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Supreme Court Rules In Favor Of Property Owners

By Sean E. Andrussier

Yesterday in Chapel Hill Title and Abstract Co. v. Town of Chapel Hill, the Supreme Court ruled in favor of property owners in their battle with Chapel Hill. Petitioners wanted to build a home in Chapel Hill on a vacant lot zoned for residential use. But because 78.5% of the property fell within a Resource Conservation District (RCD) subject to a RCD Ordinance that the Town adopted in the 1980s, petitioners needed a variance from the Town. The variance was crucial because the remainder of the property (the other 21.5%) is subject to 50-year-old restrictive covenants that preclude building on that portion of the property.

The Town's Board of Adjustment denied the variance, concluding that the RCD Ordinance alone didn't leave petitioners with "no legally reasonable use" of the property, on the theory that 21.5% of the property remained available for construction. In other words, the Board didn't ignored the restrictive covenants in determining whether petitioners have a legally reasonable use of the property.

The Supreme Court framed the issue as "whether the Board should consider the operation of the RCD Ordinance independently, or in conjunction with, the effect of the private restrictive covenants, when determining if petitioners are entitled to a variance." Relying on the RCD Ordinance itself, the Court held that the Board erred in failing to consider the restrictive covenants. The Board should've considered them in determining whether a variance was necessary to leave the petitioners with a "legally reasonable use" of the property. The Supreme Court held that the Board must give petitioners the variance.

Justice Brady issued a concurring opinion adding his view that the Town's denial of a variance without just compensation amounted to an unconstitutional (regulatory) taking of property. Relying on Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992), Justice Brady opined that the RCD Ordinance, as applied in connection with the restrictive covenants, denied petitioners of all economically beneficial or productive use of their land, thus resulting in a taking requiring just compensation. Justice Brady said the Town couldn't have it both ways: it couldn't deny a variance and deny just compensation.

The Court didn't address the taking issue, however, because the Court ordered the Town to grant the variance based on the language of the Ordinance.

Full post as published by North Carolina Appellate Blog on December 13, 2008 (boomark / email).