American Institute of Certified Planners (AICP) Practice Exam

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What is the term for the reduction in property value caused by public action, distinct from eminent domain?

Inverse Condemnation
Regulatory Takings
Value Decrease
Market Valuation

The correct answer is: Inverse Condemnation

The term that refers to the reduction in property value caused by public action, distinct from eminent domain, is known as inverse condemnation. This concept arises when a government action, such as regulation or zoning changes, indirectly affects a property’s value, leading the property owner to seek compensation. Unlike eminent domain, where the government explicitly takes private property for public use and compensates the owner, inverse condemnation does not involve a formal taking but still results in a property owner experiencing a loss in value due to government actions. This concept is significant in land use and property rights discussions, as it highlights how government actions can lead to unintended consequences for property owners, creating a legal basis for compensation claims.