Should Your Property Rights be Subject to Your Neighbor’s Veto?

MILAD IMAN, INSTITUTE FOR JUSTICE

Imagine a law giving bureaucrats unbridled discretion over your property rights. It would provide no standards. City officials could stop you from using your property—such as putting up a fence or planting a tree—for arbitrary reasons, or, indeed, for no reason at all. And you’d have no one to appeal their decisions to.

Now imagine a law vesting this unbridled discretion in a neighbor’s hands instead of a government agent’s. In other words, you’d need to get your neighbor’s permission to use your property the way you wanted. And your neighbor could withhold that permission for any reason whatsoever, even a petty, years-old grudge. If you objected to your neighbor’s decision on your property rights, you’d be out of luck—the neighbor’s decision would be final, and no one could overturn it.

Sadly, the law I’m describing is anything but hypothetical. “Consent statutes”—which condition people’s rights on their neighbors’ approval—are common in land-use law. For example, one Boston suburb—Brookline—has been considering an ordinance that’d require certain condominium owners to get their neighbors’ unanimous consent to use their condo as a short-term rental (even if their condominiums’ by-laws allowed short-term rentals). Meanwhile, case reporters are full of decisions nationwide addressing the constitutionality of similar laws enabling a neighbor’s veto over homeowners’ rights.

So what do these decisions have to say about a neighbor’s veto? It’s complicated. One line of cases holds that the government can’t delegate coercive power to private parties which they can then wield over their neighbors. But another line holds that the government can require property owners to get their neighbors’ permission before doing something that’s otherwise prohibited. Confused? You’re not alone.

Luckily, though, there’s a way out of this doctrinal morass. While it can make sense letting private parties veto their neighbors’ nuisances, it doesn’t make sense giving private parties unchecked authority to stop their neighbors’ other land uses. And fortunately, the U.S. Supreme Court held as much.

Unfortunately, this precedent is old and, sometimes, misapplied. But it’s never been overruled, and legislatures should still follow it.

Courts should too. That means engaging with specific facts to determine which land uses are actually nuisances that neighbors can legitimately veto, and which land uses are not.

Below, I’ll summarize the key precedent nullifying (and upholding) laws with a neighbor’s veto, explain why this veto should be limited to nuisances, and discuss next steps for legislatures and courts.

The Neighbor’s Veto Is Dead, Long Live the Neighbor’s Veto

In a 1912 decision, Eubank v. City of Richmond, the U.S. Supreme Court struck down a neighbor’s veto as unconstitutional. But five years later, in Thomas Cusack Co. v. City of Chicago, the Court upheld a different neighbor’s veto. The difference between these cases has been where courts ground their analysis ever since.

Let’s start with Eubank. That case involved a setback ordinance that let private parties establish binding building lines. Once two thirds of property owners abutting a street decided to set a building line between 5 and 30 feet, the government had no discretion to alter this boundary.

According to the U.S. Supreme Court, this delegation to private parties violated due process. As the Court emphasized, the government had “conferr[ed] the power on some property holders to virtually control and dispose of the property rights of others and “create[d] no standard by which the power [was] to be exercised.” 226 U.S. 137, 143–44. Hence, property owners who wanted a building line could “do so solely for their own interest, or even capriciously.” Id. at 144. Just as a law would violate due process if it put this unbridled discretion in a government agent’s hands, it violated due process to put this power in private parties’ hands.

But in the 1917 Cusack case, the U.S. Supreme Court distinguished Eubank. The ordinance at issue in Cusack prohibited people from building billboards in residential areas unless they got written consent from a majority of neighboring property owners. The Supreme Court held that this neighbor’s-veto provision did not violate due process.

So why was a neighbor’s veto unconstitutional in Eubank but constitutional in Cusack? According to the Supreme Court, the difference was that the ordinance in Eubank let property owners veto land uses that were otherwise legal whereas the ordinance in Cusack let property owners waive restrictions on land uses that were otherwise prohibited:

A sufficient distinction between the ordinance [in Eubank] and the one [in Cusack] is plain. The former left the establishment of the building line untouched until the lot owners should act. …. The ordinance in [Cusack] absolutely prohibits the erection of any billboards in the blocks designated, but permits this prohibition to be modified with the consent of the persons who are to be most affected by such modification. The one ordinance permits two thirds of the lot owners to impose restrictions upon the other property in the block, while the other permits one half of the lot owners to remove a restriction from the other property owners.

242 U.S. 526, 531.

But why should this distinction matter? Whether a neighbor’s veto is a prohibition on what’s otherwise allowed or a waiver from what’s otherwise prohibited can turn on nothing more than legislatures’ labeling games. To use the earlier example of a short-term-rental ordinance, one legislature might purport to allow homeowners to do short-term rentals unless their neighbors objected while another legislature might purport to ban short-term rentals unless people’s neighbors consented. Under the logic of Cusack, the former neighbor’s veto would be unconstitutional while the latter would be constitutional.

Whether your neighbors can veto your property rights shouldn’t turn on semantics. Instead, your ability to use your property the way you want should turn on the character of your land use. Fortunately for property owners, the U.S. Supreme Court confirmed this point in a case after Cusack.

The Neighbor’s Veto Should Be Limited to Nuisances

About a decade after Cusack, in the 1928 case of Seattle Title Trust Co. v. Roberge, the Supreme Court clarified that a neighbor’s veto’s constitutionality depends on whether it is a veto over nuisances or not. Roberge concerned a zoning ordinance that, like a typical zoning ordinance, forbade all land uses not expressly allowed. (You might have thought that the American way is that all things not forbidden are allowed, but, alas, zoning law inverts this principle.) This zoning ordinance allowed philanthropic homes for the poor and elderly in residential districts, but only if two-thirds of property owners within 400 feet of a proposed philanthropic home consented to one.

When the owner of a philanthropic home for the elderly poor challenged this neighbor’s veto, the U.S. Supreme Court agreed that it violated due process as an impermissible delegation of power. According to the Court:

The section purports to give the owners of less than one-half the land within 400 feet of the proposed building authority–uncontrolled by any standard or rule prescribed by legislative action—to prevent the . . . proposed home. . . . There is no provision for review under the ordinance; their failure to give consent is final. They are not bound by any official duty, but are free to withhold consent for selfish reasons or arbitrarily and may subject the trustee to their will or caprice.

278 U.S. 116, 121–22.

But wasn’t this neighbor’s veto just like the one upheld in Cusack? Just like in that case, there was a general prohibition on a land use and property owners needed their neighbors’ consent to waive that prohibition. As the Roberge Court explained, Cusack was inapposite because it involved a nuisance whereas Roberge did not:

It is not suggested that the proposed new home for aged poor would be a nuisance. We find nothing in the record reasonably tending to show that its construction or maintenance is liable to work any injury, inconvenience or annoyance to the community, the district or any person. The facts shown clearly distinguish the proposed building and use from such billboards or other uses which by reason of their nature are liable to be [o]ffensive.

Id. at 122. In other words, a neighbor’s veto over a nuisance was constitutional while a neighbor’s veto over other land uses was not.

This distinction makes sense. Nuisances are generally prohibited because of the harm they impose on third parties. But if those third parties are willing to allow these prohibited land uses, consent statutes can give private parties an opportunity to bargain around default rules. That said, if those default rules ban benign land uses—like philanthropic homes for the indigent—then a neighbor’s veto is nothing more than a way for “NIMBYs” to stop whatever they dislike.

Unfortunately, modern courts have not always heeded the Roberge Court’s distinction between nuisances and other land uses.

Legislatures and Courts Must Determine Which Land Uses Are Nuisances

While lots of cases from the 1910s and 1920s were overruled in the decades ahead, EubankCusack, and Roberge were not. As Professor Sasha Volokh chronicles in this informative law-review article, several modern courts have approvingly cited these three cases.

That said, courts haven’t always applied these precedents consistently or faithfully. Consider the case of Silverman v. Barry, which concerned a District of Columbia law that prohibited converting apartments to condominiums without tenants’ consent. After a trial judge granted a motion to dismiss a challenge to this law, a three-judge D.C. Circuit panel reversed the judge because “the Supreme Court ha[d] held this sort of delegation unconstitutional” in Eubank and Roberge. 727 F.2d 1121, 1126 (D.C. Cir. 1984). When the trial court dismissed the case again on remand, a different three-judge D.C. Circuit panel found that this delegation was constitutional under Cusack. According to the court, a “statute survives due process challenge on this ground if it enacts a general prohibition and then delegates to private citizens the authority to waive that prohibition.” 845 F.2d 1072, 1087 (D.C. Cir. 1988).

But this latter decision completely ignored Roberge. As Roberge shows, a delegation isn’t constitutional merely because it lets private parties waive a general prohibition. Rather, the question is whether the land use that’s prohibited is a nuisance or not. And there was no discussion—let alone indication—in Silverman as to whether converting apartments to condominiums would constitute a nuisance.

Going forward, it’s incumbent on legislatures and courts to keep the relevance of nuisances in mind when considering a neighbor’s veto. As for legislatures, municipalities like Brookline shouldn’t give private parties power to veto benign uses of property, like short-term rentals. And as for courts, it’s their job to carefully probe neighbor’s-veto laws to see if they correctly limit private power to controlling nuisances.

This task requires grappling with evidence. Cusack and Roberge are instructive. In the former case, there was “much evidence” introduced at trial showing that billboards neighboring property owners could veto were responsible for “fires[,] . . . offensive and insanitary accumulations[,] . . . and [a] shield for immoral practices, and for loiterers and criminals.” 242 U.S. at 529 (emphasis added). In the latter case, there was “nothing in the record’ showing that the philanthropic home that neighbor property owners could veto was “a nuisance.” 278 U.S. at 123 (emphasis added).

This distinction between nuisances and benign land uses should still carry the day—if your use of your property isn’t hurting anyone, then your neighbors shouldn’t have a veto to stop it.


Milad Emam is an attorney at the Institute for Justice. He joined IJ in August 2015 and litigates cases to secure free speech, economic liberty and property rights in both federal and state courts.


Used with the permission of the Institute for Justice.