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Saturday, March 18, 2017

Can Federal Protection from Takings Endanger Property Rights? The Right to Subdivide in Murr v. Wisconsin

On Monday, the U.S. Supreme Court will hear arguments in Murr v. Wisconsin, a beautifully crisp "denominator" case. The Murr children inherited adjacent lots next to the St. Croix River. One lot had a small cabin near the waterfront; the other was vacant. The Murrs would like to build on the vacant lot, but the county imposed a minimum lot size on the area in 1976 rendering the lot unbuildable. Is this minimum-lot size a deprivation of all beneficial use of the property under Lucas. Or is the "property" in question defined by the two lots combined, one of which contains a cabin?

The Cato Institute's brief argues that "[t]he Court should adopt a bright-line rule against aggregating separate parcels under common ownership," because "[s]uch a rule would add much-needed clarity to the Penn Central test by simplifying the analysis." Wisconsin by contrast argues that the Murr kids' property rights are qualified by Wisconsin's lot merger rule, which provides that adjacent lots forfeit their rights to be developed as non-conforming uses when they are brought under common ownership. The Murrs' parents transferred both of the lots to their children in the 1990s, thereby losing their non-conforming use. The Murr case, therefore, elegantly presents an instance of the central theme of takings doctrine: Which aspects of state law ought to define "property" under the Fifth Amendment? Plenty of people have written on the legal merits of this question. (Ilya Somin has, for instance, written a sharp amicus brief ).

I want to focus on another issue entirely: Do the Murr's, Ilya's and the Cato Institute's positions actually undermine the security of private property? By elevating one aspect of state property law -- lot lines -- over all others, their broad reading of Takings doctrine would give state and local governments enormous incentives to make subdivision of large parcels very difficult. After all, one risks a Lucas taking by allowing a farmer to split up a lot that later turns out to have wetlands or erosion-prone areas on it. The predictable reaction of state and local governments, therefore, will be to make lot splits even more difficult than they already are -- perhaps forbidding them altogether. If this is the upshot of the Murrs' victory, few property owners will thank them.


One might think it fanciful that states would limit the right to split lots in response to a doctrine that elevates lot lines to the status of an automatically compensable property right. State law, however, already severely impedes the right to split lots. In Michigan, for instance, each parcel is permitted only a limited number of splits over various defined time periods. In many states, subdivision requires the posting of bonds and the installation of infrastructure. The reason for these sorts of condition on subdivision is the fear of "zombie plats" -- large parcels of land containing many formally separate lots that lack the requisites for development that could be sold off to unsuspecting vacation-home purchasers, retirees, and other investors a la Glengarry Glen Ross.

The Cato Institute's proposed doctrine gives local governments just one more reason to make lot splits even more difficult: Each of those invisible lines on a plat map might become financial liabilities when the laws change and make some legally defined square, hitherto never believed to convey a right to build, into a buildable lot. One can imagine county attorneys and state legislators calling for the amendment of subdivision codes to put a moratorium on all subdivision until they can figure out the financial liabilities incurred by allowing splits. Of course, any such limit on splits would trigger no takings liability: There is no federally protected right to build on a small rather than large parcel of land. Farmers stuck with unsplittable half-sections will not line up to congratulate the Cato Institute in gratitude for their "bright-line rule" that adds "clarity" -- but little else -- to their property rights.

That's how the hydraulic pressure of Takings Doctrine works to render futile most federal protection of property rights. Since only narrow aspects of state property law are ever federalized as constitutional "property," subnational lawmakers can always evade the doctrine by simply relying on other, non-federalized aspects.

Posted by Rick Hills on March 18, 2017 at 07:24 PM | Permalink

Comments

This is a really great point that I hope occurs or has been made to the Court in some form (or that someone there reads this post).

Posted by: Asher Steinberg | Mar 19, 2017 10:18:10 PM

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