Maryland Court of Appeals Decision: Developer 1, Conservation Group 0
The home building industry recently scored a victory in Maryland's highest court in a case where a land developer's fully-executed development agreement with a local government was under legal attack by a citizens' conservation group. 

The Queen Anne's Conservation Association, headquartered on Maryland's Eastern Shore, opposed development of K. Hovnanian Companies' proposed active-adult community in Queen Anne's County and raised a variety of legal objections to it, most of which were related to zoning.
 
In Queen Anne's Conservation, Inc. v. The County Commissioners of Queen Anne's County, the Maryland Court of Appeals ruled that the conservation group lacked standing to challenge the development agreement in court because the group had not exhausted all administrative remedies. Under the administrative appeals process, the group was required to appeal the matter to the local board of appeals — which it failed to do.

K. Hovnanian had already spent several years obtaining approvals for the proposed Planned Unit Development (PUD), so the case signifies a very important legal victory: Had the Court granted standing to the conservation group, the case would likely have lingered in the courts for another two or three years at a very high cost to the developer. 

The Court of Appeals determined under what circumstances and in which forum a third party could launch a collateral attack on development agreements executed by developers and municipal governments. Because the development agreement process is a relatively new land use tool in Maryland, the Court's ruling is instructive with regard to the significance of development agreements.

NAHB filed an amicus brief in the case on behalf of K. Hovnanian, and in doing so, advocated the importance of protecting the development agreement process from open-ended legal attacks by third parties after agreements have been executed. This point clearly resonated with the Court of Appeals, and the Court's opinion quoted extensively from NAHB’s brief. 

Development agreements, which serve the critical function of vesting developers' property rights, are vital to both the public and private sectors in fostering predictability and certainty in the development approval process. 

Allowing these agreements to be attacked at any time by third parties would be extremely damaging to the stability of the process by which land development is approved, financed and delivered. Fortunately for the building industry, the Maryland Court of Appeals agreed.

For more information on the case, Queen Anne's Conservation, Inc. v. The County Commissioners of Queen Anne's County, 2004 WL 1686626 (Md.), contact Jon Luther,  NAHB staff counsel, at 800-368-5242 x8329. [ return to top ]