February 17, 2015

Stopping development for cheaper condemnation later is a taking

By Christina M. Martin Attorney

The Fifth Amendment requires the government to compensate a property owner when it takes property from a private landowner. To get around the requirement of paying “just compensation,” government entities often get creative. One trick is to depress property values prior to taking the land by excessively regulating land or by announcing an intent to later build something that would discourage buyers and development. Sometimes this works, but fortunately it did not work today.

Typical road in Indiana. Photo by Derek Jensen, from Wikimedia Commons
Typical road in Indiana. Photo by Derek Jensen, from Wikimedia Commons

Today, a North Carolina appellate court held that the state transportation agency effected a taking when it tried to freeze or depress property values of land that it might later use for a road. To keep land prices from increasing while the agency was deciding whether to build the road, the agency also passed regulations that made it very difficult for land owners to develop the affected land. The agency did not put a time limit on its decision-making process or on the restrictions on the affected landowners.

The court saw through this charade and held that the agency’s action amounted to a taking without just compensation. The taking occurred when the agency imposed the restrictions and announced that it might later take the land. You can read the decision here.

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