The Takings Clause in Four Cases Every Landowner Should Know

The most powerful sentence in American property law is shorter than a typical text message. "Nor shall private property be taken for public use, without just compensation." Twelve words. No footnotes, no exceptions, no appendix. And somehow, over two centuries, those twelve words have generated enough litigation to keep a small army of lawyers in boat shoes.

Why? Because the sentence was written for the easy case, where the sheriff shows up with a bulldozer, and the real world specializes in the hard case, where nobody shows up with anything. The government never touches your land. It simply passes a rule that makes your land worthless, or lets a stranger walk across it, and then says, with a straight face, that you have not lost a thing. If you own land, you need to know how the Supreme Court has answered that. Four cases do most of the work, and I will take them in order.

First, the rule that started it all

Here is the basic structure. The Takings Clause of the Fifth Amendment says government may take private property, but only for public use and only if it pays. For a long time the clause was understood to cover only a direct seizure or a physical occupation. Then, in 1922, Justice Holmes wrote in Pennsylvania Coal Co. v. Mahon that "if regulation goes too far it will be recognized as a taking." That one line opened the door to a whole category of claims: regulatory takings. The question ever since has been how far is "too far."

Each of our four cases answers a piece of that question.

Case one: Penn Central (1978), the balancing test

The facts are almost charming. Grand Central Terminal in New York City is one of the great buildings in America. New York had a landmarks law, and in 1967 the terminal was designated a landmark. The owner, Penn Central Transportation Company, wanted to build a big office tower over the top of it. The city's landmarks commission said no. Penn Central sued, claiming the city had taken its property, the air rights above the terminal, without paying for it.

The Supreme Court ruled against Penn Central. In Penn Central Transportation Co. v. New York City, the Court said that a regulation is not a taking just because it reduces the value of the property. Instead it laid out factors for courts to weigh, which have governed regulatory takings ever since. There are three:

1. The economic impact of the regulation on the owner.
2. The extent to which the regulation interferes with distinct investment-backed expectations, meaning what the owner reasonably expected to be able to do when buying and building.
3. The character of the government action, with a physical invasion more likely to be a taking than a general rule that adjusts the benefits and burdens of economic life.

The Court also pointed out that Penn Central could still use the terminal as a railroad station and office building, and that it had been offered a way to transfer its unused development rights to other nearby sites. All of that counted against the claim.

What does Penn Central mean for a landowner? Honestly: it is a hard test to win. It is a multi-factor balancing act, which is lawyer language for "the outcome depends on a judge's judgment." Courts have not found many takings under it. For a farmer whose land loses value because of a zoning change, a setback rule or a habitat restriction, this is the test that usually applies, and the burden is on the owner. It is the default, and it is not generous.

Case two: Lucas (1992), when the land is worth nothing

Now for a case that the property owner won, and that remains the cleanest weapon a landowner has. In 1986, a South Carolina developer named David Lucas bought two beachfront lots on the Isle of Palms, intending to build houses on them. Two years later South Carolina passed the Beachfront Management Act, which set a line past which no permanent structure could be built, and the law left Lucas with two lots he could not build on.

In Lucas v. South Carolina Coastal Council, decided in 1992 in an opinion by Justice Scalia, the Supreme Court held that when a regulation denies a landowner all economically beneficial use of the land, the government must pay, no balancing required. The Court called it a categorical taking. There is one big exception: the government does not have to pay if the restriction merely reflects what the state's existing property and nuisance law would have prohibited anyway, the "background principles" of state law. You never had the right to build a thing that was a nuisance, so the state has not taken it from you.

For a landowner, here is what Lucas means. If the regulation leaves you with nothing, you do not have to win a balancing test. But "nothing" really means nothing. Courts read it narrowly. If you can still farm part of the parcel, graze it, sell it for some use, or build somewhere on it, you are probably back under Penn Central, where the odds are worse. The Court also noted in Lucas that the loss of "all" value is rare, which is part of why this rule rarely applies. Still, it set a floor. No government may reduce a person's land to a wasteland by regulation and call that a favor.

Case three: Knick (2019), the courthouse door

Here is a procedural case that matters as much as any of the substance. For more than thirty years a rule from a 1985 case, Williamson County Regional Planning Commission v. Hamilton Bank, said that a landowner who thought the government had taken property had to go to state court first, seek compensation there, and only after losing could go to federal court. The catch was that, once you had litigated in state court, a doctrine called issue preclusion usually stopped you from relitigating the same facts in federal court. In other words, the landowner was invited to the federal courthouse by a door that had been locked behind him.

Rose Mary Knick owned land in Scott Township, Pennsylvania. The township passed an ordinance requiring cemeteries to stay open to the public in daylight hours, and it treated her land as a cemetery because of some old burial markers. She said it was a taking, and she tried to go to federal court. The lower courts, following Williamson County, turned her away.

In Knick v. Township of Scott, decided June 21, 2019, the Supreme Court overruled Williamson County in an opinion by Chief Justice Roberts. A property owner has a claim for a violation of the Takings Clause as soon as the government takes the property without paying. He does not have to exhaust state remedies first, and he can go straight to federal court under the federal civil rights statute. The decision was five to four, and the dissent worried that it would flood federal courts with local land-use disputes.

What does that mean for you? It means the courthouse is open. Note a limit, though: you still generally have to show that the government has made a final decision about what it will allow on your property. You cannot sue the day a rule is proposed. But once the government has acted, you have a choice about where to bring your case.

Case four: Cedar Point Nursery (2021), the right to say no

The last case is the one that farmers should read twice. In California, a state regulation allowed union organizers to enter the property of agricultural employers for up to three hours a day, 120 days a year, to talk to workers. Cedar Point Nursery, a strawberry grower, and Fowler Packing, a fruit-packing company, sued, saying the regulation took their property without pay.

California's argument was that this was just a regulation that restricted how a business could use its land, and under Penn Central it was no taking. In Cedar Point Nursery v. Hassid, decided June 23, 2021, the Supreme Court disagreed in an opinion by Chief Justice Roberts. The Court held that the regulation appropriated a right to exclude, which it called one of the most treasured rights of property ownership, and that a government-authorized physical invasion is a taking whether it is permanent or temporary. When the government authorizes someone to enter your land, even for a few hours a day, you do not need the balancing test. It is a per se, or automatic, taking, and you are owed compensation.

The best argument on the other side, and the dissent made it, is that this decision could cast doubt on ordinary government inspections: health inspectors, building code officials, fire marshals. If every entry onto private land is a taking, can the state still send an inspector to check a restaurant? The majority answered that many such entries are justified by background principles of property law or are conditions that attach to a permit or license, such as a health inspection that a business agrees to as a condition of operating, and that the decision does not stop them. Whether you find that persuasive or not, it shows you why the Court drew the line it did: it is the physical invasion that matters.

The same logic ran through an earlier farm case, Horne v. Department of Agriculture (2015), in which raisin growers challenged a federal program that forced them to hand over a portion of their crop to the government. The Court held that the Takings Clause applies to personal property, and that the government cannot take your raisins without paying any more than it can take your acres. If you grow it, you own it.

How the four fit together

Put the four together and you have a map.

What a regulatory taking claim requires

If you think you have a claim, you will need to show a handful of things. This is not legal advice, only a map of what lawyers look for.

1. You own a property interest. Land, a water right, a mineral right, an easement. If you do not hold the interest, nothing was taken from you. (Western water rights count as property, which is part of the reason First in Time, First in Right, and How Western Water Law Really Works exists.)
2. Government action caused the loss. A rule, a permit denial, an order or a physical presence.
3. The government has made a final decision. You generally cannot sue over a proposal or a first rejection if there is still a realistic chance of a variance or a reapplication.
4. The loss fits one of the categories above. Physical invasion, total loss, or a serious loss that wins under the Penn Central factors.
5. You file on time. Deadlines vary by state and by the type of claim. This is where a local lawyer earns the fee.

The conservative case, and the honest caveat

Why do conservatives care about this body of law? Because it is where the abstract idea of limited government meets a family's kitchen table. The Fifth Amendment says the government may take your property only if it pays. A government that can achieve the same result by regulation, with no payment, has found a way around the Constitution. The principle, which Justice Holmes stated a century ago, is that a regulatory burden that really belongs to the public cannot be loaded onto a few owners alone. If the public wants the wetland or the view or the open space, the public can pay for it.

Here is the honest caveat. The Court has not taken the principle as far as many property-rights advocates would like. Penn Central still governs most cases, and it is hard to win. Government can regulate land use, impose zoning, protect public health and enforce nuisance law without paying. That is also right: a country in which every regulation triggered a payment would be one in which nothing could be regulated, and the people who live next to a new hog confinement or a chemical plant would have no protection at all. The art is in the line, and the four cases above are where the line is drawn.

For stories of how those lines have been tested in practice, read Kelo v. New London and the Backlash That Rewrote State Law, which covers the other half of the clause, "public use," and How a Backyard Lot and a Farm Pond Became Federal Waters, Then Didn't, where a landowner needed the Court to say that he could challenge the agency at all. If you ever deal with a company that wants an easement across your land, start with A Survey Crew Is on Your Land, So Here Is Your Pipeline Playbook. And for the Western version of the whole fight, see The Sagebrush Rebellion and the Westerners Who Wanted Their Land Back and Who Owns the Range? Grazing Permits, Allotments and the Rancher's Real Rights. To learn how to read an opinion like the ones above, How to Read a Supreme Court Opinion Without a Law Degree will help.

The bottom line

• The Fifth Amendment protects more than a deed. Government can take your use of the land through regulation, not only through seizure, and the Constitution requires payment when it goes too far.
• Know the four buckets. Physical invasion is an automatic taking, total loss of value is an automatic taking, partial loss is a balancing test, and you can go to federal court once the government has acted.
• Keep records before there is a fight. Appraisals, purchase documents, permit applications and letters from agencies are the evidence a lawyer needs to show what you expected and what you lost.
• Do not wait for a perfect case. Deadlines are strict and vary by state. Talk to a local property lawyer when a rule or a request threatens your land, before the bulldozer or the deadline arrives.
• Tell your legislators what you think. Courts set the minimum. States can give owners more protection, and the voters decide how much.