What is Inverse Condemnation?

Inverse condemnation is a term used in the United States (U.S.) real estate industry. It refers to incidents in which a regulatory agency of the U.S. government prohibits a private property owner from developing a parcel of land through over regulation, normally through denying permits or allowances for improvement. In applying these restrictions, the government removes all feasible uses for the property. Instead of condemning it in the usual manner, based on it being unsafe or a danger to the community, it inversely condemns it from being converted to a productive piece of land.

Another common term that refers to this government action is regulatory taking. In more well-defined terms, this means that a legitimate regulatory agency of the U.S. government is taking personal property, in the form of land, from a U.S. citizen. The basis for regulatory taking, and as such inverse condemnation, comes from one of the most often referred to passages of the U.S. Constitution, the Fifth Amendment. In general, the amendment guarantees citizens will be shielded from the government abusing its power in legal matters.

The term regulatory taking refers to the last phrase in the last sentence of the Fifth Amendment. This phrase, “nor shall private property be taken for public use, without just compensation," guarantees that a U.S. citizen’s property will not be taken from them. This is commonly interpreted by the courts to mean that if a properly owner is prohibited from developing a piece of land by a government ruling or law, that ruling often makes it useless to the owner. Since the government normally offers no compensation when these restrictions are applied, the land owner has inherently had one of his Fifth Amendment rights violated.

An inverse condemnation claim is frequently based on the denial of generally common requests regarding property. Residential and commercial landowners often appeal to their local governments for permits to develop wetlands and coast lands. Applications for easements and relief from zoning restrictions are other typical submissions.

Before taking an inverse condemnation claim to court, many jurisdictions require proof that all other avenues of resolution have been exhausted. The procedures for filing these suits vary from state to state. National level filing guidelines are different from those used at the state level. Citizens are usually encouraged to hire an attorney specializing is such cases to increase their chances of winning.