Just compensation for a taking is typically based on which value?

• A. Replacement cost
• B. Market value to owner
• C. Appraised value to government
• D. Nominal sum

Answer: (B)

In eminent domain, just compensation is based on the property's fair market value at the time of the taking. That means the amount a willing buyer would pay a willing seller who knows the property's condition and potential uses. This focuses on what the property is worth in the open market to the owner, not on how much it would cost to rebuild it or on some internal government appraisal. Replacement cost reflects rebuilding value, which isn’t the same as market value. An appraisal used by the government isn’t the compensation measure unless it aligns with fair market value. A nominal sum ignores the actual loss to the owner. So the best choice is market value to the owner, i.e., the fair market value of the property taken.