Eminent domain does not always mean that something physical has been taken from you, such as your property, land, or access. In previous articles, we have discussed regulatory expropriations in reverse expropriation claims. Regulatory expropriations arise when a government authority has approved some type of regulation, law or ordinance that deprives the owner of all or part of the value of the real estate. A similar scenario relates to unreasonable development restrictions that are imposed on homeowners who want to develop their property.
What amounts to an unreasonable development restriction? This occurs when:
- Government authorities impose restrictions to the extent that the property cannot be developed in the way it should be, or
- Development of any kind is completely restricted due to regulations imposed by the government, such as building permits or zoning changes.
If any of these situations occur, it is likely that the owner will experience a loss in value of his property because he can no longer develop it for its best and highest use. Under eminent domain law, a homeowner facing unreasonable development restrictions can apply for a court order to reverse this decision and also file a reverse condemnation claim.
This is where things get tricky. If you encounter roadblocks or barriers that advance the development of your property, the courts will not allow you to proceed with your claim until you have first exhausted all available administrative remedies. What does that mean? Imagine that you are a developer or property owner and you want to develop your vacant property with a 5-story condominium building with a street level commercial showcase. To do this, you must first go through the permit application submission process and then you must appear before the planning commission, the zoning commission, the board of adjustment, and possibly the town hall or city council. This is called the administrative review process. The courts will not hear your claim until you have first taken these steps and have been denied.
How far must you go through this administrative process before you can file a claim? Unfortunately, in this area, these cases are everywhere. Some cases require the property owner to complete the administrative process two or three times. Others don’t even have to go through the entire process. The determination in these cases is almost always made on a case-by-case basis. To help your case, remember: the further you go through the administrative process, the more likely the courts will agree that you have exhausted your options.
This process is accompanied by what is called a doctrine of futility. This means that you can establish that the actions you have completed to date show that even if you continued with the administrative review process, the end result will be the same, which means that no matter what you do, the government authority will continually deny your development. . If this can be established, the courts will accept that any effort to continue down the path of administrative review will be futile. They will then allow you to take your case for review right then and there.
Claims through the administrative reverse condemnation process have two components. First, the property owner will go through the administrative process and then seek a court order alleging that the local authority is causing problems or not granting him the permits that he believes he is entitled to. Property owners must assert that the local authority’s reason for denying them is arbitrary, capricious, or unreasonable. They must also claim a reverse conviction, so that if the regulation is somehow upheld and they are denied the right to develop their property, then there is a reverse condemnation claim to alternatively request the remedy of just compensation.
