Update: Lawsuits Challenging Raleigh’s Missing Middle Housing Reforms

Given the recent news that the developer of the Hayes Barton townhome community received approval of an amended plan for 17 townhomes, we thought it was time to provide an update on all of the Missing Middle litigation. As readers may recall, this proposed project spawned the first lawsuit challenging Raleigh’s Missing Middle reforms.

These reforms (TC-5-20 “Missing and Middle 1.0”) and (TC-20-2021 “Missing Middle 2.0”), along with (TC-3-22) aim to increase housing supply by allowing townhomes, duplexes, and similar multi-unit dwellings in areas that historically permitted only single-family detached homes. Several other proposed developments have prompted challenges to specific project approvals, as well as possible challenges to the underlying Missing Middle reforms.

In the Hayes Barton neighborhood, a developer sought administrative approval for an 18-unit townhouse community using only Missing Middle 1.0. Although the City approved the proposed development, several Hayes Barton homeowners appealed the approval to the Raleigh Board of Adjustment and lost. They then appealed to Superior Court, and the judge agreed with the home owners on one narrow ground: the developer’s proposed “Transitional Protective Yard” did not fully satisfy the requirements of the City’s Unified Development Ordinance (UDO). The developer opted not to appeal that particular ruling, so it stands. In his ruling, the Judge gave the developer 6 months to file an amended development plan that addresses the Transitional Protective Yard issue. Consistent with the Judge’s ruling, the developer filed an amended plan with the City and that plan was approved on April 4, 2025. The amended plan contains 17 townhomes instead of 18 but is otherwise quite similar to the original plan.

In a separate lawsuit, several Hayes Barton neighbors challenged the validity of all Missing Middle Housing reforms. The neighbors claim the City failed to provide mandatory notice to the public before adopting these ordinances, which could potentially invalidate them if the court agrees. The parties have nearly completed the discovery phase of the litigation. Next, the parties will likely ask the judge to rule on a variety of “dispositive motions.” These motions ask the court to decide the case without a full trial. Typically, when ordinances are challenged on procedural grounds, judges can rule on the legality of the adoption process without a lengthy trial. It’s also worth noting that the judge in this matter ruled that the neighbors improperly sued the developer because only cities have that power to enact ordinances. As a result, the court ordered the neighbors to reimburse the developer for the legal costs. The neighbors appealed that decision to the NC Court of Appeals, while the rest of the case continues in Superior Court. The litigation seeking to invalidate Raleigh’s Missing Middle reforms is likely to take at least 1-2 more years to wind its way through trial and potential appeals.

There is similar ongoing litigation involving a project near the Raleigh Country Club (RCC). There, a developer obtained staff approval for a 16-unit townhome community at 2501 Pool Road using both Missing Middle 1.0 and 2.0. The RCC appealed the staff approval to the City’s Board of Adjustment (BOA), but the appeal was denied based on a procedural issue. The BOA ruled that the wrong party filed the appeal challenging the administrative approval. That decision is now in Superior Court. It could take nine to twelve months for the judge to rule on this appeal, and potentially longer if appeals are filed. As in the Hayes Barton litigation, the developer owns the property in question. Thus, it’s reasonable to assume that the developer will ultimately develop the property regardless of how the litigation plays out.

Complicating matters is the possibility of another Missing Middle challenge from RCC, given that the same attorney who represents the neighbors in Hayes Barton also represents the Club. That attorney sent a letter to the City suggesting it might file another lawsuit challenging the Missing Middle reforms using similar arguments that the City failed to follow the required public notice procedures.

A third set of lawsuits, referred to as “restrictive covenant cases,” connects the Missing Middle reforms to a recent 2023 NC Supreme Court ruling. The Supreme Court decision made it easier to invalidate older neighborhood covenants that restrict properties to single-family-only uses. In some areas, developers have spotted an opportunity to remove these restrictive covenants, then use the Missing Middle reforms to build townhomes. Two examples in Raleigh include a proposed project at 524 and 528 Barksdale Drive and another at 12801 Strickland Road. The Strickland Road developer has already succeeded in removing the single-family restriction. The Barksdale Drive project received administrative approval for 2 townhomes, but must still resolve the underlying covenant litigation. The Strickland Road project is seeking administrative approval for 33 townhomes.

All of these legal battles raise questions for the future of Missing Middle projects in Raleigh. In Hayes Barton, for instance, the developer’s loss in Superior Court was based only on a narrow buffering issue. That allowed the developer to amend its existing plan and build something very close to the original approved plan. The same thing could occur in the Raleigh Country Club case, as that developer also owns the property and is likely prepared to pursue alternate approaches if necessary.

The broader challenge to all Missing Middle reforms remains in limbo while the courts consider the neighbors’ procedural arguments. At its core, the neighbors are arguing that these reforms were actually zoning map amendments, not mere text changes, and should have required mailed notice to every affected property owner. If a court agrees, Raleigh might decide to re-enact the same Missing Middle policies under the correct procedural rules, possibly through a large rezoning process where the City publishes half-page advertisements in the local newspaper twice. Another possibility is that a court might conclude the time window for challenging a zoning map amendment has expired, meaning the ordinances would remain valid. Until these legal questions are resolved, developers who build under the existing Missing Middle ordinances run the risk that a successful court challenge could invalidate the approvals that allow them to move forward.

On the political side, there is no guarantee that City Council would simply re-approve these ordinances if a court strikes them down, particularly given that many issues in local government can shift when political priorities change. Additionally, the recently passed Senate Bill 382 prevents cities from downzoning properties in many situations. This legislation complicates how Raleigh might tweak or replace its Missing Middle reforms.

Looking ahead, these matters will take time to get resolved, especially if the losing side continues to appeal up to the NC Supreme Court. Both the City and well-funded neighborhood groups appear ready to litigate extensively, which suggests an extended timeline. In the meantime, if you are a property owner or developer considering using the Missing Middle reforms, it is prudent to keep in mind the pending lawsuits and the financial risks they pose. At least for now, the City continues to approve applications, and some projects remain viable. However, until the cases are resolved, a degree of uncertainty lingers.

Read our comprehensive coverage of Missing Middle in Raleigh here.