Municipality Need Not Negotiate With Mortgage Holder Before Condemning Property

By: Peter J. Gallagher

Last year, we told you about a decision from the Appellate Division holding that a condemning authority does not have to engage in bona fide negotiations with a mortgage holder that has obtained final judgment on the property that the authority is seeking to condemn. Click here for the prior post. The Supreme Court has now affirmed the Appellate Division’s decision.

Under New Jersey law, before condemning real property, a condemning authority must, among other things, engage in bona fide pre-litigation negotiations with the party that "owns title of record to the property."  N.J.S.A. 20:3-6. Prior case law had made clear that this limitation meant that a condemning authority was not required to negotiate with a leaseholder or some other party that might have an "interest" in the property, but was instead required to negotiate only with the record title owner. In Borough of Merchantville v. Malik & Son, LLC, however the Supreme Court was faced with a slightly different question — whether a municipality needs to negotiate with an entity that held the mortgage on the underlying property, had obtained final judgment of foreclosure against the title owner, and was on the verge of taking the property to sheriff’s sale. The Supreme Court ruled that it does not.

 

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Condemning Authority Not Required To Negotiate With Mortgagee

by:  Peter J. Gallagher

 In a recent opinion, Borough of Merchantville v. Malik & Son, LLC, the New Jersey Appellate Division held that a condemning municipality was not required to negotiate with a party that had obtained a final judgment of foreclosure on the property that the municipality was looking to condemn.  Under New Jersey law, before condemning real property, a condemning authority must, among other things, engage in bona fide pre-litigation negotiations with the party that "owns title of record to the property."  Prior case law had made clear that this limitation meant that a condemning authority was not required to negotiate with a leaseholder or some other party that might have an "interest" in the property, but was instead required to negotiate only with the record title owner. 

In Malik & Son, a lienholder argued that, by virtue of it having obtained final judgment of foreclosure on the property, it stepped into the shoes of the record title holder, and the municipality should have been negotiating with it instead of the record title holder.  Specifically, the lienholder argued that it was not like a leasholder or even a "mere mortgage holder," but was instead the true "stakeholder and only party with a genuine interest in negotiating the sale of the property" because it had possession of the property, the right to sell it, a final judgment of foreclosure, and had scheduled a sheriff's sale by the date of the taking .  Relying on the plain language of the relevant statutes, the trial court rejected this argument, and the Appllate Division affirmed its decision.  The Appellate Division further explained that the municipality did not preclude the record title holder from discussing the negotiations with the lien holder, and that the lienholder — as a "condemnee with a compensable interest," albeit not the record title holder — could participate in subsequent valuation and allocation eminent domain proceedings. 

Planning Board Can’t Deny Variance Based on Anticipated Inability of Applicant to Satisfy Site Plan Criteria

by:  Katharine A. Muscalino

The Bay Head Planning Board initially approved a bulk variance application submitted by a property owner who had inherited an irregular lot with just ten feet of frontage, where fifty feet was required.  Finding that denying a bulk variance for the frontage requirement would result in an undue hardship, and that the Applicant had adequately addressed concerns about emergency access to the Property resulting from the lot frontage variance, the Board approved the application with a 5-4 vote.  Per the approval, the Applicant was required to submit a drainage plan for the Borough Engineer’s approval at the time of site plan application.

Upon an objector’s prerogative writ suit, the parties discovered that a board member had voted on the bulk variance without attending all of the meetings or reviewing all of the transcripts.  The bulk variance application was remanded for a new vote, following a review of the transcripts by all of the board members.  The Board then voted to deny the bulk variance, with a 4-5 vote.  In its resolution, the Board explained that it denied application because the applicant had failed to provide “affirmative testimony… by any competent engineer… on how the applicant would address the well known drainage issues which plagued the proposed lot and more assuredly concerned the adjoining property owners.”

 

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“All Animals Are Equal But Some Are More Equal Than Others”

 by:  Lawrence A. Calli

Owners of residential properties in New Jersey are no longer limiting themselves, in concept or use, to the idea that a person's home is a mere bastion of solitude and rest.  Rather, many homeowners are expanding their use of residential lots.  To be clear, we are not talking about simply adding a home office or  mother/daughter suite.  No, the newest trend appears to be raising livestock, and it’s not merely a trend in the southern and western counties of the State.  The trend towards municipal ordinances permitting livestock on residential properties has already spread to urban areas (including Jersey City), and is regularly considered by mayors and councils throughout the State. 

In a recent article, the Hopewell Valley News reported that the Hopewell Borough Council has been asked to consider an amendment to its land use ordinance that would allow residents to raise chickens in their backyards ("Hopewell: Backyard Chickens Are Council Topic").  The article notes that amendments in other parts of the State permit residents to keep as many as seven chickens within 25 feet of a neighbor’s property as long as the neighbor approves (larger flocks have to be kept 40 feet from the nearest neighbor).  

Hopewell Township recently adopted an ordinance that permits residents  to keep up to six chickens on their property.  The ordinance gained some notoriety because it limits rooster visits to only 10 days per year, and requires that the roosters be disease-free before visiting with the hens.  However, a spokesperson for Hopewell Township indicated that the amendment that Hopewell Borough adopts would not "in the slightest, possible way” mimic what occurred in Hopewell Township.  In fact, "a majority of communities forbid roosters because some find the crowing noise they make a nuisance, especially if it occurs in the early morning hours."