Chapter III: Just Compensation
Who is entitled to just compensation?
The constitutional requirement of just compensation applies not just to the record owner of the property, but to anyone whose property interest is acquired by the government agency. For example, a business tenant on property to be acquired by eminent domain may be entitled to compensation for the value of his leasehold interest, the value of his fixtures and equipment, and the loss of business goodwill suffered as a result of the government agency's acquisition.
Many leases include a "condemnation clause" which spells out the entitlement to compensation as between the owner and tenant. These clauses generally specify whether the tenant is, or is not, entitled to any "leasehold bonus value" -- that is, the value of the tenant's leasehold interest. Courts have virtually uniformly held such condemnation clauses to be enforceable. Even under these provisions, however, the tenant is still often entitled to the value of his own fixtures and equipment and business goodwill.
Under the California Constitution, property and business owners are entitled to have just compensation determined by a jury.