Supreme Court allows enlargement of time for land use appeals

The New Jersey Supreme Court allowed the enlargement of the 45 days filing requirement to file an appeal of a land use decision. In the case of Hopewell Valley Citizens' Group, Inc. v. Berwind Property Group Development Co., Justice Long, writing for the Court considered the issue of whether an objector to a planning board’s grant of site plan approval is entitled, in the “interest of justice,” to an enlargement of time under the Civil Practice Rules. These rules require an interested party to file an appeal of a planning board approval within 45 days from the date of publication of the notice of decision.

The Supreme Court held that the circumstances presented in this case warrant enlargement of the forty-five-day period because “it is manifest that the interest of justice so requires.”

The Municipal Land Use Law provides that “[t]he period of time in which an appeal of the decision may be made shall run from the first publication of the decision, whether arranged by the municipality or the applicant.” N.J.S.A. 40:55D-10(i). Appeals from local land use decisions are accomplished by actions in lieu of prerogative writs. The Civil Practice Rules set forth the time limitations on the institution of such actions. Those rules (a) acknowledges a general limitations period of forty-five days “after the accrual of the right to the review, hearing or relief claimed . . . .” The portion of the rules relating to appeals of land use decisions, provides that no action shall be commenced “after 45 days from the publication of a notice once in the official newspaper of the municipality or a newspaper of general circulation in the municipality . . . .” A subsection of the rule provides: “The court may enlarge the period of time where it is manifest that the interest of justice so requires.”

It is undisputed that in this case the objector failed to meet the deadline imposed by the Rules insofar as it did not file its complaint within forty-five days of the first notice published by the developer. The Court’s task is to determine whether the objector is entitled, in the “interest of justice,” to an enlargement of time under the Rule and, hence, to an adjudication of the merits of its claim.

The Rule’s language suggests that a court has discretion to enlarge a time frame when it perceives a clear potential for injustice. The Rule was aimed at those who slumber on their rights. Certain cases are excepted from the rule governing limitation of actions. Included in that category were three traditional types of challenges: “important and novel constitutional questions”; “informal or ex parte determinations of legal questions by administrative officials”; and “important public rather than private interests which require adjudication or clarification.” The Court recognized that, as a general proposition, “ignorance of the existence of a cause of action will not prevent the running of a period of limitations except when there has been concealment.”

The court found that the Plaintiff was entirely reasonable in calling the Board Secretary for information on the date of publication of the notice of decision to determine the date of expiration of the period of time to appeal the land use board decision. Plaintiff was inadvertently misled. To be sure, the developer was blameless, but so was plaintiff. Further, the six-day delay was such that defendants could not have suffered prejudice sufficient to warrant the barring of this litigation. The Court held that this was the exact type of circumstances that the Rules were designed to address.

The decision stands for the proposition that developers can no longer rely on the time limitations for appeals to be strictly applied where an objector has not slept on its rights if such violation of the time limitation was based upon a mistake coupled with an objector’s reasonable reliance. The decision also points to the importance of a developer’s actions. In this instance, had the developer sent the publication to the objector, the result would have been different.

New Jersey Appellate Division upholds "Area in Need of Redevelopment Designation"

In the New Jersey Appellate Division case of Suburban Jewelers vs. City of Plainfield, the Appellate Division upheld Plainfield's redevelopment designation of a portion of Plainfield's Central Business District. A number of commercial property owners appealed the City's redevelopment designation contending that the designation adversely affected their properties. The property owners argued that the City failed to make the constitutionally required finding of "blight", the findings were based upon a net opinion, and the City planning board failed to consider the benefits of the present uses of the properties.  In addition they argued that the trial court failed to consider the opinion of another judge in the same vicinage. The court rejected all the arguments advanced by the property owners. 

The Court found:

1. Gallenthin principles must be followed in determining whether an area is blighted.

2. The City's planning consultants did a thorough review of the area investigating the conditions of each property including any deterioration, use, occupancy and vacancy of each property, site characteristics including drainage, operations, parking, and lighting, tax payment history, police incidents and crime rate, and any unsafe conditions and code violations relating to  each property.

3. The City's determination that the study area is in need of redevelopment  comes invested with  a presumption of validity.

4.  While a net opinion is not adequate, the City's report contained detailed factual findings rather than a mere recitation of the statutory criteria and met the "substantial evidence standard" because the report discussed specific conditions of each property and explained in detail why those conditions rose to the level of obsolescence etc. and explained why those conditions were detrimental to the safety, health and welfare  of the community. Those conditions were found to have a detrimental effect on surrounding property.

5. The Court reaffirmed the Gallenthin standard that " while the meaning of blight has evolved and broadened it still has a negative connotation and retains its essential characteristic: deterioration or stagnation that negatively affects surrounding properties."

6.  The Court did not require the planning board to consider the benefits of the current uses of the study area.

Accordingly this case upholds a redevelopment designation when there is a proper study and reinforces that the redevelopment decision is subject to a presumption of validity which will be upheld so long as the decision is supported by substantial credible evidence.  

 

 

Case Development - Realty Transfer Fees

     On October 30, 2009, the Tax Court of New Jersey decided Mack-Cali Realty, LP, et al. v. Clerk of Bergen County, et al. which presented the question of whether the exemption from the realty transfer fee allowed by N.J.S.A. 46:15-10(a) where consideration is less than $100.00 is applicable from two conveyances from Mack-Cali to other limited liability companies which it was the sole member. While the decision will likely be appealed to the Appellate Division, the decision currently stands for the proposition that a deed between commonly-owned entities that transfers unencumbered real estate and for which no other consideration passed from grantee other than the amount set forth in the deed, then that transfer is likely exempt from the realty transfer fee requirements.

     The Tax Court construed the definition of "consideration" is stated in terms of “the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, …” (emphasis added).   As such, while the definition includes the amount of any mortgage to which the transferred property is subject, it does not otherwise include any element not paid by the grantee to the grantor. Therefore, it does not include an indirect benefit of the kind imputed by the New Jersey Division of Taxation in affirming the County Clerk's determination that a realty transfer fee be imposed.  Accordingly, the Tax Court held that the consideration for each transfer was $10.00 as stated in the deed and the transactions are exempt from the realty transfer fee.

Free Rent Provision May Extend Term of Lease

Free rent is customarily given by a Landlord to a Tenant as an incentive to lease a particular space. Besides the obvious benefit to Tenant, Landlord also benefits by being able to list the lease on the rent roll starting on the day the lease begins, even if no rent is being collected. But does free rent extend the term of a lease? According to a recent New Jersey Appellate decision, it does.

In R.A.M. Holding Corp. v. Hoboken No. 1 Blimpie, Inc., No. L-1267-08 (N.J. Super. Ct. App. Div. July 24, 2009 ), Landlord and Tenant negotiated a 10 year lease commencing on September 1, 1997 and terminating on August 31, 2007. Because of necessary renovations, Landlord offered to abate rent for the first two months and the parties executed a rider to that effect. The rider also provided for an option to extend the term for an additional five years provided notice was given within 60 days of the date of termination. Tenant gave notice to Landlord that it intended to extend the lease on October 2, 2007, after the original lease term would have terminated. Landlord commenced dispossess proceedings, claiming that the lease had already terminated on August 31, prior to the notice of extension.

 

The court found in favor of Tenant, and held that the rider provision giving Tenant two months of free rent actually amended the term of the lease and extended the date of termination to November 31, 2007, which in turn granted Tenant an additional 60 days to give notice of Tenant’s decision to extend the lease.

 

While not all free rent provisions will extend the term of a lease, Landlords should ensure that the language of any lease or rider specifically states that any free rent incentive given is to be taken during the lease term and state the particular date on which the lease is to terminate.

Yale Enterprises, L.L.C. v Euksuzian

 In an unpublished opinion from the Appellate Division, Yale Enterprises, L.L.C. v. Franck and Sarkis Euksuzian, Docket No. A-1224-07T1, the Court dealt with some interesting issues between a landlord and a tenant.

The landlord and tenant entered into a commercial lease in Medford, New Jersey, to commence on October 1, 2002. The landlord was to perform certain interior renovations prior to occupancy. However, the landlord failed to deliver the space and a series of amendments were entered into, each extending the time by which the landlord was required to deliver the space and requiring the landlord to obtain a certificate of occupancy before the tenant was required to take possession of the space. The final amendment required delivery of the space by the landlord by March 1, 2005. However, although the tenant took possession of the space on March 1, 2005, the landlord had still not acquired a certificate of occupancy for the space. Thus, the tenant’s occupancy was illegal. At the time that the tenant occupied the space, it had been evicted from its former space (after having obtained a series of extensions), which explains why the tenant moved into the new space without the certificate of occupancy having been obtained by the landlord. 

Promptly following the tenant’s occupancy, Medford Township issued various citations and levied fines because of the tenant’s occupancy without a certificate of occupancy having been obtained. The tenant expended monies to complete the improvements that should have been performed by the landlord, eventually obtaining a certificate of occupancy. Thereafter, the landlord commenced an eviction action for the failure of the tenant to pay rent. The tenant admitted that it had not paid rent, but brought a counterclaim for the fines and penalties it paid to Medford Township, for unreimbursed costs expended by the tenant for improvements to the space that it made, and for rent paid by the plaintiff to its former landlord as holdover rent that the tenant was forced to pay because of the landlord’s failure to timely deliver the space. The tenant also claimed lost profits. 

 

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New Jersey's Appellate Division holds that a landlord may not wrongfully withhold security deposits exceeding the statutory amount even where tenant has pets

In Reilly, et al. v. Weiss, (decided March 24, 2009) the Appellate Division considered the application of New Jersey’s Security Deposit Act where a landlord collected a security deposit of two and a half months’ rent because the tenant intended to keep cats in the leased premises. The Appellate Division concluded that the landlord could not justify collecting a greater security deposit amount than the one and one-half month’s rent, the maximum permitted by the Act, even if the tenant is maintaining a pet on the premises. The Appellate Division concluded that although the Security Deposit Act does not contain an express penalty for violating the maximum collectible amount, any monies that exceeded the maximum that were held by the landlord and not returned at the termination of the lease are monies that are subject to the punitive remedy of doubling the amount that is returned to the tenant pursuant to NJSA 46:8-21.1.

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Purchaser of Commercial Property Found to be Liable for Payment of a Broker's Commissions Where the Purchaser Obtained the Seller's Interests Under a General Assignment of Leases and Rents

In a recent decision, the New Jersey Supreme Court held that the purchaser of a commercial property may be liable for the payment of a broker’s commission which was due under leases assumed by the purchaser pursuant to a general assignment executed at closing. 

In Pagano Company v. 48 South Franklin Turnpike  (decided March 9, 2009), the Court applied its prior holding in VRG Corp. v. GKN Realty Corp., 135 N.J. 539 (1994) which held that to incur liability by virtue of an assignment the purchaser must have “affirmatively assumed” the seller’s obligations to pay the commissions, to require that a purchaser honor a commission agreement even without a separate, express agreement to pay such commissions. 

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