Most land use and condemnation lawyers are familiar with the holding of Palazzolo v. Rhode Island, 533 U.S. 606 (2001). In Palazzolo, the U.S. Supreme Court repudiated the so-called “Notice Rule,” which held that post-enactment purchasers could not state a claim for a regulatory taking arising from restrictions adopted before they took title to the property. This was the law of New York. In Basile v. Town of Southampton,1 89 NY2d 974 (1997), cert den 522 U.S. 907, the Court of Appeals held:
Enactments which are legitimate exercises of police power, such as wetlands regulations here, do not effect a taking when a purchaser acquires property subject to such regulations. “The relevant property interests owned by [a purchaser] are defined by those State laws enacted and in effect at the time [title is taken] and they are not dependent on the timing of State action pursuant to such laws.” Matter of Gazza v New York State Dept of Envtl. Conservation, 89 NY2d 603, 616 (decided today). Since claimant took title to her property subject to wetlands regulations and the encumbrances of certain covenants, she cannot claim the value of the property without such restrictions.
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