Did you know that courts across the country are now saying that your constitutionally protected property rights are subject to an expiration date? This comes as a shocking surprise for those of us who believe that the Constitution was intended to protect our “inalienable rights.” But in a troubling trend, many courts across the country are now holding that property rights are effectively extinguished once government adopts land use restrictions on what you can do with your property.
Of course most zoning restrictions are going to be upheld as valid regulatory enactments because the state and her municipalities generally have police powers to control land use and development. But if a regulation “goes too far” in limiting what you can do with your property, you may be entitled to compensation under the Fifth Amendment’s Takings Clause. And while the rub is often in “proving” that the regulation is unduly burdensome, it is certainly true that in some cases government will be required to pay for restricting your property rights. However, many courts across the country are now saying that the right to obtain compensation is necessarily extinguished once a landowner sells his or her (overly-regulated) property to someone else.
This week we asked the Supreme Court to take up a case (MHC Financing v. San Rafeal) challenging an aggressive rent control ordinance because the Ninth Circuit ruled that business owners could not seek compensation for regulations that were adopted before they acquired their land. And this is the fourth time that NFIB Legal Center has asked the Supreme Court to take up the issue of whether takings claims are automatically extinguished once land is sold or transferred. In fact the Supreme Court is still considering whether to take up a similar case—which NFIB Legal Center is supporting as amicus curiae. In Mehaffy v. United States the Federal Circuit held that a small business owner was barred from seeking compensation for restrictions resulting from enforcement of the Clean Water Act on his land, notwithstanding the fact that his company owned the land before enactment of the CWA; the Federal Circuit held that, at the time ownership transferred from the company to the owner, the right to initiate a takings claim was extinguished.
Importantly, these cases—extinguishing the right to bring takings claims on transfer of title—have unfortunate real world implications. As we argued in Mehaffy, this especially hurts small business owners, ordinary landowners, and the elderly. This is because they usually lack the economic resources to bring a costly lawsuit, which is usually necessary to get the compensation you are owed. As a result, they are essentially without any meaningful opportunity to recoup lost values when government enacts overly-aggressive land use restrictions. And in practical terms it means that property rights could be entirely extinguished throughout the country within a generation, because property is almost always going to change hands once the owner passes away.
To see our brief in Mehaffy, click here. For more commentary on the Mehaffy case check out NAHB’s summary here. And for more commentary on our filing in MHC Financing, check out this Fox and Hounds post.