Pakdel v. City and County of San Francisco

A married couple partially owns a multi-unit residential building in San Francisco. When the city approved their request to convert the building from a shared-ownership arrangement into individual condominiums, it required them to offer their tenant a lifetime lease. The couple asked the city to either exempt them from that requirement or pay them for it. The city refused both times and threatened enforcement action if they did not comply. The couple sued in federal court, arguing the lifetime-lease requirement was an unconstitutional government taking of their property.

Can a property owner sue a city in federal court over a regulation they say amounts to an unconstitutional taking, even if they did not follow every step of the city's administrative process before asking for relief?

Yes — property owners can bring their federal lawsuit once the government has reached a definitive, concrete position, without having to have followed every administrative procedure along the way. The Court held that the "finality" requirement for takings claims — the rule that a court won't hear a property-rights challenge until the government has made up its mind — is a modest one. All a property owner must show is that there is no remaining question about how the government's rule applies to their specific property.

Here, San Francisco had clearly reached such a position: the city twice denied the couple's requests and threatened them with enforcement action. That was final enough. The Ninth Circuit's additional demand — that the couple should have used the city's prescribed administrative procedures to seek an exemption before suing — was really an exhaustion requirement in disguise. The federal civil-rights law the couple sued under carries a longstanding rule that plaintiffs do not have to exhaust state administrative remedies before going to federal court, and Congress has not changed that rule for property-rights plaintiffs.

Property owners who believe a government regulation illegally takes their property can now go straight to federal court once the government has given a definitive answer — even if they did not follow every prescribed administrative step to get that answer. This prevents local and state governments from blocking federal lawsuits by pointing to procedural missteps that did not change the government's firm position.

The case returns to the Ninth Circuit to reconsider the couple's takings claim on the merits. The Ninth Circuit may also revisit their alternative theories — including whether the requirement amounts to an unconstitutional exaction or physical taking — in light of the Court's contemporaneous decision in Cedar Point Nursery v. Hassid. The Supreme Court's ruling on finality is a final merits decision and will govern future takings ripeness disputes in the lower courts.

The Court does not decide whether San Francisco's lifetime-lease requirement is actually an unconstitutional taking; that question goes back to the lower courts. The ruling also does not say that a property owner's failure to follow administrative procedures is always irrelevant — it may still affect the merits of the claim or the amount of damages recoverable.