Zoning law changes can have a significant impact on plans that owners may have for their property. If the zoning code is modified to prohibit a use that was previously permissible, the property may continue to be used in the same way if it is a prior non-conforming use. However, that may not help an owner who has a pending permit application or who has received a permit but has not completed construction. In those situations, different rules apply.

Right to continue with construction in progress

Where a more restrictive zoning law is enacted, an owner may be permitted to complete a structure or development which is now nonconforming only if, prior to the effective date of the zoning change, the owner:

• Undertook substantial construction, AND
• Made substantial expenditures.

The owner’s construction and expenditures must be in made in reliance on a validly issued permit, and in doing so, the owner acquires “vested rights.”

The permit upon which the owner relies must be primarily related to approval of the project and not for secondary or tangential work. For example, a permit for demolition, removal of a water tank, or clearing/grading property may be considered secondary work as the work permitted is likely not specific to a particular use or structure on the property. The reasoning behind this is that secondary or tangential work can likely be easily adapted for a different, conforming use of the property, so the owner is not harmed by their reliance on the permit.

Similarly, the improvements made to the property and expenditures incurred must be substantial as compared to the entire project. The improvements made to the property must be specific to the intended non-conforming use such that they cannot be adapted to a permitted use. The court may compare the costs incurred to the cost of the total project in order to determine whether a substantial part of the project has already been completed. If the work done could be used for another project that would be a permitted use, or the expense incurred in making the improvement is but a small percentage of the total intended project, then the owner may not have obtained vested rights.

The purpose of vested rights is to prevent significant harm to an owner of property who has relied on a validly-issued permit. If the improvements made are easily adapted to another use or not costly compared to the total project, harm is minimized. For example, if a developer spent significant money on widening the road adjacent to property, but such work would be needed anyway for a permitted use, then the requirements of this provision are not met.

It should be noted that even if the right to continue with construction has vested, it can be abandoned by inaction. In other words, if there had been substantial work on the project such that vested rights were obtained, and then further construction was abandoned for a period of time, the owner could lose the right to complete the project.

In addition, in the case of a large development, if the owner’s right to continue has vested on one portion of the property, it may carry over to the entire project. However, different rules apply to developments involving subdivisions.

If the owner has an approved subdivision plat, it is immunized from subsequent zoning changes to area restrictions for 1 to 3 years depending on the circumstances. This statutory right applies to area restrictions only (not use restrictions). For instance, if the zoning law changed to require larger plots of land for each home, that is an area restriction and the subdivision would be protected from having to change plot sizes provided construction was completed within 1 to 3 years (depending on the circumstances). However, if the zoning change prohibited residential use of the land, then statutory vested rights would not be available.

Right to continue construction when application is pending

The general rule is that a court determining whether a particular use is allowed will apply the zoning law in effect as of the day of the court’s decision, not as of the time of the application. For example, a property owner applies for a permit and it is granted. A neighbor appeals based upon an interpretation of an ambiguous provision of the zoning code. The Zoning Board of Appeals (ZBA) agrees with the neighbor and revokes the issuance of the permit. The property owner appeals to a court of law. Before the court makes a decision, the zoning code is amended to re-write the rule to match the interpretation utilized by the ZBA. Generally, the court must apply the amended rule, and the owner would not be entitled to the permit.

There is, however, a “special facts” exception. A property owner may be entitled to the permit if they show that:

• The owner would have been entitled to permit approval as of right under the law existing at the time of the application, AND
• There was bad faith by the municipality or an abuse of administrative procedures delaying consideration of the permit application.

Typically, the “special facts” must show that the municipality delayed considering the owner’s permit application in bad faith, so the owner had no time to get the permit and obtain vested rights to continue with construction before the municipality changed the zoning law.

To learn more about how zoning law changes impact your property rights, read our related posts on non-conforming uses and regulatory takings or see our zoning and land use practice page.

If you are concerned about recent zoning law changes that affect your property, contact us for a consultation.