Sometimes called a “case of the race,” the common law doctrine of vested rights is “one of the most troublesome areas of land use regulation.” Exeter Building Corp v Town of Newburgh, 114 AD3d 774 [2d Dept 2014].
In New York, the “vested rights” doctrine is equitable in nature and implicated when a property owner or developer seeks to continue the use of property in a way that was permissible before an enactment or amendment of zoning regulations no longer permits it. Town of Orangetown v. Magee, 88 NY2d 41 .
Generally, an owner of real property can acquire common-law vested rights to develop property in accordance with the prior zoning regulations when (1) in reliance on a legally issued permit, the landowner (2) effects substantial changes and incurs substantial expenses to further the development and (3) the landowner’s actions relying on the valid permit(s) are so substantial that the municipal action results in serious loss rendering the improvements essentially valueless. Id. As a result, the “race” becomes whether the developer gets the project completed or at least substantially completed to satisfy the Magee test before the municipality get its zoning code in place.
Recently, in Exeter Building Corp v. Town of Newburgh, the Court of Appeals affirmed a determination by the Appellate Division holding that the developer had not vested a plan to build 136 townhouse units, because it could not have reasonably relied on valid permits when warned repeatedly of a rezoning by the Planning Board. In Exeter, the Court of Appeals refined the reliance test in Magee, holding that is was not “reasonable” for the developer to rely on a conditional site plan approval placing emphasis on the Town Planning Board’s repeated warnings of the proposed rezoning.
Now, not only must developers listen for the starting gun in a vested rights case, but they must also consider the reasonableness of a municipality’s warning. Such an additional qualifier seems to give the government a head start.
For a detailed discussion of vested rights and the underlying Appellate Division case, see one of our earlier blog posts, Appellate Court Rules on Common-Law Vested Rights.