July 17, 2007
Dear Codes Enforcement Officer:
You have this question: Where the city issued a building permit for a residence under the following circumstances, is the building permit valid?
The location of the residence is in a subdivision which was in a PRD-2 district in the early 1990s. The subdivision plat was approved by the planning commission (and apparently by the city), and the plat was recorded. I am told (although I have not seen it) that the plat provided for a setback of 40 feet with respect to the property in question. In fact, as I understand the facts, the residences in the vicinity of the property in question, including the residence next door, is built with a 40 foot setback.
But the property for the proposed residence is presently in an R-1A district, having been rezoned two or three years ago. The City’s Subdivision Regulations, which the cover shows to have been “Amended June 1993,” provide that:
The minimum depth of building setback lines from the street shall not be less than thirty (30) feet and in the case of corner lots, thirty (30) feet from the side street, unless higher standards are required by an existing zoning ordinance. [§ Art. IV, § E.4.]
The Zoning Ordinance, which the cover shows was “Readopted May, 2003, Revised May 2005,” provides that in an R-1A district the setback is a minimum of 30 feet (15 feet for cluster development). [§ 6.c.1.]
The property owner in question, who is apparently a builder, has already poured the footings to the residence.
The threshold question is whether the 40 foot setbacks in the approved and recorded plat, or the minimum of 30 foot setback provided for in both the city’s subdivision and zoning ordinance, apply to the property?
The answer is that the 40 foot setback provided for in the plat applies, which means that the building permit issued to the builder was not valid. The reason is found in the city’s present subdivision regulations:
These regulations shall govern all subdivision of land within the Planning Region, except any subdivision, the plat of which has been registered prior to the adoption of these regulations, or the division of and plats of land petitioned by the owners among themselves either in court or by deeds.
The very strong implication of that provision is that the setback requirements reflected in the plat approved and registered as to the property in question still apply. It is difficult to reach any other decision. For that reason alone a change in the setback requirements with respect to the plat that includes the property in question and which was approved and recorded would require action on the part of the planning commission to apply the setbacks contained in the city’s present subdivision regulation (and zoning ordinance). That action is apparently within the authority of the city. It is said in 4 Anderson’s American Law of Zoning, § 25:23 that:
Absent any statutory protection, land included in a newly improved plat which has been approved by the planning board and filed in the appropriate office is as vulnerable to changes in the zoning regulations as in all other land in the Community. [Citing several cases.]
4 Rathkopf, The Law of Zoning and Planning, § 70:24 says:
In the absence of a statute conferring vested rights upon a subdivider, the rules relating to vested rights in a subdivision are generally the same as to those relating to building permits. Vested rights can be secured by a subdivider in a particular subdivision plat where his position has been changed by the installation of improvements in reliance upon the grant of final approval. Thus, where site improvements for a residential subdivision have been installed, this would ordinarily constitute a sufficient change of position to secure vested rights, as against an amendment changing the zoning classification of the property to one in which residential use was prohibited, since such an amendment would render useless the improvements installed. Where an amended ordinance relates only to lot size or other restrictions with respect to development under which the site improvements made under the original approved subdivision plat would be equally useful or valuable, however, a vested right in the subdivision as approved could not be claimed on the basis of the installation of those improvements.
There are statutes in some states that lock-in development according to the recorded and approved plat for a certain number of years. There is no such statute in Tennessee.
The City did subsequently adopt subdivision and zoning regulations that conflict with the setback requirements contained in the plat governing the property in question, but those subdivision regulations provided that they would not apply to previously approved and recorded platted property.
Let me add here that if the city at some point wishes to apply present subdivision and zoning regulations to already platted property, it should proceed with caution. A quick perusal of many of the cases on this question indicates all of them appear to involve developers unhappy with subdivision or zoning regulations adopted after the approval of either the preliminary or final plat that for one reason or another make development less advantageous. I can find only one case in the United States where homeowners have asserted that their investments in their neighborhoods gives them a vested right to rely upon a pre-existing plat to deny property owners the right to build according to subdivision or zoning regulations adopted after the plat was approved and recorded. The homeowners were successful in that case, but they were aided by some peculiar facts. But I still doubt that where all the residences in a particular neighborhood adhere to a certain setback requirement contained on an approved and recorded plat, the courts, absent some good reason, would uphold more recent and liberal conflicting setback requirements.
But does the builder’s investment in the construction of the footings give him any right to continue construction of the residence to completion?.
The answer is no.
In some Tennessee cases where a building permit has been erroneously issued, and the permittee has accrued substantial expense in reliance on the permit, the permit cannot be revoked. The point at which that can happen in Tennessee is not clear. In Howe Realty v. City of Nashville, 141 S.W.2d 9094 (1940), a building permit was accidentally issued by an assistant to the supervisor of buildings after the supervisor of buildings had been advised by the city law department not to issue a permit. The permit was cancelled before any construction had begun on the project for which the permit had been issued. In upholding the cancellation of the permit, the Court, citing 43 C.J. 349, declared that:
As a general rule, a building permit has none of the elements of a contract and may be changed or entirely revoked, even though based on a valuable consideration, if it becomes necessary to change or revoke it in the exercise of the police power. Applicant’s property is not exempt from the operation of subsequent ordinances and regulations legally enacted by the corporation, as for instance, his property may be subject to an ordinance or regulations extending the fire limits. But when once the proper authorities grant a permit for the erection or alteration of a structure, after applicant has made contracts and incurred liabilities thereon, he acquires a kind of property right on which he is entitled to protection; and under such circumstances it is generally held that a permit cannot be revoked without cause or in the absence of any public necessity for such action. [At 906] [Emphasis is mine.]
In Haymon v. City of Chattanooga, 513 S.W.2d 185 (Tenn. App. 1973), the city adopted an illegal zoning change that permitted the plaintiffs to construct some apartment buildings. The plaintiffs were issued a building permit, and spent $35,000 on construction when the city revoked the permit. The Court upheld the revocation of the permit, reasoning that:
It seems proper here to note that a building permit is not a contract and may be changed or entirely revoked even though based upon a valuable consideration if necessary in the exercise of the police power. Howe Realty Co. v. City of Nashville, 176 Tenn. 405, 141 S.W.2d 9094; Law of Zoning, supra. p 1158. See also Moore v. Memphis Stone & Gravel Co. 47 Tenn. App. 461, 339 S.W.2d 29... It is strongly contended however, that a court of equity should hold the City estopped to revoke the building permit after complainants have expended large sums of money relying upon the validity of the permit. While we are not unsympathetic with the plight in which complainants find themselves, we cannot accede to this contention. [At 188] [Emphasis is mine.]
In the case of Chickering Ventures, Inc. v. Metropolitan Government of Nashville & Davidson County, 1988WL 133527 (Tenn. Ct. App.1988), it was said that the possession of a valid building permit is a prerequisite in determining whether the builder has a vested interest in continuing the particular land use or finishing the particular project at issue. In that case, the Court pointed out that the developer was not able to place “good faith reliance” upon the building permit issued by the city because under the facts the permit was invalid. As to the investment the developer had made in the property under the invalid permit, the Court pointed to Haymon v. City of Chattanooga:
With respect to the amount expended prior to the revocation of the building permit, we are not referred to any authority on what constitutes “substantial expenditures.” In Haymon v. The City of Chattanooga, 513 S.W.2d 185 (Tenn. Ct. App. 1973), the court held that the expenditure of $35,000 in the construction of a foundation for an apartment building was not sufficient to give the property owner a vested right to continue construction. We find that case to be persuasive authority.... [At 3]
That case is unreported; it has less precedential value than reported cases. But it is factually similar to Haymon v. City of Chattanooga, and its result is consistent with it.
In spite of Haymon v. City of Chattanooga, what constitutes “substantial investment” is not entirely clear. The Tennessee Supreme Court said in Howe Realty Co. v. City of Nashville, 141 S.W.2d 904 (1940), with respect to “vested rights” that, “...the degree to which actual construction may have progressed..., appears to play a very important part in the attitude of the courts.” [At 906] In State ex rel. SCA Chemical Waste Services, Inc. v. Konigsberg, 636 S.W.2d 430 (Tenn. 1982), the Court held that the plaintiff had no vested right in pre-existing zoning regulations when he applied for a building permit for a chemical waste treatment plant but had not begun construction nor even purchased the land upon which the plant was to be built. The Court declared that, “It is well-settled that rights under an existing ordinance do not vest until substantial construction or substantial liabilities are incurred relating directly to construction.” [At 437] [Emphasis is mine.]
The builder in your question would probably lose based on the dollar investment in the footing. I am familiar with the cost of footing, arising from the fact that I have a son in the footings construction business. Absent some extraordinary circumstances, there is no way the cost of the footings for most houses would remotely approach $35,000. But there is more to Haymon about the question of whether erroneously issued building permits can be revoked than the cost of the investment the landowner has made in the property in question. In that case, the court said:
The principle is well established that where both parties have the same means of ascertaining the true facts that there can be no estoppel. Crabtree v. Bank 108 en. 483, 67 S.W. 797; Parkey v. Ramsey, 111 Tenn;. 302, 76 S.W. 812.
“It is essential, as a general rule, to the application of the principle of estoppel, that the party claiming to have been influenced by the conduct of declarations to another to his injury, was himself not only destitute of knowledge of the state of the facts, but was also destitute of any convenient and available means of ascertaining such knowledge, that where the facts are known to both parties, or both have the same means of ascertaining the truth, there can be no estoppel. Crabtree v. Bank, supra; Hankins v. Waddell, 26 Tenn. App. 71, 167 S.W.2d 694.
It is proper to add that, generally, the doctrine of estoppel does not apply to the acts of public authorities. State v. Williams, 207 Tenn. 695, 343 S.W.2d 857. [At 188-89]
In Haymon the Court pointed out that:
The record suggests...that the building inspector said enough to put complainants upon inquiry as to the existence of the covenant. In any event, the instrument creating the covenant and making it run with the land was of record complainants had constructive notice of its existence. It seems to be unquestioned that the narrow buffer strip would be to the disadvantage of nearby owners of residential property. We fail to see why they should suffer loss under all the circumstances of this case. [At 189]
In the City’s case, I do not know if the building inspector said anything to the builder that would give him a clue that there might have been a recorded plat requiring a setback of 40 feet existed. However, the plat was approved and recorded and was available to the property owner the same as it was to the building official who issued the permit. For that reason, he had constructive notice of its existence. The subdivision regulation itself provided that the regulations did not apply to preexisting approved and recorded plats. In addition, he is a builder,
and a builder who undoubtedly knew that other houses in the vicinity adhered to a 40 foot setback, which put him on constructive notice that the 30 foot minimum contained in both the subdivision and zoning regulations might not apply.
Furthermore, if I understand the facts correctly, the houses in the R-1A district in the vicinity of the residence in question lies are all 40 feet, pursuant to the recorded plat. For that reason, the property owner finds himself in the same position as the property owner in Haymon: “ It seems to be unquestioned that to narrow the buffer strip would be to disadvantage nearby property owners of residential property. We fail to see why they should suffer loss under all the circumstances of this case” [At 189]
The 2003 case of Far Towers Sites, LLC v. Knox County, 126 S.W.3d 52 (Tenn. Ct. App. 2003) (Appeal to Tenn. Supreme Court denied January 26, 2004), supports that conclusion, and appears to go even further by holding that one cannot achieve any vested rights at all in a building permit issued in violation of the zoning ordinance. There Far Tower obtained a permit from Knox County to build a telecommunications tower, renewed the permit several times, and was repeatedly assured by county officials the permit was valid. It invested $62,000 in improvements to the site. It was subsequently discovered by both the county and Far Tower that the tower site was in the Tennessee Technology Corridor, and that as a prerequisite for the issuance of a building permit by the county Far Tower was required to obtain a Certificate of Appropriateness under the Technology Corridor Development Authority Act. Because Far Tower had not obtained that certificate, Knox County shut down the project.
Far Towers argued that there are only two requirements to establish a vested right in a building permit; (1) the issuance of the permit by the responsible government agency, (2) making of contracts and incurring substantial liabilities in reliance on the permit. Far Towers further argued that, since no case expressly states that the permit must be validly issued, the validity of the issuance of the permit was immaterial. [At 63] The Court rejected those arguments, and accepted Knox County’s argument that under Moore v. Memphis Stone & Gravel Co., 47 Tenn. App. 461, 339 S.W.2d (1959), “a permittee can acquire no vested rights when a permit is issued in violation of the zoning ordinance.” [At 59]
The Court stuck to that position, rejecting Far Tower’s argument that the Court should adopt the Pennsylvania Supreme Court’s position in Petrosky v. Zoning Hearing Bd. Of Township of Upper Chichester, 402 A.2d 1385 (1978). In that case, the property owners, relying upon a building permit issued to them by the township, built a garage in accordance to plans they had submitted with their application for a permit. However, it was discovered seven months later that the garage violated the set back requirements, and the township ordered them to remove it or alter it to comply with the setback requirements. The Pennsylvania Court declared that, “We reject the notion that a citizen who does attempt to check the zoning statutes by making inquiry of the proper officials, who certainly should be expected to have knowledge about zoning, has not exercised due diligence.” [At 65]
The Tennessee Court of Appeals rejected Pennsylvania’s position:
We decline to adopt, as an absolute proposition, that a citizen can rely upon the advice and actions of a mid-level local county official pertaining to a zoning matter within that official’s area of responsibility in lieu of any independent research. It is certainly conceivable that such an official might not be well-versed in the legal intricacies of a thick zoning ordinance. It goes without saying that such official are of varying levels of education, training, intelligence, competence and most importantly knowledge and comprehension of the law pertaining to their official duties. “The ramifications of the broad “due diligence” proposition stated in Petrosky are too significant to prompt us to depart from the established precedent in the Moore case. If there is to be a departure from Moore, we believe it must come from the General Assembly or the Supreme Court...
In the instant case, as previously noted, Far Tower does not contest the obvious–all of the permits issued by Knox County in this case...were issued in violation of the Tech Acts and the Knox County Zoning Ordinance, i.e. they were all issued prior to the issuance of a COA.[Certificate of Appropriateness.] [At 66]
For those reasons, concluded the Court, Far Tower had no vested property right in and under the invalidly issued permit.
Far Tower also attempted to rely on Haymon to claim that the county should be estopped from denying the validity of the building permit. The Court turned aside that attempt, pointing to the limitations on estoppel when the person asserting it had equal ability to acquire knowledge that would have saved him from his damage, declaring that:
In the case at bar, Far Tower and the defendants both had access to the Tech Act and the Knox County Zoning Ordinance. Both documents were in the public domain. As we have previously noted, when both parties have “the same means of ascertaining the true facts there can be no estoppel. Haymon, 513 S.W.2d at 188.
There is nothing in this case to take it out of the general rule that “the doctrine of estoppel does not apply to the acts of public authorities.” Id. At 189. [At 68]
It appears to me that, if the facts I have at hand are correctly stated, the property owner does not have a valid building permit, and the city can “cancel” it.
Sidney D. Hemsley
Senior Law Consultant