A Chapel Hill company won the opportunity to build a house on a lot the firm owns, thanks to a recent N.C. Supreme Court ruling.
In its ruling in December, the high court found that Chapel Hill had violated its own rules in not issuing a building permit for the lot that is largely situated in the town’s Resource Conservation District.
Chapel Hill Title and Abstract Company owns a vacant lot on Coker Drive in Chapel Hill. Development of the property is affected by both restrictive covenants that run with the land and Chapel Hill’s Resource Conservation District ordinance.
In 2002, the town issued Chapel Hill Title a building permit for a house to be situated on the 21.5 percent of the property not included in the district. Neighbors soon sued. They claimed the structure would violate setback requirements in the covenants. A judge agreed and enjoined Chapel Hill Title from making use of the building permit.
Chapel Hill Title then applied for a building permit on the portion of the lot in the district. Ordinarily, building is not allowed under Chapel Hill’s district ordinance. The ordinance creating the district does allow for variances if 75 percent or more of a property is in the district. The town’s Board of Adjustment rejected the variance application.
Chapel Hill Title sued the town, arguing that it should have granted the variance. A Superior Court judge ruled for the company. Upon the appeal however, the decision was overturned. A majority of a three-judge panel of the N.C. Court of Appeals ruled in favor of the town. Because the decision was not unanimous, the state’s highest court was required to hear the case upon Chapel Hill Title’s request.
Before the high court, the town again argued that the variance had been property rejected. It contended that because Chapel Hill Title had obtained a building permit for a spot on the property not covered by the district, the district was not responsible for petitioners having no reasonable use of the property. In the town’s view, the fact that restrictive covenants prohibited making use of the building permit was irrelevant. The town also argued that because Chapel Hill Title was aware of the district ordinance and covenants when it bought the property, any hardship was self-created and not attributable to the district.
The Supreme Court was not swayed by the town’s arguments.
“The central question we address is whether the Board should consider the operation of the RCD ordinance independently, or in conjunction with, the effect of the private restrictive covenants, when determining if petitioners are entitled to a variance,” wrote Justice Robin Hudson in ruling for Chapel Hill Title.
The Supreme Court’s seven justices unanimously held that the town’s district ordinance required that the ordinance and covenants must be considered together. The high court noted that the plain language of the ordinance said as much, with its requirement that “the Board of Adjustment shall consider the uses available to the owner of the entire zoning lot.”
“Because more than seventy-five percent of the property is subject to the ordinance, petitioners have shown they are entitled to rely on the rebuttable presumption of ‘no legally reasonable use’ of the property,” Hudson wrote for the court.
“This presumption is not rebutted by a building permit that was issued but can never be used.”
Justice Edward Brady filed a separate concurring opinion, arguing that the refusal to issue a variance also amounted to an unconstitutional taking of private property without just compensation.
“I believe that respondents’ denial of petitioners’ request for a variance not only violates the provisions of the Chapel Hill Resource Conservation District Ordinance because of respondents’ failure to consider the effect of the restrictive covenants on the subject property, but I also believe that the denial results in a de facto taking, which requires respondents to provide just compensation for petitioners’ land,” he wrote.
The case is Chapel Hill Title & Abstract Co. v. Town of Chapel Hill Board of Adjustment, (275A08). (Download a pdf file of the opinion here.)
Michael Lowrey is an associate editor ofCarolina Journal.