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Constitutional Law • Takings
CONLAW#065
Legal Definition
Government regulation constitutes a taking if it leaves no reasonable economically viable use of the property, but it is not a taking where it merely decreases the value of the property. A court will assess whether the regulation interferes with distinct, investment-backed expectations.
Plain English Explanation
A government rule counts as taking someone's property if it stops the property from being used in any profitable way. However, if the rule just makes the property less valuable but it can still be used to make money, it's not considered a taking. The courts look at whether the rule messes with the owner's expected benefits from their investment.
Imagine you bought a piece of land thinking you could build a store on it someday. That's your plan to make money from this investment. But then, the government passes a new rule saying you can't build anything there because they want to protect an endangered frog that lives on your land. Now, your land is pretty much useless for your original plan, and you can't make any money from it. This is what we call a "regulatory taking." The government hasn't taken your land away from you, but because of their rules, you can't use it the way you wanted to. The law says that if the government's rules leave you with no way to make money from your land, it's like they've taken it from you, and they have to pay you for it. But, if you can still use your land for something else that makes money, even if it's not as much as you hoped, then it's not considered a "taking."
Imagine you bought a piece of land thinking you could build a store on it someday. That's your plan to make money from this investment. But then, the government passes a new rule saying you can't build anything there because they want to protect an endangered frog that lives on your land. Now, your land is pretty much useless for your original plan, and you can't make any money from it. This is what we call a "regulatory taking." The government hasn't taken your land away from you, but because of their rules, you can't use it the way you wanted to. The law says that if the government's rules leave you with no way to make money from your land, it's like they've taken it from you, and they have to pay you for it. But, if you can still use your land for something else that makes money, even if it's not as much as you hoped, then it's not considered a "taking."
Hypothetical
Hypo 1: Bob decides to build a luxury hotel on his beachfront property in Hypofornia. However, the state passes a new environmental regulation that prohibits any construction within 500 feet of the shoreline to protect coastal ecosystems. Bob's property is entirely within this zone, leaving him unable to build his hotel or use the property for any profitable venture. Result: This would be considered a regulatory taking because the government regulation has prevented Bob from using his property for any reasonable economically viable use, entitling him to compensation for the loss of his property's value.
Hypo 2: Sam owns a piece of land in New Hypoland, planning to develop a shopping center. A new state law is passed requiring a large portion of land to be set aside as a green space for any new development to protect local wildlife. Sam can still build his shopping center, but it has to be smaller than he planned. Result: This would not be considered a regulatory taking because Sam is still able to develop his property and use it for a profitable purpose, even though the value of the property might decrease due to the size limitation.
Hypo 3: Sam buys a small lot in downtown Hypofornia with the intention of opening a cafe. After purchase, the city passes a zoning ordinance that restricts building heights in the area to preserve the historic character of the neighborhood. Sam's plans for a two-story cafe are now limited to a single story, but he can still operate a profitable business within these restrictions. Result: This is not a regulatory taking because, despite the new restriction, Sam's property retains a reasonable economically viable use as a cafe.
Hypo 4: Bob purchases a large piece of land in a bustling commercial area of Hypofornia with the intention of building a multi-story shopping mall. After conducting thorough research, Bob has clear expectations of the profit he can earn from rental income, based on the location's high population density and consumer behavior. However, before construction begins, the local government of Hypofornia passes a regulation limiting buildings to a single story to preserve the area's skyline view. This new rule drastically reduces the potential retail space Bob can offer, slashing the anticipated rental income and profit from the mall. Despite the land still being usable, the specific, profit-driven use Bob planned is no longer possible, and the value of his investment plummets. Result: Given the regulation's significant impact on Bob's distinct, investment-backed expectations and the severe limitation on the property's potential profitability, this situation could be viewed as a regulatory taking. Bob might have grounds to seek compensation from the government for the diminished value of his property, arguing that the regulation has deprived him of the reasonable, economically viable use he had planned for his land.
Hypo 2: Sam owns a piece of land in New Hypoland, planning to develop a shopping center. A new state law is passed requiring a large portion of land to be set aside as a green space for any new development to protect local wildlife. Sam can still build his shopping center, but it has to be smaller than he planned. Result: This would not be considered a regulatory taking because Sam is still able to develop his property and use it for a profitable purpose, even though the value of the property might decrease due to the size limitation.
Hypo 3: Sam buys a small lot in downtown Hypofornia with the intention of opening a cafe. After purchase, the city passes a zoning ordinance that restricts building heights in the area to preserve the historic character of the neighborhood. Sam's plans for a two-story cafe are now limited to a single story, but he can still operate a profitable business within these restrictions. Result: This is not a regulatory taking because, despite the new restriction, Sam's property retains a reasonable economically viable use as a cafe.
Hypo 4: Bob purchases a large piece of land in a bustling commercial area of Hypofornia with the intention of building a multi-story shopping mall. After conducting thorough research, Bob has clear expectations of the profit he can earn from rental income, based on the location's high population density and consumer behavior. However, before construction begins, the local government of Hypofornia passes a regulation limiting buildings to a single story to preserve the area's skyline view. This new rule drastically reduces the potential retail space Bob can offer, slashing the anticipated rental income and profit from the mall. Despite the land still being usable, the specific, profit-driven use Bob planned is no longer possible, and the value of his investment plummets. Result: Given the regulation's significant impact on Bob's distinct, investment-backed expectations and the severe limitation on the property's potential profitability, this situation could be viewed as a regulatory taking. Bob might have grounds to seek compensation from the government for the diminished value of his property, arguing that the regulation has deprived him of the reasonable, economically viable use he had planned for his land.
Visual Aids
Related Concepts
Can a property owner challenge pre-existing regulations?
How is just compensation measured?
May the federal government take private property?
What is a possessory taking?
When are government conditions on development a taking?
When is a temporary denial of use a taking?
When is property considered to have been taken for public use?
