January 1, 1900

by Brooke E. Newborn

While certain important court cases affecting the real estate industries decided since last year’s Atlantic Builders Conference are addressed at length elsewhere in this edition, this article highlights other noteworthy rulings in New Jersey during the past year.

Affordable Housing

The Appellate Division, in In the Matter of the Adoption of N.J.A.C. 5:94 and 5:95, invalidated COAH’s “growth-share” rules and the regulations permitting municipalities to provide affordable housing without offsetting benefits. In this appeal, brought by Hill Wallack LLP on behalf of the NJBA, the court also struck down COAH’s rule allowing municipalities to age-restrict up to 50% of their affordable housing obligation. The court also held that the use of “filtering” in reducing the statewide housing need was unsupported by the record. COAH has since proposed new rules purporting to address the court’s concerns (see article elsewhere in this issue).

In In re Adoption of Uniform Housing Affordability Controls, the Appellate Division found that the affordability ceilings for units eligible to receive COAH credit, established by the New Jersey Housing and Mortgage Finance Agency (HMFA), are consistent with the agency’s legislative mandate. Although the court praised the appellant’s suggestions as to steps that COAH and HMFA could take to increase the availability of rental and ownership housing for low income families, the appellant’s disagreements with the regulation were not enough for the court to find the regulation to be invalid.

The Appellate Division also decided, in In the Matter of N.J.A.C. 19:3, 19:4, 19:5 and 19:6 and in New Jersey Builders Association v. New Jersey Meadowlands Commission, that the New Jersey Meadowlands Commission’s interim zoning regulations failed to meet its constitutional obligation to plan and to zone for affordable housing. However, the court held that the regulation was a reasonable response pending COAH’s revision of its rules. It also held that the New Jersey Sports and Exposition Authority is not responsible for affordable housing within its part of the Meadowlands.

Redevelopment Plans

In Gallenthin Realty Development Inc. v. Borough of Paulsboro, the plaintiff property owners sought review of the borough’s classification of their property as “in need of redevelopment,” which subjected the property to a taking by eminent domain. The New Jersey Supreme Court held that the pertinent redevelopment statute, N.J.S.A. 40A:12A 5(e), applies only to property that has become stagnant and unproductive due to issues of title, diversity of ownership, or other conditions of the same kind. It determined that the New Jersey Constitution does not permit government redevelopment of private property solely because the property is not used in an optimal manner. In light of this conclusion, Paulsboro’s redevelopment designation was invalidated.

Eminent Domain

In Raab v. Borough of Avalon, the plaintiffs sought compensation for the physical taking of their property by the defendant municipality, together with damages. The Appellate Division was called upon to determine the applicable time period within which a private party must commence an action to challenge the taking of private property by a public entity where the public entity’s actions failed to comply with any of the statutory provisions governing the use of eminent domain. The court held that the action must be filed within six years from the date of accrual, which is defined as the date the landowner becomes aware or, through the exercise of reasonable diligence, should have become aware, that he or she had been deprived of all reasonably beneficial use of the property.

In City of Passaic v. Shennett, the Appellate Division held that the city failed to comply with precondemnation requirements and that the property owner was not properly served with the complaint, nor a notice of the commissioners’ hearing. The court vacated the default judgment granting possession to the city, notwithstanding the property’s sale to a third party.

Condominium Associations

Density Variances

In Grubbs v. Slothower, the Appellate Division held that zoning boards of adjustment should apply a more relaxed standard of review for density variances than for use variances. The plaintiffs owned property in Rahway in a zone that permitted single-family dwellings. They submitted an application seeking to subdivide their single conforming lot into three new nonconforming lots and to construct two new one-family homes on two of the new lots, maintaining the existing home on the third. The application was denied by the zoning board of adjustment. The court concluded that the same review standard should not be employed for use variances and density variances, and it therefore reversed the board’s denial, and remanded the matter to the board for further proceedings.

Notice of Ordinances

In Cotler v.Township of Pilesgrove, the Appellate Division held that personal notice of an amended zoning ordinance is not required when the changes result from a periodic general re-examination of the master plan. Nonetheless, the issue arose as to what happens if publicly published notice does not contain sufficient information concerning the nature and scope of the changes. The court concluded that such a sketchy notice did not comply with the requirements of the statute and that the ordinance was, therefore, invalidly adopted.

Suit Deadlines

Entertainment Licenses

In Nouhan v. Board of Adjustment of the City of Clifton, the court held that a mercantile license, such as an entertainment license, cannot authorize a use of property that is not permitted by the zoning ordinance. In that case, neighbors to a restaurant-turnednightclub had complained to the zoning board about the use of the premises. The neighbors filed an application for interpretation of the zoning ordinance and of a special exception providing for the use of the premises as a restaurant only. The court agreed with the neighbors that an exception for a property’s use as restaurant did not automatically permit the operation of a nightclub.

Landlord/Tenant

In Hale v. Farrakhan, the court held that, where a tenant vacates a residential unit based on the landlord’s intention to occupy the premises, the landlord has the burden to proving, in a wrongful-eviction action, that his or her failure to occupy the unit was not arbitrary. The court determined that placing the burden upon the landlord to prove that his or her failure to occupy was not arbitrary will serve to assure that the landlord’s announced intention to occupy the unit personally is not used as a pretext to remove the tenant for some other reason.

Conclusion

During the past year, the courts have produced a wide variety of important legal developments. Please note that the summaries contained herein can only generally describe the rulings provided in these cases. Readers of this article are encouraged to seek more detailed information from counsel with regard to these issues and their impact on any particular matter. At Hill Wallack LLP, we look forward to discussing any of these recent legal developments with you at your convenience.

Brooke E. Newborn is an associate of the firm and a member of the Land Use Division. She concentrates her practice in the land development application and permitting process and in the litigation of land use matters.