A recent Supreme Court ruling could have implications for landowners in the state of Michigan.
In June, the United States Supreme Court ruled in favor of an ordinance that may confuse landowners who want to break up small parcels of land. The case dealt with two adjacent properties along the lower portion of the St. Croix River in Troy, Wisconsin. The plaintiffs, owners of the two parcels, filed suit against a local ordinance, which treated the two properties as one parcel of land, limiting their use.
The parents of the plaintiffs bought the parcels of land in the 1960s and maintained them under separate ownership before transferring them to the petitioners in 1994 and 1995. Both parcels were over one acre in size but each had less than one acre suitable for development.
As part of an improvement plan, the owners of the properties wanted to sell one of the lots and develop the other. State and local regulations, however, regarded the adjacent properties as one parcel. The regulations prevent the use or sale of adjacent properties under common ownership unless they have more than one acre suitable for development.
“The reason you have these types of ordinances is to get rid of nonconforming lots,” said Brad Fowler, municipal law attorney with Grand Rapids-based Mika Meyers PLC. “If you have two adjacent properties under common ownership, the ordinance treats it as just one lot.”
The plaintiffs filed suit under the Fifth Amendment to the U.S. Constitution, arguing the ordinance constituted a regulatory taking that deprived them of all, or almost all of, the use of the lot they wanted to sell.
The Fifth Amendment’s eminent domain clause ensures right to compensation if a government body takes private land for public use.
The owners lost the case at the trial and intermediate court levels, and the case went up to the U.S. Supreme Court.
The Supreme Court upheld, in a 5-3 decision, the ordinance did not constitute a federal taking and the lower courts were correct to treat the two lots as one.
“The petitioners sued under the Fifth Amendment, which deals with federal takings,” Fowler said. “But nobody’s property was actually taken. The statute did affect the value of the property, but they could still build on the lot.”
The Court also ruled the devaluation of the property under the ordinance was mitigated by the benefits of the property as a whole, allowing more room for improvements and giving the owners more privacy and recreational space.
While the case deals with federal takings, the state of Michigan has adopted nearly all federal takings codes, so Michigan law may treat similar cases the same way.
“If landowners live in a municipality that has regulations that say if they have two lots that are nonconforming, they might want to be aware of the fact,” he said. “If they want to buy two lots that are joined, they should put them in separate owners’ names.”