A property rights dispute currently before the U.S. Supreme Court could have broad implications on real estate all over the country, and for these reasons, has drawn significant concern from business interests. The case involves an area of the law known as regulatory taking, whereby a government regulation limits the use of private property to such an extent that the property owners have arguably been deprived of the economically reasonable use and/or value of that property.

This case involves one family’s effort to sell part of its property before they were stopped by county officials, who claimed that local conservation rules prevent the family from splitting up the land and selling it. When the family asked the government to pay what the parcel land was worth due to the restriction, the government refused to do so.

Regulatory Taking

The Fifth Amendment to the U.S. Constitution prohibits the federal government from taking property from citizens without providing them with compensation, which has been interpreted to mean the fair market value of the property. Similarly, state governments are prohibited from doing the same under the Fourteenth Amendment.

However, there are instances of regulatory restrictions on the use of property which, when they further legitimate public ends, have not been considered to be a taking by the courts simply because they negatively affect the value or use of the land. Courts have disagreed as to when the regulation goes too far, and have upheld certain land-use regulations that adversely affect real property interests, such as zoning laws. However, when zoning restrictions deny an owner of any and all economically viable use of the land, these restrictions are often deemed “takings” of the affected property.

The current case before the U.S. Supreme Court may fall into this latter category, as the local government has placed restrictions on any and all activity that would effectively split up the property (and allow it to be sold) because, as a whole, the land remains quite valuable. Clearly, this restriction significantly affects the family’s ability to sell the property. As a result, various property rights and business groups have taken an interest in the case, saying that such rules allow the government to avoid paying landowners for restricting land use, where the Constitution requires compensation if such regulations eliminate the property’s economic value. The Court’s ruling could affect more than 100 cities and counties across the U.S. which currently have similar restrictions.

Property & Business Defense Attorneys Serving Alabama

At Cloud Willis & Ellis, our experienced business and real estate litigation attorneys can help you with any and all legal questions about your property and/or business concerns. We can provide you with the valuable counsel you need to ensure that you have solutions to navigate through any and all complicated property questions. With offices in Birmingham, Hoover, and Mobile, Alabama, we are here to serve your needs. Contact us today with any questions you might have.