Don't let property rights get trampled in Maryland

September 06, 2006|By Timothy Sandefur

When the Supreme Court handed down its Kelo v. New London decision last year allowing governments to use eminent domain to seize private property and hand it over to developers, people in Maryland and across the nation were outraged. Dozens of states passed new laws to prevent politicians from taking away property rights.

But in spite of the public outcry, government officials are devising more tricks to dispossess property owners. One such trick, called "amortization," allows government to take property without even giving owners the "just compensation" to which they are constitutionally entitled.

In a lawsuit before Maryland's highest court, bureaucrats in one of the state's largest counties are trying to use amortization to shut down a used-car dealership without paying the owner a dime.

Under amortization, the government outlaws the current use of a piece of property but gives the owner a "grace period" allowing him or her to continue with that use for a period of time. During that period, the owner supposedly "recovers the cost" of the property and therefore (the theory goes) the government owes the owner nothing.

In 2003, when officials in Prince George's County decided they wanted art galleries to replace the car dealerships along U.S. 1, they enacted a law ordering the dealerships to close. Instead of compensating the businesses for the loss of their property, the county said the dealers could continue to operate for seven years, so no compensation was necessary.

Think about that for a moment. Suppose a government official were to come to your door tomorrow and say, "We want your house to become a gas station, but we're not going to pay you for this forced change. Instead, we'll let you live here for a few more years and pay you nothing."

Fortunately, no government has used amortization against homes - so far. But it has been used against business owners in several states, and many property rights abuses first exercised against business owners are later aimed at homeowners.

The notion that property owners "recover their losses" during the grace period is simply a trick to evade the constitutional requirement of "just compensation." After all, the losses wouldn't happen if the government were not taking the property. Amortization is like saying that a person can steal a loaf of bread, then give back a few slices to make up for the theft.

What's more, amortization schemes make it difficult for owners to make good use of their property during the grace period. Suppose the owner needs to update his facility to remain competitive, but it will take 10 years for the updates to pay for themselves, and the government has given the owner only a five-year grace period. Should the owner go ahead with the updates, knowing they won't pay off? Or should he stay with his outdated facility and underserve his customers for his five remaining years?

Amortization schemes have been challenged in state courts around the nation, and the Maryland Court of Appeals is expected to announce its decision in the Prince George's County case in the fall. Although about half of the states allow such schemes, seven others, including Pennsylvania, have prohibited them.

As the Pennsylvania Supreme Court explained in a 1991 case, "If we were to permit the amortization of nonconforming uses, any use could be amortized out of existence without just compensation ... and any property owner could lose the use of his or her property without compensation. Even a homeowner could find one day that his or her `castle' had become a nonconforming use and would be required to vacate the premises within some arbitrary period of time without just compensation."

Property rights have a special place in American law. They ensure the safety of the things we've earned and protect our ability to plan for the future. If Maryland allows government to deprive its citizens of their property rights without just compensation, there would be virtually nothing to stop government from simply assuming control over every piece of property in the state. Individual property owners, rather than the public as a whole, would be forced to pay the price of the politicians' desires - and the government would be free to gain windfall profits for itself.

Marylanders deserve to be paid for the things government takes from them. Let us hope the state's Court of Appeals will put a stop to this abusive "amortization" scheme.

Timothy Sandefur is an attorney for the Pacific Legal Foundation and author of "Cornerstone of Liberty: Property Rights in 21st-Century America." He co-authored an amicus curiae (friend of the court) brief on the Prince George's County case. His e-mail is

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