Equitable Estoppel & Vested Rights in Tennessee


A right to continue development even in the face of a change in the rules of the municipality based on good faith construction efforts before the change in regulations.

Leading Case:

Howe Realty v City of Nashville, 176 Tenn. 405, 141 SW 2d 904 (1940)


The right to continue development vests after obtaining a building permit and substantial development has taken place.

Most property owners do not realize that even if they have a building permit, if the zoning or other development regulations are changed before substantial construction takes place, the permit may be revoked. As a result, it is important that construction begin promptly after obtaining a building permit in order to be in the best position to protect against any subsequent changes in zoning or other development regulations.


In Howe Realty, an applicant for a building permit to build a gasoline service station was granted the permit in a commercial zoning distric in Nashville. The local councilman felt this to be an inappropriate location for gas station and promptly re-zoned the property. Well, it took 2 to 3 months.

In the meantime, the permittee spent something like $30,000 on site development prepatory to actual construction. The court held that this was insufficient and the new zoning (residential) was upheld.


While the vested rights doctrine is skewed sharply in favor of the municipality, the municipal codes official must be careful to distinguish those situations which are defensible from those which are not. The opinion of local legal counsel is imperative in these situations.

Other Authority:

A case from New York is perhaps the most extreme example of the vested rights doctrine. In this case, the developer had constructed a building of over 25 stories under an invalidly issued permit. The city ordered several of the top stories be taken down, at great cost.

As you might guess, the property owner sued. And lost!! The court unequivocally held that the city was not prevented from enforcing the code simply because of a mistake on both sides. The developer was the one at risk.

I do not think that a Tennessee court would look at it quite that way. This case is interesting because of the rather extreme position taken by the New York Court of Appeals. I question whether this result would obtain here in Tennessee. But, certainly, Tennessee courts are very protective of municipal rights in this area, and only in clear cases will the developer be able to persuade the court that construction rights have vested.

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