Relating to Real Estate

Suppose you want to build a house. You submit plans to the local jurisdiction, the plans are reviewed, and you are issued a building permit. You build your house in accordance with the approved plans and the building permit. After your house is built, neighbors complain that the house does not meet the applicable front yard setback requirements. No problem, right? You built in accordance with the building permit so you are fine, right? Wrong. An erroneously issued permit can be voided and cause immense inconvenience (or worse), as occurred in In the Matter of the Petition of Angela Taylor, No. 2119 Sept. Term 2017, 2019 WL 2006012 (Md. Ct. Spec. App. May 7, 2019).

Guy Naylor purchased a residential lot on Roland Avenue in Baltimore City. He submitted plans and applied for a building permit to build a 4,000 square foot house on his 18,226 square foot lot. The plans depicted a 30 foot front yard setback from the house to the street to match the general residential setback for the zone of 30 feet. The City approved the building plans and issued a building permit for construction of the home with a 30 foot setback. Thereafter, Naylor constructed his house and received a use and occupancy permit from the City. Unfortunately for Naylor, a separate section of the zoning code required a front yard setback “averaging” with neighboring properties, which yielded a 40 foot front setback.

Naylor’s neighbors (including Angela Taylor, the named plantiff in the case) were apparently unhappy with the location of the home and complained to the City. The City realized it had made an error in approving a 30 foot setback instead of a 40 foot setback. Over a year after the building permit was issued, and after the City had issued a use and occupancy permit for the completed home, the City sent Naylor a letter advising that it had made an “error” in permit review and as a result the “structure as constructed on the Property is non-conforming with the Baltimore City Code.” The City instructed Naylor to apply for a variance to cure the 10 foot setback nonconformity.

Naylor applied for a variance, which was denied. He then appealed to the City Board of Municipal and Zoning Appeals (“BMZA”). The BMZA dismissed the variance appeal on the basis that it lacked jurisdiction because neither the original building permit nor the subsequent use and occupancy permit had been revoked (or appealed).

In response to the BMZA action, the City revoked the use and occupancy permit for the property. Naylor appealed the revocation of the use and occupancy permit and, in conjunction with the appeal, requested a 10 foot front yard setback variance. After a hearing, the BMZA granted Naylor’s request for the variance. The BMZA found that Naylor satisfied the requirements for a variance by proving the two necessary elements: (a) the “uniqueness” of his property and (b) he would suffer “practical difficulty or unnecessary hardship” in complying with the 40 foot (not 30 foot) front yard setback requirement. Of significance to the disposition of the case, the parties conceded that the elements of uniqueness and hardship needed to be proven as of the date of issuance of the original building permit, not at the time the use and occupancy permit was revoked.

The aggrieved neighbors appealed the BMZA variance approval to the Circuit Court for Baltimore City. The circuit court affirmed the BMZA decision. The aggrieved neighbors further appealed to the Court of Special Appeals. The neighbors argued that the BMZA erred in granting the setback variance because Naylor had not sufficiently demonstrated (a) uniqueness of his property, nor (b) “practical difficulty or unnecessary hardship” in complying with the 40foot setback requirement as of the date of issuance of the original building permit.

In reviewing the decision of the BMZA, the Court of Special Appeals found that there was sufficient evidence in the record to support the BMZA’s finding that the property met the “uniqueness” requirement for granting a variance. The court found, however, that the BMZA did not sufficiently set forth the factual basis for finding “practical difficulty.” The court vacated and remanded the case for further proceedings, instructing the BMZA to “articulate the particular practical difficulty caused by the Property’s unique physical characteristics.” The court wanted specific findings of facts – not merely conclusions or recitations of statutory criteria – so that it could properly review a decision to grant a setback variance. The case will go back to the BMZA for additional proceedings.

Wow! How could anyone not feel sympathy for this homeowner? It seems Mr. Naylor properly sought and obtained City permits, yet he still became embroiled in extensive legal proceedings. Clearly he or his planner/builder erred in preparing plans based upon the generally applicable 30 foot setback without accounting for the “averaging” 40 foot setback imposed by another section of the Code. But this was a subtle error; City zoning and permitting offices made the same “error.” The City issued building permits and a use and occupancy permit for Naylor to build and occupy the home with a 30 foot front yard setback. Isn’t Mr. Naylor entitled to rely upon the City’s permits as being valid? The Taylor case makes clear that the answer is: “No – if a permit is issued in error, it can be revoked.”

Practice Pointers

The Taylor case is an unreported opinion and cannot be cited in court as either precedent or as persuasive authority. Nonetheless, the case is instructive on several points.

• An erroneously issued permit can be revoked. The Taylor case is not unique in that regard. A number of Maryland appellate cases have held that a permit erroneously issued by a local jurisdiction is invalid. See, e.g.,Marzullo v. Kahl, 366 Md. 158 (2001); Lipsitz v. Parr, 164 Md. 222 (1933). People need to be aware that a permit issued in error can be revoked. It is much better to get the permit right, rather than simply get the permit.
   
• Make certain that an order granting a zoning variance sets forth specific factual support for each element of a variance. Maryland appellate courts have insisted that administrative bodies/zoning boards set forth sufficient factual findings to support the grant of a variance or other administrative relief. It is not sufficient for a board to simply state that it “factually finds” that there is “uniqueness” and “practical difficulty” in a case – the facts underlying those findings must be set forth in the decision. If a decision is issued without sufficient recitation of factual findings, a practitioner should request that the board “clarify” the decision with the addition of factual findings suggested by the practitioner. A request for “clarification” might prolong a board proceeding, but it might also avoid a remand from an appellate court that reviews the board’s decision.
   
• Setback Statute of Repose. There is a statute in Maryland that limits causes of action based upon the failure of a building to comply with setback requirements. Section 5-114 of the Courts & Judicial Proceedings Article generally provides that a person cannot initiate an action arising from the failure of a building to comply with a setback restriction more than three years after the date upon which the violation first occurred. A subsection of this statute is specifically applicable to local government actions if the permit was wrongfully or erroneously issued. This statute was not mentioned or applied in the Taylor case, presumably due to the fact that the violation proceedings started less than two years after issuance of the building permit.
   
• Municipal Estoppel – could it apply? Estoppel can be a defense to a number of causes of action. An estoppel can arise where (a) there is voluntary conduct or representation of a party that (b) is reasonably relied upon by another person, and (c) the other person takes action to his detriment or changes his position to his detriment. See, e.g., Heartwood 88, Inc. v. Montgomery County, 156 Md. App. 333 (2004). Generally, courts are reluctant to apply estoppel concepts against a local government due to a concern that local government should not be bound by or precluded from taking governmental actions due to the errors or unauthorized conduct of its employees. See Marzullo, supra; Lipsitz, supra. Courts have, however, suggested that municipal estoppel might apply in “the exceptional case where injustice sufficient to overcome the superior and generally overriding claims of the public would result if estoppel was not invoked against the [municipality].” SeeSchaefer v Anne Arundel County, 17 F.3d 711, 714 (4^th Cir. 1994), quotingCity of Baltimore v Chesapeake Marine Ry. Co., 233 Md. 559, 582 (1964). In Permanent Fin. Corp. v. Montgomery Cty., 308 Md. 239, 250 (1986), the Court of Appeals cited Lipsitz for the proposition that “[a] municipality may be estopped by the act of its officers if done within the scope and in the course of their authority or employment, but estoppel does not arise should the act be in violation of law,” and then found municipal estoppel in a case involving a commercial building in Montgomery County for which a building permit was issued to construct higher than the later-determined maximum height limitation.

The homeowner in Taylor (Mr. Naylor) might have sufficiently compelling facts to warrant an estoppel against the City. The homeowner might argue that the City is estopped from revoking the use and occupancy permit because (a) the City issued a permit, (b) the homeowner reasonably relied upon the City’s issuance of the permit and (c) the homeowner took action to his detriment – constructing a home – in reliance upon the permit. Mr. Naylor spent hundreds of thousands of dollars to construct a home based upon permits issued by the City. Mr. Naylor received a use and occupancy permit from the City to occupy the home. Realistically, the home cannot be moved rearward 10 feet to satisfy the setback requirements. These facts might persuade a court that this may be one of the rare cases where municipal estoppel should apply. It is arguably a significant “injustice” for the City to revoke a use and occupancy permit where a homeowner, after having spent significant money to construct a home in reliance upon the validity of a permit issued by the City, cannot practically move the house 10 feet to satisfy the setback requirement. The “injustice” that would be wrought by permit revocation seems to substantially outweigh the general interests of the public in enforcing the “averaging” setback distance and requiring that the home be set back an additional 10 feet from the street.  

For questions, contact Bill Shaughnessy (410) 576-4092.