David Lucas bought two beachfront lots on the South Carolina coast. Lucas planned to build houses on each parcel. But before Lucas could start work on the build, the State of South Carolina passed a regulation prohibiting permanent residential development on the land.
Lucas filed suit in state court, arguing that the regulation was tantamount to a taking, as it destroyed the land’s economic value. After disagreement among the lower courts as to whether the regulation constituted a taking or a valid exercise of state police powers, the United States Supreme Court took up the case.
The issue before the Court was whether a land-use regulation that completely nullifies land’s economic value is a taking requiring payment of just compensation. Ultimately, the Court concluded that this type of land-use regulation did amount to a taking, unless the state could show that the now-banned use could have been blocked under state nuisance law prior to the land-use regulation’s passage.
Further, the Court concluded that there was no need to engage in the traditional analysis, weighing the public interest against the property owner’s expectations, if the regulation completely destroyed the land’s value.
Thus, the Court carved out an important exception to traditional Takings Clause analyses.
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