacts property rights and can influence property values and investment decisions.

The other choices are related to property but do not accurately describe eminent domain. Selling property is a right of ownership, while foreclosure pertains to a lender's legal right to reclaim property due to nonpayment of a mortgage. The ability of investors to buy distressed properties involves market dynamics and investment strategies, rather than the government's intervention in private property rights.