Thursday, March 10, 2016

The Vested Rights Act of 2014

Although the Vested Property Rights Act of 2014 has been in effect for well over a year (since January 1, 2015) I don’t think I’ve taken a moment to talk about it. It certainly is a welcome step in the right direction: when I see happen all the time, is an applicant who finds a parcel of property, puts together his development plan, goes to codes and applies for a permit only to have the permit either stalled, or even if it is issued, the law is changed immediately thereafter in order to thwart the proposed development.

I’ve always thought that developers look for properties which they can develop without a hassle from the local government. They find a piece of property, to figure out if it can be used for the purpose they intend, and then they apply for a permit. It’s only after that, that all of a sudden, that particular land use at that particular location is no longer satisfactory. The neighbors or the local government or both rise up in righteous indignation and demand that the law be changed so that that use can no longer be permitted at that location.

That was the state of the law in Tennessee before the adoption of the 2014 VRA. An applicant had to get a building permit plus must have substantial construction underway in order to have any white to continue the work, notwithstanding the fact that when he obtained the building permit, the project was entirely legal. Because of the government, under the old Tennessee law, changes the rules before you reach substantial construction, the new law applies and the building permit catch revoked.

The 2014 VRA changed that. It was adopted as Chapter 686 of the Public Acts of 2014, and is codified in its municipal version at Tenn. Code Ann. § 13-4-310(b) to (k). Found in the first sentence: “a vested property rights shall be established with respect to any property upon the approval… Of a… Development plan or a building permit. During the vesting period… The locally adopted development standards which are in effect on the date of approval… Shall remain the development standards applicable to that property or building…”

Certainly, we will have to wait for some court decisions to understand how this will all fit together. From my perspective there has been a growing acceptance across the nation of statutory provisions such as this, where the applicant who complies with the developmental regulations in effect at the time of approval is permitted to develop pursuant to those regulations even if changes are made thereafter.

Notice however, that the protection only exists from and after the time of approval. If the applicant applies for a building permit, but does not get the permit approved, and there is a change in the zoning regulations which would preclude the development, there is no protection pursuant to the act. Protection starts on the day of approval; not on the day of the application.

I’m sure that there will be many interesting questions which arise as a result of the application of the Vested Rights Act, but as of now, I don’t know of any particular litigation involving the statutory provisions. I’m sure that it won’t take long for lawsuits regarding the application of the act to offer some additional guidance.


  1. Hello George,

    Long time no see....

    I understand the issue quite well. I don't understand how this influences the legislative process that is required by the local government, lets say Nashville. If I buy a piece of land that is zoned RS-15 and want to build a government subsidised multi-family apartment complex I will need a change in zoning.

    A bill is filed and gets the perfunctory approval on first reading. It is referred to the Planning Department, they review it and send it on to the Planning Commission who approve it. So is the property owner vested at this point? Or does the legislation have to be approved by the Council before the rights are vested?

    By the way the average American family knows little to nothing about zoning, its process, or what the zoning is on property in their area. Even worse, they don't know what uses can be placed there.

    So if someone wants to see a sanctimonious blowhard they can most often be found on a list of lobbyists or law firms specializing in land use cases.

    Best regards,

    John Stern

  2. Thanks for the comment John. Of course, the Vested Rights Act only applies where the property owner is satisfied with the current zoning and applies for a permit to build something which is permitted by the current zoning regulations. Because in the past, the common law vested rights doctrine required not only a building permit but also substantial construction, typically what would happen, and has happened to many of my clients, is that immediately after obtaining the building permit, the zoning was changed so as to prohibit the project described in the building permit. Under the common law, since no rights had vested, because no substantial construction had taken place, the new zoning prohibiting the project had to be enforced and the development was stopped.

    The Vested Rights Act changes that so that if a building permit is obtained, even if the zoning is changed thereafter, even if there has been no actual construction, the property owner may continue with the project under the local development laws as they existed at the time that the building permit was issued.

    I should probably add that by virtue of the adoption of the pending ordinance doctrine by the Tennessee Supreme Court several years ago, if there is a zoning bill which would change the applicable regulations pending before the local legislative body, and it has at least been considered by the planning commission, then the local government may choose not to issue any building permit inconsistent with the pending legislation. The new Vested Rights Act does not change that in any way as far as I know.

    We will need a couple of cases to more fully understand the impact of the new statute. There is a case pending before the Davidson County Chancery Courts right now, and I would expect that a decision will be issued in the next couple of weeks.

    – George