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September 11 2017

United States Supreme Court Upholds Regulation Prohibiting the Use or Sale of Adjacent Substandard Lots Under Common Ownership as Separate Building Sites

By: Bradley A. Fowler

On June 23, 2017, the United States Supreme Court, in a five to three opinion,*  upheld, against a takings challenge, state and local regulations preventing the use or sale of adjacent lots under common ownership as separate building sites unless they have at least one acre of land suitable for development.  The case, Murr et al. v. Wisconsin et al., dealt with two adjacent lots along the lower portion of the St. Croix River in the town of Troy, Wisconsin.

The petitioners’ parents purchased the lots separately in the 1960s, and maintained them under separate ownership until transferring the lots to the petitioners in 1994 and 1995, respectively.  Both lots were over one acre in size, but because of their topography they each had less than one acre suitable for development.  Under the pertinent state and local regulations, therefore, the unification of the lots under common ownership implicated the rules barring their separate sale or development.  The petitioners became interested in selling one of the lots as part of an improvement plan, and requested variances to effectuate the plan.  When the variances were denied, petitioners filed suit alleging that the regulations constituted a regulatory taking that deprived them of all, or practically all, of the use of the lot they wanted to sell.  The petitioners lost at the trial and intermediate court levels and the United States Supreme Court agreed to hear the case.

The Supreme Court held that the lower courts were correct to treat the contiguous properties as one parcel.  The Court further held that the restriction on using the individual lots was mitigated by the benefits of using the property as an integrated whole, allowing increased privacy and recreational space, plus an optimal location for any improvements.  Therefore, the Court found that the petitioners had not suffered an unconstitutional taking and they had not been deprived of all economically beneficial use of their property.    

Many municipalities have similar regulations regarding the unification of adjacent substandard lots under common ownership.  The Murr case affirms that such regulations do not run afoul of the Takings Clause of the United States Constitution. While Murr is a federal takings case, Michigan has adopted nearly all federal takings jurisprudence, and so this case will likely control Michigan law on the issue.  

If you have questions regarding the implications of Murr et al. v. Wisconsin et al., or are faced with a takings challenge to your ordinances dealing with unification of substandard lots, please do not hesitate to contact your Mika Meyers’ municipal attorney for clarification and assistance.   

* Justice Neil Gorsuch took no part in the consideration or decision of the case.