The right of the state to take private property without the property owner's consent. The Fifth Amendment to the US Constitution requires just compensation to be given to the property owner when private property is taken by the federal government. States also have powers of eminent domain. The act of taking the private property is called condemnation or expropriation.

In finance, loan agreements often require condemnation proceeds received by a borrower from a governmental taking of its property to be applied to prepay the borrower's loan (see Practice Note, Loan Agreement: Prepayment and Commitment Reduction Provisions: Recovery Events).

For more information on eminent domain, expropriation and how they affect lenders and borrowers, see Practice Notes, Political Risk Insurance: Is it Necessary? and Expropriation in international investment law.