Eminent domain and inverse condemnation can be confusing terms.
Both have to do with condemnation, a process the government takes to seize private property or limit its use by the landowner. What's important to know is that eminent domain is a right, whereas inverse condemnation is a proceeding.
Eminent domain is the power held by the government to take land from private landowners to be repurposed for public use. When this happens, the government must fairly compensate the property owner for the full or partial loss of the property.
An example of eminent domain is when the government determines it needs a privately-owned property to build a new highway. The government would then make an offer to the property owner. If the owner agrees to the offer, the government takes ownership of the property. If the owner and the government do not come to an agreement about the value of the property, there will likely be a condemnation proceeding.
Inverse condemnation is when a landowner seeks compensation from the government for an informal taking. An informal taking is when the government does not file formal eminent domain action for the taking and, therefore, the property owner is not compensated for the taking. In response, the owner can begin an inverse condemnation proceeding to seek that compensation.
Often, situations that result in inverse condemnation proceedings involve the government denying that it took anything from the landowner. As an example, the government may have built a highway, but was able to route it next to someone's property instead of through it. The highway may not be on private property at all, but if the water runoff from the highway floods the private property every time it rains, the landowner may be able to seek compensation, even if the government says nothing was taken from the owner.
While eminent domain and inverse condemnation are related terms, it is important to know the difference. It is especially important to know the difference and know your rights if you think you might live in the area of a future government project.