With Measure 37, Transferability Up in the Air

By Edward H. Trompke

Lawyers are amusing themselves — and each other — coming up with creative arguments why rights granted under Measure 37 are or are not transferable. The Attorney General's office has written an opinion which decides the matter for state agencies until a court decision settles the question about whether the Attorney General's standards or some other standard should apply.

In the meantime, the following rules apply:

1. If a person transfers all his or her interest in property without protecting any Measure 37 rights, that person's Measure 37 rights are terminated upon sale.
   
   
2. If a person files a Measure 37 claim, completes development of the property, and then sells it, the rights are preserved. But, the status of the development is unclear. It is either (1) lawful for all future buyers because it is permitted, or (2) a non-conforming use that exists and is lawful, but may be terminated under certain circumstances (for example, if it is destroyed by fire some cities may not allow reconstruction).
   
   
3. There is a divergence of opinion about what happens when a person files a Measure 37 claim, and has it approved, but does nothing with those rights or does not complete the contemplated development. Some Measure 37 proponents believe that the rights are transferable because they have been preserved by obtaining approval of (or by filing) the Measure 37 claim. The Attorney General's opinion requires more. It states that substantial steps be taken to implement development that utilize the Measure 37 rights before those rights become transferable. The problem with that is that the Attorney General does not state specifically what substantial steps must be taken. They fall somewhere between filing an application for development and completing the development. For example, if a subdivision is the proposed development, something between filing the application and building the houses and streets to complete the subdivision allows transferability of the right to keep, use, sell, and resell the houses, streets, sewers, electric lines, and lots. A good middle-of-the road answer might be that the rights are transferable, either when the subdivision receives preliminary approval, or when the lots are surveyed, staked, and the plat map is filed for recording.

There are some attorneys viscerally opposed to Measure 37 who state that even then, the right is not transferable. For the following reasons, rights under Measure 37 must be transferable. Measure 37 is based upon the premise that an owner may use property in ways that were allowed at the time the person acquired either the property or an interest in the property, if a later land use regulation both restricts the use of the property and diminishes its value. Value is defined as the fair market value. If the rights protected under Measure 37 are not transferable, then there is no market for those rights. They go away upon sale or transfer of the land. Measure 37 could never restore (or create) any rights in the owner. If that were the case, then the great angst we all suffered from listening to political ads and rhetoric during the Measure 37 election was for nothing.

That is clearly not what the average voter thought, and that is especially true of what the partisans on either side of the election said they thought during the campaign. For example, consider the case of Dorothy English, the "poster child" for the Measure 37 campaign. Mrs. English stated that she wanted to use her property and develop it so that her children could live on it. Presumably, that meant for as long as they wanted to live there — even after she died. This was evident in the radio ads where she stressed her seniority and her voice emphasized it. If Mrs. English or her children built houses on the property, but were required to tear them down after her death, then her property had no changed market value to give rise to a claim under Measure 37. If, when she died everything must come down, there would be no value in building houses on the property. There could be, therefore, no loss in value measurable under Measure 37. That was not what the voters understood Measure 37 to mean. It meant that at some point, either Mrs. English, or her agents, could divide the property, build houses, live in them, and at some point, sell them at the changed market value.

The debate will continue and courts must decide the fine points, but one thing is clear: Measure 37 rights become transferable at some point in time.

This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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