What is “inverse condemnation”?

Inverse condemnation is when the government interferes with a landowner’s right to use his property. Inverse condemnation claims are quite often for “temporary takings,” or the temporary loss of use of the property due to government action (such as flooding due to government construction work). These kinds of claims are legitimate and governments handle and settle them as a matter of course. Another type of recognized inverse condemnation claim is when government regulations eliminate all economically beneficial use of an individual’s property (such as when regulations prohibit a property owner from building anything on her land). This is also called a “regulatory taking.”

What is being proposed and why is it bad?

The proposals expected to arise during the 2007 legislative session address a very different type of inverse condemnation claim. The proposal is to expand the concept of inverse condemnation to include instances in which government regulations only allegedly diminish the value of property instead of eliminating the value entirely. This could include all types of regulations that restrict how owners can use their property, from zoning to historic preservation to environmental and land use laws, such as stream buffer and tree ordinances.

Expanding the definition of inverse condemnation to include the partial reduction – rather than the complete loss – of a property’s potential maximum economic value would seriously hinder local governments in Georgia from engaging in land use planning that protects property values. If a land use regulation prevented a property owner from using the property to maximize profits in any way he or she sees fit, regardless of its impact on neighboring property rights and values, the local government would be liable to pay the property owner the hypothetical lost value.

What about property rights? Don’t I have the right to do what I want with my own property?

Private property rights are important, indeed paramount. However, no property owner has a right to use his or her property in such a way that it causes harm to others. Land use and environmental regulations are meant to ensure that no one’s private property is degraded by another’s actions, and to protect the public health and welfare by protecting air and water quality for all.

What would such an expansion of “inverse condemnation” mean for the average homeowner in Georgia?

Such an expansion would lead to expensive litigation, higher property taxes, and the inability of local governments to protect the health, welfare, and property values of their communities.

Litigation:
Expanding the definition of inverse condemnation would open the floodgates of litigation against local governments. Local governments must regulate to carry out their functions. If one property owner filed an inverse condemnation claim because a land use regulation prevented him from using his land in the most profitable manner, the local government would be forced to pay, or, more likely, to grant a variance to that regulation. If environmental degradation or an incompatible land use were the result, neighboring property owners who were negatively impacted could also sue the local government because a regulation (i.e. the variance) reduced the value of their property.

Property values:
For most Georgian families, their single most important asset is their home. The value of a home depends in large part on its location, in particular on the quality and character of the surrounding community. Land use and environmental laws protect community, environmental and property values by creating a stable investment environment and assuring that adjacent properties are not negatively impacted from others’ land use decisions. Local zoning and environmental ordinances are enacted by counties and cities to protect property rights and a community’s vision of its future. Forcing local governments to grant variances would defend the worst behavior of some property owners at the expense of their neighbors.

Higher taxes:
Under an expanded definition of inverse condemnation, local governments would be liable to pay claimants the difference between the most profitable use of a property and the use allowed under existing regulations. All the other property owners in the community will therefore be impacted as their property taxes will be raised to generate the compensation for those seeking to maximize their profit. If, instead of following this course, the local government decided to grant variances or roll back its land use and environmental regulations, the consequences would also be expensive for the community. Higher costs to provide services for unplanned and incompatible uses would likely lead to an increased tax rate as well.

How is inverse condemnation different from eminent domain?

Eminent domain is the constitutional right of the government to “take” or “condemn” private property for public use, such as for roads, parks, or government buildings. In these cases, the government takes ownership of the property and is required to provide “just compensation” to the property owner for the property taken. While often the amount of compensation becomes the subject of litigation, typically the right of the government to “take” the property is not. Eminent domain and inverse condemnation are similar, but they differ in some important ways. One difference is that inverse condemnation is raised in a claim by a property owner against the government, as opposed to a process the government institutes against a landowner when it exercises its right of eminent domain. Another significant difference is that the government does not assume ownership of the property through inverse condemnation.