August 1, 2014

Princeton, NJ August 1, 2014 --- In a newly issued decision, the Superior Court has determined that a State regulation permanently restricting the resale of so-called Mt Laurel housing does not apply to homes built in the 1980s and 1990s. The decision, which potentially affects thousands of families who bought low or moderate income homes during that period, was issued in a case brought by Hill Wallack LLP on behalf of 160 homeowners against the Township of Mahwah.

The plaintiff homeowners purchased their homes with a deed restriction that required that if the homes were resold during the next 25 years, the homes could be resold only to other low or moderate income families and only at below market prices. The deed restriction provided that after the 25-year control period, the homeowners would be free to sell to any buyer at any price. The deed restriction was established in accordance with a court order entered in 1984 in exclusionary zoning litigation involving Mahwah Township.

Mahwah attempted to override this deed restriction on the grounds the so-called Uniform Housing Affordability Control (UHAC) regulation issued by the State in 2004 required the town to restrict future sales forever and that the regulation was retroactive—it applied even to homes built and occupied long before 2004.

In its decision, the court rejected Mahwah’s interpretation of the UHAC regulation. Accepting the arguments made by Stephen Eisdorfer, Esq. and Thomas F. Carroll, Esq. of Hill Wallack LLP, the court found that the UHAC regulation applied only to homes newly constructed after the effective date of the regulation. It did not apply retroactively to the plaintiffs’ homes constructed many years earlier.

Stephen Eisdorfer, Esq. stated: “The public policy when the Mahwah homeowners bought their homes was that low and moderate income households should be able to use the appreciation in the value of their affordable homes as a means of accumulating assets that would lift them out of poverty in precisely the same way that other homeowners do so. The deed restrictions for their homes reflected this policy. The court decision in this case holds that UHAC regulations do not operate retroactively to override these deed restrictions. This benefits not only the homeowners in Mahwah, but also thousands of other homeowners throughout the state who bought low or moderate income homes in the 1980s and 1990s.”

The UHAC regulations are sometimes referred to as the 95/5 rule because it provides that if a low or moderate income home is sold after the expiration of the period of controls, the town may take 95 percent of the increase in value.

The court’s decision was not a final judgment. It has scheduled further proceedings for September 2014. For further information concerning this critically important decision, readers are encouraged to contact Thomas F. Carroll, III, Esq., or Stephen Eisdorfer, Esq., of Hill Wallack LLP, at 609-924-0808.

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