Constitution 101: Property Rights

How does the Constitution protect your property? When can the government seize your house for public projects? And how did a single footnote clear the way for business regulations? Find out in part 9 of Legal Lad’s series about the U.S. Constitution.

Adam Freedman
November 30, 2012

Constitution 101: Property Rights

And now, your daily dose of legalese: This article does not create an attorney-client relationship with any reader. In other words, although I am a lawyer, I’m not your lawyer. In fact, we barely know each other. If you need personalized legal advice, contact an attorney in your community.

Constitution 101

This is the ninth installment of a new series on the U.S. Constitution and the Bill of Rights. For more on the Constitution, you can check out my new book, The Naked Constitution: What the Founders Said, and Why it Still Matters.

Life, Liberty and Property

Both the Fifth and the Fourteenth Amendments to the Constitution provide “due process” protections for “life, liberty and property.” As I explained in the previous episode in this series, courts have used the due process clause to scrutinize not only judicial due process, but also legislative due process, a concept known as substantive due process. We tend to hear a lot about courts and politicians protecting the rights to life and liberty – but we don’t hear so much about property. 

A Famous Footnote

One reason for this, believe it or not, is a single footnote in a 1938 Supreme Court decision. In United States v. Carolene Products, the Court refused to strike down a federal regulation that effectively put some dairy companies out of business. In Footnote 4 of the Court’s opinion, the justices embraced the concept of substantive due process – that is, the idea that the Court could strike down legislation that infringes on certain rights – but said that they would not strike down economic regulations so long as they have some “rational basis.” Unlike the doctrine of “strict scrutiny,” which we’ve seen in the context of First Amendment rights, the so-called “rational basis” test is a very lenient one. Courts will usually find that business regulations have some rational basis.

The Takings Clause

Another important constitutional safeguard for property is the Fifth Amendment’s Takings Clause, which states that “private property [shall not] be taken for public use, without just compensation.” On the one hand, the Takings Clause reaffirms the traditional government right of “eminent domain,” that is, the power to seize property for certain purposes. On the other hand, the Clause includes two important conditions: first, the property must be taken for “public use,” secondly, the property owner must receive “just compensation.”

Government Can “Take” Without Seizing

Experts disagree, however, on the basic question of what it means for the government to “take” property. If the government bulldozes your house and puts down a road, that’s pretty clear. But what if the government simply renders your property useless without literally taking away your legal title? The Supreme Court has held that, in certain circumstances, government regulation that deprives a property owner of all economic benefit of his or her property can count as a “taking.” For example, in 1992, the Court held that a state had effectively “taken” certain oceanfront property by prohibiting all development on the property.

What Is a “Public Use?”

Another area of controversy is the requirement that government takings must be for “public use.” Typically, this is understood to refer to basic government infrastructure that is available to the general public: roads, parks, canals, schools, and so on. But in the case of Kelo v. New London, the Supreme Court considered a municipal plan to seize private homes and give the land to a private property developer, who would build an office park. On a 5-to-4 vote, the Supreme Court upheld the city’s plan, stating that the private office park satisfied a “public purpose” (namely, generating tax revenues) and that such a purpose satisfied the Fifth Amendment’s concept of public use. The Kelo decision was controversial, and led many state legislatures to restrict the power of eminent domain further than required by the Supreme Court.

The Contracts Clause

Another provision related to property rights is the Constitution’s prohibition against any state law “impairing the Obligation of Contracts.” On its face, this provision – which appears in Article I of the Constitution’s main text – would seem to prohibit any law that impairs a person’s contractual right to acquire or use property. However, the Court has carved out exceptions for emergency situations – such as Depression-era laws that prevented banks from foreclosing on delinquent mortgages.

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