Governments may sometimes take actions that limit the use of your property. Typically, when the government plans on taking your property for a public purpose they institute a condemnation action using their powers of eminent domain. A more insidious inverse condemnation example is when the government action does not produce an obvious taking, such as acquisition of your land to build a road, but nonetheless significantly impacts the landowner’s property value. In these instances, an Indiana landowner may bring an inverse condemnation lawsuit to hold the government accountable for the limitations they have created on your property.

Examples of Inverse Condemnation?

Inverse condemnation may be a direct, physical taking of or interference with real or personal property by a public entity. For example, inverse condemnation actions have been successfully brought in the following situations:

  • Where government construction caused flooding on a property
  • Where government construction caused sewage to escape onto a property
  • Where government construction caused an interference with land stability
  • Where government construction caused a significant impairment of access, or noise from overflying aircraft.

Zoning and the Taking of Landowner Property

Schuh V. State Example

An often overlooked consequence of government action is how zoning ordinances may affect a property owner. In some instances, the change in how a zoning ordinance affects a landowner may create a situation where the government has effectively “taken” the property by eminent domain.

A landowner can seek compensation in an eminent domain context where a zoning ordinance or other state action creates a substantial interference with private property and destroys or impairs a person or entity’s right to freely use and enjoy the property, along with the rights and interest in the property. State v. Jordan’s Pharmacy, 215 N.E.2d 32 (Ind. 1966). Several courts in Indiana have held that damages from an eminent domain appropriation which cause a property to be in violation of applicable zoning ordinances are compensable. State v. Stefaniak, 238 N.E.2d 451 (Ind. 1968).

In Schuh v. State, 241 N.E.2d 362 (Ind. 1968) the court held that when an eminent domain taking placed a property owner’s building in violation of applicable zoning ordinances, a taking occurred and the property owner must be compensated for the building. In Schuh, the State of Indiana condemned a strip of land in order to widen a highway. The widening of the highway caused a building on the property owner’s land to be situated closer to the highway than allowed by zoning ordinances. The landowner was not permitted to commence any new construction on the property until the building in violation of the zoning ordinance was torn down. Thus, the Court determined that the property owner should have been compensated for the value of the building as part of the damages resulting from the condemnation of his property because the property owner was no longer able to enjoy his right to freely use and enjoy the property.

In summary, when an eminent domain taking causes a property or buildings on a property to be in violation of applicable zoning ordinances, the fair market value of the entire building or property is included in the damage computation in the Court’s determination of compensation for the take.