How Long Does Statutory Vesting of Property Rights Last in North Carolina?

Navigating the duration of vested property rights in North Carolina can be complex and subject to state statutes and local ordinances. While a development permit generally creates granted property rights under N.C. Gen. Stat. § 160D-108(c), it's important to note that these rights are distinct from common law vested property rights and may be subject to limitations and requirements imposed by local ordinances.

Under § 160D-108(d), vested property rights last as long as the permit remains valid under the law, but there is an exception. If the work authorized by the license has not substantially commenced within one year of issuance, the vested property rights will expire. In other words, if there is a significant delay in starting the development project within the first year of obtaining the permit, the vested rights may be lost.

To determine the fate of vested property rights, it's essential to understand the concept of "substantial commencement." Once work on the project substantially commences, the property rights granted in the permit have vested, and they will remain protected as long as the license remains valid.

Given the complexity and potential nuances of statutory vesting in property rights, property owners and developers in North Carolina must consult with experienced land use attorneys who can provide guidance and ensure compliance with local ordinances and state statutes. Property owners and developers can protect their interests and navigate the regulatory landscape effectively by understanding the timing and conditions for the creation and duration of vested property rights. Upon issuance of a development permit, granted property rights are generally created (although the relevant local Ordinance can impose requirements and restrictions). These are vested statutory property rights that are distinct from common law vested property rights. When vested property rights are created (or exist under North Carolina common law), North Carolina statute, §160D-108(c), bars "... any action by a local government that would change, alter, impair, prevent, diminish, or otherwise delays the development or use of the property allowed by the applicable land development regulation or regulations..."

In North Carolina, obtaining a development permit creates statutory vested property rights distinct from common law vested property rights. These rights protect against actions by local governments that could hinder or delay the development or use of the property, as allowed by applicable land development regulations. However, these rights are not indefinite and can be subject to limitations.

Under § 160D-108(d), statutory vested property rights last "so long as the permit remains valid under the law." If the work authorized by the permit has not "substantially commenced" within one year of issuance, the vested property rights will expire. In other words, there is a time limit for starting the development project within the first year of obtaining the permit, and if there is a significant delay, the vested rights may be lost.

The concept of "substantial commencement" is essential in determining the fate of vested property rights. Once work on the project "substantially commences," the property rights granted in the permit have been awarded and will continue to be protected as long as the license remains valid.

It's important to note that even after vesting, the statutory vested property right can still expire if the development project remains uncompleted and if development work is intentionally and voluntarily discontinued for not less than 24 consecutive months.

But even this is complicated since the running of this 24-month discontinuance period is automatically tolled "... during the pendency of any board of adjustment proceeding or civil action in a State or federal trial or appellate court regarding" the property, the development project, the validity of a development permit, the use of the property or the existence of the statutory vesting period granted by section 160D-108.

For development projects that require multiple permits, the various durations and time limits begin to run from the issuance of the first permit. However, section 160D-108(e) states that "[f]or purposes of the vesting protections of this subsection, an erosion and sedimentation control permit or a sign permit is not an initial development permit."

To complicate matters even further, concerning multi-phase development projects, the vesting of property rights is seven years which begins to run from the issuance of the permit for the initial phase. See section 160D-108(e).In North Carolina, even after statutory vested property rights are created, there are conditions under which those rights can still expire. One such circumstance is if the development project still needs to be completed and there is intentional and voluntary discontinuation of development work for not less than 24 consecutive months.

However, the calculation of this 24-month discontinuance period is subject to certain complexities. The running of this period is automatically suspended, or "tolled," during the pendency of any board of adjustment proceeding or civil action in a State or federal trial or appellate court regarding the property, the development project, the validity of a development permit, the use of the property, or the existence of the statutory vesting period granted by section 160D-108. In other words, if there are legal proceedings related to the development project, the 24-month discontinuance period does not continue to run during that time.

For development projects requiring multiple permits, the various durations and time limits for vesting begin to run from issuing the first permit. However, it is essential to note that to vest protections under section 160D-108, an erosion and sedimentation control permit or a sign permit is not considered an initial development permit.

Additionally, in the case of multi-phase development projects, the vesting of property rights has a duration of seven years. This period begins with the permit issuance for the project's initial phase.

The complexities surrounding the expiration of vested property rights necessitate careful consideration and expert legal guidance. Property owners and developers in North Carolina should consult experienced land use attorneys to understand their development projects' specific timelines and requirements. Complying with the statutory provisions and understanding the tolling of periods during legal proceedings is essential to safeguarding vested property rights and ensuring the successful completion of development projects.

Note further that the vesting of property rights is not automatic. The statute contains a provision -- section 160D-108(h) -- regarding the process, which states in part:

"(h) Process to Claim Vested Right. - A person claiming a statutory or common law vested right may submit information to substantiate that claim to the zoning administrator or other officer designated by a land development regulation, who shall determine the existence of the vested right. The decision of the zoning administrator or officer may be appealed under G.S. 160D-405. On appeal, the existence of a vested right shall be reviewed de novo..."

As a side note, following the process to claim a vested right is extremely important. In a footnote, a recent North Carolina Court of Appeals case indicated that if the issue had been appropriately presented, the court would have rejected a claim for vested property rights since the applicant needed to follow the proper process in claiming a vested right. See Jubilee Carolina, LLC v. Town of Carolina Beach, Case No. COA18-1108 (Court of Appeals of North Carolina, October 15, 2019).

Section 160D-108 repeatedly recognizes and allows local governments to modify the statutory provisions to add a final layer of complication. For example, section 108(d) states that the vesting of property rights expires after a year if the project does not "substantially commence." However, the statute also states that a ".... local land development regulation may provide for a longer permit expiration period." Note that a local ordinance cannot shorten the period.

Contact Experienced Mecklenburg County Land Use Attorneys Today

For more information and to schedule a confidential consultation with experienced and dedicated zoning and land use attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our "Contact" page or give us a call at 704-370-2828. We handle land use, zoning, and condemnation legal matters in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.