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Learning Outcomes

This article explains takings under the Fifth Amendment, including:

Identifying when governmental conduct crosses the line from permissible regulation into a compensable taking of private property, and how incorporation makes the Takings Clause applicable to state and local actions.
Distinguishing per se physical occupations from regulatory restrictions, and recognizing when regulations amount to total versus partial regulatory takings under the Penn Central framework.
Understanding how the public use requirement is interpreted as public purpose, and applying the deferential rational-basis standard to condemnations for economic development or redevelopment projects.
Determining what qualifies as “just compensation,” how fair market value is calculated for different property interests, and why consequential losses and lost profits are usually excluded.
Evaluating exactions and development conditions using the nexus and rough proportionality tests, and spotting when permit demands become unconstitutional conditions requiring compensation.
Applying takings doctrine to classic MBE fact patterns involving zoning changes, environmental regulations, temporary moratoria, emergency police-power measures, and neighboring government uses that depress property values.
Comparing temporary takings with permanent appropriations, and assessing factors such as duration, economic impact, and interference with investment-backed expectations in exam hypotheticals.

MBE Syllabus

For the MBE, you are required to understand the constitutional limits on government power to take private property, with a focus on the following syllabus points:

Scope and application of the Fifth Amendment Takings Clause (as incorporated against the states)
Distinguishing physical occupation/appropriation from regulatory restrictions on use
Per se takings (permanent physical occupation; total loss of economic use) versus ad hoc regulatory takings
The public use requirement and the very deferential standard applied to it
Just compensation: what counts as “property” and how compensation is calculated
Exactions and development conditions (nexus and rough proportionality tests)
Temporary takings and emergency/police-power actions

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

Which of the following is most likely a taking requiring just compensation?
1. A city rezones land to prohibit commercial use, reducing its value by 30%.
2. The government requires a landowner to allow a permanent cable box on her property.
3. A state bans all billboards along highways, reducing advertising revenue.
4. A city imposes a tax on rental income.
The Takings Clause requires:
1. Compensation only for physical seizures of land.
2. Compensation for any government regulation that reduces property value.
3. Compensation when private property is taken for public use.
4. Compensation only if the owner is deprived of all economic use.
Which scenario is least likely to be considered a taking?
1. The government floods private land for a temporary period.
2. A city requires developers to dedicate land for a public park as a permit condition.
3. A state prohibits construction on wetlands, leaving some economic use.
4. The government builds a road across private land.

Introduction

The Fifth Amendment provides: “nor shall private property be taken for public use, without just compensation.” This is the Takings Clause. Through the Fourteenth Amendment’s Due Process Clause, it applies to federal, state, and local governments.

Key Term: Takings Clause
The constitutional provision that prohibits government from taking private property for public use without providing just compensation.

The Takings Clause does not prevent the government from ever taking property. Instead, it conditions the exercise of that power on paying just compensation and, in theory, limiting takings to public use. Much of the doctrine concerns:

When government action is considered a “taking” rather than mere regulation, and
What counts as “public use” and “just compensation.”

Key Term: Eminent Domain
The sovereign power of government to take private property for public use, subject to the Takings Clause requirement of just compensation.

On the MBE, takings questions often hide among zoning, land-use, or permit fact patterns. The critical task is to recognize when the government has gone beyond regulation and effectively appropriated property.

The Scope of the Takings Clause

The Takings Clause is triggered when:

Government physically appropriates or occupies private property, or
Government regulations go so far that they are the functional equivalent of an appropriation.

Not every interference, inconvenience, or decrease in value is a taking. Many land-use regulations (zoning, environmental rules, building codes) are valid exercises of the police power and require no compensation, even when they significantly reduce property value.

The Clause protects “private property,” which includes not just fee simple ownership of land, but also other recognized property interests, such as:

Leasehold interests (tenants can have takings claims)
Easements and profits (nonpossessory rights in land)
Certain personal and intangible property interests

However, most exam questions focus on land and buildings.

Physical Takings

A physical taking occurs when the government occupies, invades, or confiscates private property.

Key Term: Physical Taking
Government action that results in a permanent or continuous physical occupation or appropriation of private property, which is a per se taking requiring compensation, regardless of how minor the area occupied or how small the economic impact.

Classic examples include:

Condemnation of land to build a road, school, or other public facility
Government-authorized permanent installation of equipment on an owner’s land (e.g., cable boxes, seismographic equipment)
Permanent flooding or recurring invasions that effectively take over the property

Key points:

Permanent physical occupation is always a taking. Even if the space is tiny and the economic effect is minimal, the owner has lost the right to exclude the government or others from that part of the property.
The government need not be the direct occupier. A law requiring owners to allow a utility company to permanently install equipment on their property is still treated as a governmental physical occupation.
By contrast, reasonable, limited inspections or occasional entries (e.g., health inspectors) are usually not takings because they are temporary and tied to regulation, not permanent occupation.

The Themis example of required seismographic equipment in basements illustrates this: a permanent government-mandated installation in private buildings is a physical taking requiring compensation, even if the economic impact is slight.

Regulatory Takings

Sometimes the government does not physically invade property, but regulates it so heavily that it effectively takes the property.

Key Term: Regulatory Taking
A government regulation of property use that is so extensive that it is functionally equivalent to a physical appropriation, thereby requiring just compensation.

There are two main categories to know:

Total regulatory takings (per se rule)
- When a regulation deprives the owner of all economically viable or beneficial use of the property, it is treated as a per se taking.
- Example: A beachfront zoning rule that makes it permanently illegal to build any structure, leaving the land with no economically productive use.
Partial regulatory takings (balancing approach)
- When some economic use remains, the Court uses an ad hoc balancing test (often derived from Penn Central), considering:
  - The economic impact of the regulation on the owner
  - The extent of interference with reasonable, investment-backed expectations
  - The character of the government action (e.g., general regulation versus targeted burden)
- Most regulations that simply reduce property value—even significantly—do not amount to takings under this test.

Regulatory takings are relatively rare. On the MBE, a regulation is more likely a valid exercise of the police power unless the facts clearly show either:

A total wipeout of economic use, or
An unconstitutional exaction (discussed below).

Public Use Requirement

The Takings Clause only applies when property is taken “for public use.” In modern doctrine, this is interpreted very broadly.

Key Term: Public Use
Any purpose that is rationally related to a conceivable public purpose, including traditional public facilities (roads, schools, utilities) and broader public benefits such as economic development.

Important for the exam:

“Public use” does not require that the public be able to physically enter or use the property.
Taking property to transfer it to another private party can still be “public use” if the purpose is, for example, economic redevelopment, eliminating blight, or increasing jobs and tax revenues.
Courts apply a rational-basis-type test: if the taking is rationally related to any legitimate public purpose, the public use requirement is satisfied.

Some states have stricter standards as a matter of state law, but for MBE purposes, assume the federal constitutional baseline, which is extremely deferential to government on public use.

Just Compensation

When a taking occurs, the government must pay “just compensation.”

Key Term: Just Compensation
The fair market value of the property interest taken at the time of the taking, measured by the owner’s loss rather than the government’s gain.

Key points:

Compensation is based on fair market value, not replacement cost and not subjective or sentimental value.
It is measured at the time of the taking, not after appreciation or depreciation.
Just compensation is owed for whatever property interest is taken (e.g., full fee interest, leasehold interest, easement, profit).
Lost profits, future business opportunities, or consequential losses are generally not included, unless they are part of the market value of the property itself.

When the government formally condemns property, it must pay up front. If the government effectively takes property without formal condemnation, the owner usually brings an inverse condemnation action to recover compensation.

Key Term: Inverse Condemnation
A lawsuit brought by a property owner alleging that government action has effectively taken property, seeking an award of just compensation.

Regulatory Action vs. Taking

Not all government action affecting property is a taking. Many are non-compensable regulations under the police power.

Typical non-takings include:

Zoning ordinances limiting the type or density of development
Environmental regulations restricting harmful uses
Building codes, setback requirements, and height limits
Regulations that reduce property value but leave meaningful economic uses

From the Themis materials:

Building a prison next to a rural home may drastically reduce its market value, but that is generally not a taking. Government can affect neighboring property values without paying.

By contrast, a regulation is more likely a taking if:

It eliminates all economic use, or
It imposes a permit condition/exaction that is unrelated or disproportionate to the proposed development.

Exam tip: On the MBE, a mere decrease in value—even 25% or 30%—is almost never enough by itself. Look for:

Permanent physical occupation, or

Regulations that leave no economically viable use, or

Permit conditions that lack nexus or proportionality to the project’s impacts.

Temporary restrictions or partial loss of value usually do not require compensation.

Worked Example 1.1

A city passes an ordinance prohibiting all construction on a parcel of land to preserve wildlife habitat. The owner cannot build, sell, or lease the land for any productive purpose.

Answer:
This is likely a taking. The regulation deprives the owner of all economically viable use of the land. Under the per se rule for total regulatory takings, the city must pay just compensation.

Worked Example 1.2

A state requires landowners to allow a utility company to install permanent cable boxes and wiring on the exterior walls of their buildings.

Answer:
This is a physical taking. A permanent physical occupation of private property—even if it occupies only a small area and causes minimal economic loss—is a per se taking requiring just compensation.

Worked Example 1.3

A city rezones a residential area to prohibit commercial use, reducing property values by 25%, but owners can still live in or rent their homes.

Answer:
This is not a taking. The rezoning is a land-use regulation that leaves economically viable residential uses. A partial reduction in value, without more, does not require compensation.

Worked Example 1.4

A company buys land containing coal deposits, purchases expensive mining equipment, and plans to mine the coal. Before mining begins, Congress imposes stringent environmental and reclamation requirements on all coal mines nationwide. Compliance would make mining on this land unprofitable. The company instead sells the land to a farmer for its agricultural value, recouping its land purchase price but not its equipment costs or expected profits. It sues, claiming a taking equal to its equipment cost and lost profits.

Answer:
There is no taking. The statute is a general regulation that still leaves economically viable uses of the land (e.g., farming). Because the land retained market value and could be sold for productive use, the regulation did not deny all economic use. The company cannot recover its equipment costs or lost profits under the Takings Clause.

Exam Warning

On the MBE, not every reduction in property value is a taking. Look for:

Permanent physical occupation, or

Regulations that leave no economically viable use, or

Permit conditions that lack nexus or proportionality to the project’s impacts.

Temporary restrictions or partial loss of value usually do not require compensation.

Public Use and Economic Development

The Supreme Court interprets “public use” very broadly, essentially as “public purpose.”

Taking property for economic development, even if transferred to a private developer, can satisfy the public use requirement if:

The project is rationally related to a public purpose, such as job creation, economic revitalization, or increased tax revenues, and
The taking is not a mere pretext to benefit a particular private party without genuine public benefits.

So, the following typically qualify as public use:

Roads, bridges, and public transportation facilities
Schools, parks, government buildings
Utilities and public infrastructure
Redevelopment projects aimed at eliminating blight or stimulating economic growth

Revision Tip

For MBE purposes, assume a very deferential approach: if the government can articulate any legitimate public purpose, the public use requirement is met. The real fight on the exam is almost always about whether there is a “taking” at all, not about public use.

Temporary Takings and Emergencies

Government restrictions or occupations may be temporary rather than permanent. Temporary actions can still be takings, but courts usually apply a more context-specific approach.

Key Term: Temporary Taking
A government action that denies all economic use of property for a limited period. It may be compensable, depending on factors such as duration, economic impact, and interference with reasonable expectations.

When assessing a temporary taking, courts consider (as reflected in the MBE materials):

The economic impact during the restricted period
The length of the delay or occupation
The owner’s reasonable, investment-backed expectations
The good faith and planning purposes of the government

Examples:

A multi-year moratorium on building permits that prevents all development might be a compensable temporary taking.
A short-term construction easement that blocks access to a property for several months may also require compensation, even though the property is later restored.

Emergency and police-power actions are treated differently:

Destruction of property to stop a fire, prevent disease, or respond to wartime necessities is often viewed as an exercise of the police power and may not require compensation, even though the property is destroyed.
Likewise, short-term evacuations or closures during a natural disaster or public health emergency are usually not takings.

The key distinction: Is the government using or occupying the property (suggesting a taking), or is it acting to protect public health, safety, or welfare in an emergency, with incidental damage that falls under the police power?

Exactions and Permit Conditions

When a landowner seeks a development permit, the government sometimes imposes conditions—called exactions—such as dedicating land for a road or paying money for infrastructure.

Key Term: Exaction
A condition imposed by the government on a land-use permit, requiring dedication of land, an easement, or payment of money. Exactions must be closely related and roughly proportional to the impacts of the proposed development to avoid being takings.

To be constitutional, exactions must satisfy two requirements, often described in MBE materials as:

Nexus
- There must be a close connection between the legitimate public interest and the condition imposed.
- The condition must address a problem or impact that the proposed development itself creates or aggravates.
Rough proportionality
- The degree of the exaction must be roughly proportional to the impact of the development.
- Government cannot demand far more land or money than is necessary to offset the project’s effects.

If an exaction fails either requirement, it is treated as a taking. The government must then either:

Remove the condition, or
Keep the condition but pay just compensation.

Worked Example 1.5

A developer seeks permission to build a large shopping center that will greatly increase traffic at a nearby intersection. The city approves the permit on the condition that the developer donate a strip of land along the road for widening the intersection and contribute funds to install a traffic light.

Answer:
This is likely a valid exaction, not a taking. There is a clear nexus between the development (increased traffic) and the conditions (road widening and a traffic light), and the requirements are roughly proportional to the project’s traffic impact. No compensation is required.

By contrast, if the city demanded that the developer dedicate half of the parcel for a distant public park unrelated to the traffic impacts, this would likely fail the nexus and proportionality tests and be treated as a taking.

Additional Nuances: Zoning, Police Power, and Neighboring Uses

The MBE often tests understanding of the line between:

Zoning (regulation) under the police power, and
Takings that require compensation.

From the Themis handout:

Zoning is generally not a taking and requires no compensation, so long as it advances legitimate public interests (e.g., health, safety, welfare) and does not extinguish a fundamental attribute of ownership.
Zoning becomes a regulatory taking only when it leaves no economically viable use for the property, which is rare.

Common zoning measures—such as height limits, setback requirements, residential-only zones, and restrictions on certain businesses—are presumptively valid and non-compensable, even if they significantly reduce property value.

Government actions that incidentally hurt neighboring property values, like building a prison, landfill, or highway nearby, are also typically valid exercises of the police power and not takings.

Practical Issues: Who Recovers and How Much

Because the Takings Clause protects property interests, compensation is not limited to fee simple owners.

Tenants with leasehold interests are entitled to compensation when their leasehold is taken or substantially impaired, often receiving a share of a condemnation award.
Holders of easements or profits (e.g., rights to cross land or extract resources) can be entitled to compensation if those interests are extinguished by condemnation.
Mortgagees and other lienholders may have claims to portions of the condemnation award, depending on their priority under state law.

Compensation is apportioned among all holders of affected property interests, but the total is still based on the fair market value of what is taken.

Summary

The Takings Clause prohibits government from taking private property for public use without just compensation.
A physical taking—including permanent occupation of even a small part of property—is a per se taking requiring compensation.
A regulatory taking occurs when regulations go so far that they are the functional equivalent of a physical appropriation, especially when they leave no economically viable use.
Most zoning and land-use regulations are valid exercises of the police power and are not takings, even if they reduce property value.
Public use is interpreted broadly as any rationally related public purpose, including economic development.
Just compensation is generally the fair market value of the property interest taken at the time of the taking.
Exactions must have a nexus to the project’s impacts and be roughly proportional; otherwise they are treated as takings.
Temporary restrictions or occupations may be compensable takings, depending on duration, economic impact, and interference with reasonable expectations, but emergency police-power actions rarely require compensation.

Key Point Checklist

This article has covered the following key knowledge points:

The Takings Clause applies to federal, state, and local governments through the Fourteenth Amendment.
A physical occupation authorized by government—however small—is a per se taking requiring compensation.
A total regulatory taking (no economically viable use) is also a per se taking; partial regulatory takings are evaluated using a balancing test.
Most zoning and land-use regulations that leave some economic use are not takings and require no compensation.
The public use requirement is satisfied if the taking is rationally related to any legitimate public purpose, including economic redevelopment.
Just compensation is measured by the fair market value of the property interest taken at the time of the taking, not by the owner’s subjective loss or lost profits.
Property interests other than fee ownership—such as leaseholds, easements, and profits—can be protected under the Takings Clause.
Exactions imposed as permit conditions must have a close nexus to and be roughly proportional with the development’s impacts; otherwise, they are takings.
Temporary takings can be compensable; courts consider economic impact, duration, expectations, and governmental good faith.
Emergency and police-power actions that incidentally damage property are usually not takings.

Key Terms and Concepts

Takings Clause
Eminent Domain
Physical Taking
Regulatory Taking
Public Use
Just Compensation
Inverse Condemnation
Temporary Taking
Exaction

Individual rights - Takings