What Supreme Court Nominee Brett Kavanaugh Could Mean for Real Estate

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President Donald Trump‘s pick for the U.S. Supreme Court, Judge Brett Kavanaugh, could influence some of the most controversial issues in the United States for generations to come.

But while commentators have been scrutinizing Kavanaugh’s record on hot-button topics like abortion and immigration, there’s been little discussion of what a more conservative court could mean for home buyers, sellers, and owners. And it could mean a great deal.

Retiring Supreme Court Justice Anthony Kennedy was often a swing vote, and that extended to property issues.

“The Supreme Court has done some very interesting things on land use law that affect homeowners,” says Robert Thomas, a real estate attorney specializing in land use and eminent domain at the Honolulu-based law firm of Damon Key Leong Kupchak Hastert.

Thomas expects more property-related cases will make their way to the Supreme Court, brought by people hoping that the new bench will increase their odds of a victory.

While it’s impossible to know just how Kavanaugh would vote on every issue, there are indications from the circuit court judge’s substantial legal record that he may favor looser environmental and financial regulations (which affect consumers). Thomas says he expects him to be more sympathetic to builders and homeowners.

Here are just a few of the real estate-related areas on which Kavanaugh, if confirmed by the U.S. Senate, could have the biggest impact.

Eminent domain could be checked

For years, when most Americans thought of eminent domain, they thought of it as the government seizure of privately owned land to use for new schools, roads, or utilities.

But Kelo v. City of New London changed those perceptions. In a slim 5-4 ruling, the Supreme Court decided in 2005 that local governments could use eminent domain to take private land when redevelopment would result in economic benefits to a community.

That means that homes could hypothetically be seized and turned over to a developer, and a mall or hotel could go up where they once stood. Property owners would be compensated for their losses. (In response, a number of states passed laws restricting this practice.)

Justice Kennedy was one of the five votes in favor of the ruling. If a similar case was brought before a more conservative court that favors limits on government power, the outcome could be different, say legal and real estate experts.

“Homeowners would be more secure in their property. The types of reasons homes could be taken would be reduced,” says Casey Pipes, a real estate attorney in Mobile, AL, who specializes in eminent domain, land use, and zoning issues.

One case that could test eminent domain is Knick v. Township of Scott, Pennsylvania, which the Supreme Court has agreed to hear this fall. It revolves around Mary Rose Knick, who challenged a local ordinance after grave markers were found on her property. The ordinance required residents who own properties where bodies are buried to open the land up to the public during daylight hours. At issue is whether property owners can take their cases to federal courts or must exhaust all of their legal options in state courts first.

It’s important to note that the Supreme Court doesn’t usually reverse its rulings unless there is some new aspect of a case, says John Weicher, director of the Center for Housing and Financial Markets at the Hudson Institute, a conservative-leaning think tank in Washington, DC.

Fewer environmental restrictions could be a boon to builders

It’s no secret that Kavanaugh is not a fan of what he believes is the overreach of many government agencies—including the U.S. Environmental Protection Agency. Loosening or rescinding various federal and environmental regulations could make more land available to builders and could give property owners more control over their land.

“Kavanaugh helped kill President Obama’s most destructive new environmental rules” and has “led the effort to rein in unaccountable independent agencies,” reads an email obtained by Politico that the White House sent to business groups about Kavanaugh’s nomination.

Legal experts say the Waters of the United States rule, which President Trump has suspended until it can be reviewed and rescinded or revised, is especially vulnerable. In 2015, the rule placed thousands of wetlands and other bodies of water under government jurisdiction.

This has made it more difficult, costly, and sometimes downright impossible to build new homes in these areas and for property owners to make certain improvements to their land. Depending on the situation, owners may need permission to make changes or face civil and/or criminal penalties.

With clearer regulations, fewer permits required, and fewer accompanying fees, developers would be more likely to explore putting up homes and entire communities on this land, says real estate attorney Thomas.

And although changing the rules could have real environmental repercussions, it could also ease the housing crunch a bit.

Weakening the scope of the Endangered Species Act, which protects more than 2,400 animal and plant species and their habitats, could also open up more land for builders. This year, the  Supreme Court is slated to hear Weyerhaeuser Company v. United States Fish and Wildlife Service, which revolves around the designation of private land in Louisiana as a critical habitat of the dusky gopher frog.

“[Kavanaugh’s] not anti-environment per se,” says environmental law professor Michael Gerrard, also the director of the Sabin Center for Climate Change Law at Columbia University in New York City. But his addition to the court “could mean a weakening of environmental protections.”

Consumer protections for home buyers, borrowers could be jeopardized

Much has been made of Kavanaugh’s opinion that the structure of the Consumer Financial Protection Bureau is unconstitutional. The agency was created by Congress and signed into law by President Barack Obama in response to the financial crisis. It protects consumers who use financial products and services, such as mortgages, credit cards, and student loans.

But Kavanaugh doesn’t so much oppose the consumer watchdog itself, or its protections for homeowners and borrowers obtaining the mortgages it provides, as the way it’s set up and how much power it wields. (Its director can only be fired for neglect of duty or inappropriate conduct.)

“Kavanaugh joins a court that already thinks government agencies have too much regulatory power,” says Stephen Wermiel, a professor of constitutional law at American University’s Washington College of Law. “He’ll be a strong fifth vote to spread that view.”

If the agency was restructured to have less power, it could become harder for ordinary people (such as home buyers) to bring lawsuits before the courts—and win them, says Linda Jun, senior policy counsel at Americans for Financial Reform, a Washington, DC-based nonprofit organization.

“I’d be concerned about the lessening of consumer protections as a result,” she says.

However, no one should panic just yet. Kavanaugh’s views on curbing the reach of government are similar to Kennedy’s, says Ilya Shapiro, a senior fellow in constitutional studies at the Cato Institute, a libertarian think tank in Washington, DC.

In the end, which cases the nation’s highest court hears may be at least as important as what it decides. It only takes four justices to agree to hear a case.

“The question is: What is this guy interested in?” real estate attorney Thomas says. “That’s where he will make a significant difference.”

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Source: Housing Trends Feed