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San Diego Real Estate Round-Up: A Preexisting Regulation May Be a “Taking”

San Diego has had many cases in which land was taken for a public purpose. Some of the major highways in San Diego are built where houses once stood. When a landowner challenges a restriction on the use of land on the grounds that it is so burdensome as to be a “taking” of the property for which the government must pay compensation, the United States Supreme Court has said in past decisions that a court should consider, among other things, the extent to which the regulation interferes with the landowner’s “reasonable investment-backed expectations.”

If the restriction was already in place when the owner acquired the property, the question arises as to whether the owner could have reasonable expectations for any use of the property that is in conflict with the restriction. After all, the purchaser “moved to the problem” because he should have knowledge of the restriction that is already in place. There have been many cases regarding these issues in the San Diego Superior Court over the years.

Now the Supreme Court has given landowners new hope with a contrary ruling. Knowing about regulations at the time of sale will still make it harder to win because of the rule about reasonable expectations, but it will not completely preclude such a taking argument. The Court was unwilling to categorically deny relief to someone subjected to the most extreme or unreasonable land-use restriction solely because the restriction was in place when the property was acquired.

The practical effect of the Supreme Court’s ruling is to increase the significance for the property owner of creating a record that will demonstrate that the new owner is expecting to acquire all of the same rights as the prior owner, including the right to challenge the legality of the preexisting regulations. The language of the sales contract itself can be drafted to reflect these expectations. The purchaser’s actions, such as hiring an architect or a consultant and spending money in the approval process, may speak as loudly about expectations as words in a contract. The Supreme Court left some matters unresolved, but it unquestionably has left open a door to taking arguments that was previously closed by many courts.

Our law office of Law Office of Scott C. Soady, A Professional Corporation is commited to trying to keep up to date in all aspects of the law. Please feel free to e mail us with your legal question and if we cannot answer it we will refer you to an attorney or a California State Bar Association Referral Service which does.

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