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Escaping Logical Circularity: The Postenactment Purchaser Problem and Reasonable Investment-Backed Expectations

October 2004

Citation: ELR 10865

Author: Tal Dickstein

Imagine buying a piece of property that is subject to a governmental land use regulation such as a zoning ordinance that restricts development or some other use of the property. Under these circumstances, can a claim be brought against the government for reimbursement of the market value of the land? In other words, should one who purchases a piece of property after the enactment of a governmental regulation which restricts development (a postenactment purchaser) be allowed to maintain a claim that a regulatory taking, or inverse condemnation, has occurred even though the property was taken with actual or constructive notice of the existing regulation?

The answer to this question is of great importance to anyone contemplating purchasing real estate for two related reasons. First, in many parts of the United States, public regulation of private-property use is pervasive. These regulations include, but are not limited to, "zoning classifications, historic districts, aesthetic standards and . . . environmental regulations." As the prevalence of land use regulations has soared, it is not surprising that the volume of takings claims, seeking just compensation for the diminution of land value these regulations cause, have also increased.0 Second, real property, the subject of so many government regulations, changes hands at a high rate in this country, meaning that the postenactment purchaser problem is likely to arise in many future regulatory takings claims.

Tal Dickstein received his J.D., magna cum laude, from Benjamin N. Cardozo School of Law in 2004. The author would like to thank Prof. Stewart Sterk for his encouragement to write on this topic as well as his challenging and enriching instruction at Benjamin N. Cardozo School of Law. The author would also like to thank Howard Freeman for his help in forming the proposal of this Article, and Jaimie Lupow for her tremendous support and understanding throughout the writing process.

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