Not all eminent domain cases rely on the physical taking of the property. In many situations, the property owner is still able to retain possession of the property, but it has become so restricted as to be deemed worthless to the owner. This is referred to as a regulatory taking.
Definition of a Regulatory Taking
A regulatory taking occurs when new regulations are put in place which restricts the use of the property and decreases the value and/or enjoyment of the land without providing for reasonable compensation. Zoning laws are one type of restriction with changes in zoning to be considered a regulatory taking in certain situations.
Decisions and Rules Regarding Regulatory Takings
In the Lucas v. South Carolina Coastal Council case, the court ruled that when a regulation deprived a property owner of all the use of the property, the owner should receive compensation equivalent to the value of the entire property. The case serves as a standard for situations where a total taking is deemed to have occurred, and it’s referred to as the Lucas Test.
One of the most important recent cases for eminent domain and regulatory takings is with Penn Central Transportation Co. v. New York City in 1978. In this case, a takings claim went to court because the owner of a historic terminal was not allowed to build an office building over the terminal. The owner contended that the regulation resulted in a loss of income. When regulatory takings cases arise that allow the owner to retain the property but at a reduction of income or loss of value it is referred to as a Penn Central Test.
Dealing with Regulatory Takings
The burden of proof in these cases lie with the property owner, especially when only a partial loss of property or decreased value is involved. The owner must be able to prove that the regulation was the cause for the decreased income or property value.
Even when a property owner applies for a permit to develop the land and is denied, it is not automatically considered a taking. For this situation to be a regulatory taking, the denial must prevent any viable use of the land.
Regulatory takings is a complex part of eminent domain, often difficult for the property owner to prove to the satisfaction of the court. For this reason, it is best to hire an attorney who is not only experienced in eminent domain but in regulatory takings.