US Supreme Court Issues RARE Real Estate Decision

Industry Observer with No Longer Processing Mortgages. MLO #293441 expired

Paddy Deighton, who is an attorney, explains a recent US Supreme Court case that did not make a lot of headlines, but which could be of critical importance to those of us in the real estate business.  Hopefully you will find it as interesting a read as I did today.

Original content by Paddy Deighan MBA JD PhD

There was a little known Supreme Court decision that did not receive the same fanfare as some of the other cases before the Court. The recent property-rights ruling went in favor of landowners and land developers. The ruling could have far-reaching effects on how government handles property owners’ decisions that “cause wider harm or social burdens” on the community. The case, Koontz v. St. Johns River Management District, revolved around the property owner (Koontz)’s desire to develop about four acres of a 14.9-acre wetland property. When Koontz sought a permit for the development from the local water management district (St. Johns), he was told that he could choose either to develop only one acre or pay for contractors to make improvements to government-owned wetlands in the same watershed in exchange for a full permit. Koontz opted to take neither option and sued, saying that his property was essentially “taken for public use without just compensation” because he was not able to develop his land without agreeing to “extortionate demands.”

Paddy Deighan


Backed by the National Association of Home Builders, civil liberties groups, and property-rights advocacy groups, Koontz’ case spent 11 years working its way through the legal system. The Supreme Court ended up siding with Koontz, saying that the local watershed “impermissibly burden the right not to have property taken without just compensation” by creating a set of parameters around the receipt of the desired permit that prevented Koontz from using his own land for his own benefit. The vote was 5-4 in favor of Koontz, with Justice Alito writing in support of the decision that “land-use permit applicants are especially vulnerable to…coercion…because the government often has broad discretion to deny a permit that is worth far more than the property it would like to take” and that “government…may not leverage its legitimate interest in mitigation to pursue governmental ends that lack an essential nexus and rough proportionality to [social costs of the proposal]”.


Not surprisingly, many property owners are breathing a collective sigh of relief that their rights are being further defined and protected, but critics of the decision warn that the ruling sets a dangerous precedent since technically no physical thing was taken away from Koontz. Justice Kagan, who wrote the dissenting opinion on the case, said that the ruling “threatens to subject a vast array of land-use regulations….to heightened constitutional scrutiny” and “I would not embark on so unwise an adventure”.  Why an I am not surprised that Justice Kagan dissented on this.....


Paddy Deighan, J.D. Ph.D

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Steven CookSteven T Cook
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Comments (5)

Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Steven, regarding Paddy:  Paddy asked "Why is he not surprised that Justice Kagan dissented on this?"  Probably because he and others of his mindset more concerned with the money to be made here than they are about preserving the environment.  At least that's what it looks like to me from his remarks.

There ARE times when the common good must be addressed more forcefully than the individual good.

Jun 28, 2013 10:49 AM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Steven:  You mentioned in your comments that this ruling could be of critical importance to those of "us" in the real estate business."

There really are times when good ol' "business" has to take a back seat to things perhaps deemed of greater importance, and of importance to more people than just the short-term interested of the person involved.

Jun 28, 2013 10:54 AM
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Karen Anne  -- there are indeed times when things of greater importance need to be taken into account, though I do not think that they should be at the expense of the individual.  If the government thinks that ground is so important it should not be developed -- they should pay the retail cost to the owner and take possession of the land.  However, that is not what is being done; they are prohibiting the use of the land, without compensation, and continuing to require the homeowner to pay taxes on property they won't let him use. 

Either they should let him use the property or they should buy it from him, so he can go buy other property he can use.   The other issue is to come in 5-10 or more years after property is bought and then change the usage without any input from the landowners (whith happens too often through various means.)

Jun 29, 2013 09:27 AM
Laura Giannotta
Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ
Your Realtor Down the Shore!

I wonder if and how this will affect the current problems on Long Beach Island at the Jersey Shore.  Several ocean front homeowners have refused to sign agreements to allow dune replenishment, it is an on going battle that some say threatens the safety of all properties on the Island.  Very interesting. 

Jul 01, 2013 07:26 PM
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Laura -- that is an interesting question.  Do you know if their reason for refusing to sign is simply financial, or do they have other concerns?

Jul 02, 2013 04:56 AM