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Downzoning Ordinances: Limiting Development and Preserving Open Space

Published on: July 27, 2016 | by David R. Pierce

Downzoning of lands at the municipal level as a way of limiting development and preserving open space and agricultural land has been taking place in New Jersey for years. Downzoning is the practice of increasing the required lot size for the development of a single family home or, in other words, reducing the density of development permitted under the existing zoning ordinances. These zoning ordinances are typically “hot button” issues which often spawn litigation regarding their validity under the Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.). Most downzoning litigation does not involve a challenge to the validity of the ordinance as a whole (although that certainly does occur), but in most instances involve a challenge to the validity of the ordinance as applied to one or more specific parcels of property. While a zoning ordinance may be valid in general terms that does not preclude a judicial determination that the ordinance in question is not valid as applied to a specific and distinct parcel of property.

New Jersey law on this issue began to coalesce with the case of Bow & Arrow Manor v. Town of West Orange, 63 N.J. 335 (1973) in which the New Jersey Supreme Court found that although zoning ordinance changes regarding the uses permitted in various zones were valid in general, they were nevertheless invalid as applied to specific properties that were the subject of the lawsuit. Fourteen years later, in Zilinsky v. Zoning Bd. of Adj. of Verona, 105 N.J. 363 (1987), the New Jersey Supreme Court sustained the validity of an ordinance imposing off-street parking requirements in a residential zone and, more particularly, the requirement that one of the two required off street parking spaces had to be provided in a garage. While these two cases did not directly deal with downzoning issues, the legal principles developed in these cases regarding whether or not a zoning ordinance provision was sustainable formed the foundation for the later review of zoning ordinances involving downzoning.

In Riggs v. Long Beach Township, 109 N.J. 601 (1988) the New Jersey Supreme Court invalidated a zoning ordinance that changed the permitted density from 1 unit per five thousand square feet to 1 unit per ten thousand square feet. The court reasoned that the zoning ordinance was enacted for the purpose of depressing the value of the plaintiff’s land so that the municipality could acquire it cheaply. In doing so, the court developed a four part test for analyzing the validity of a zoning ordinance that is challenged:

Expediting Your Loan – Insurance Proofs Demystified

Published on: July 8, 2016 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

You have a commitment from your Lender; certainly you should be able to close in one week, Right? Wrong. When closing a loan, there are many areas that can derail you from a timely closing. One area of particular concern and which often delays closing, is with respect to the Lender’s insurance requirements. To reduce discrepancies or issues leading up to closing, and to ensure that closing occurs as expeditiously as possible, it is important to understand the Lender’s insurance expectations and requirements at the outset; specifically, as set forth in the Lender’s commitment letter.

For commercial mortgage transactions, Lenders typically require a) property insurance on a “special form of loss” policy, previously referred to as an “all risk” policy, and b) commercial general liability insurance. For the property insurance, the lender will require the property to be insured at least in the amount of the loan and it will require a standard mortgage clause that names it as the mortgagee. Prudent lenders also typically require that the policy must be endorsed as “lender’s loss payable,” which gives the lender the right to receive the loss payment on a claim even if the insured has failed to comply with certain terms of the policy or because the loss was occasioned by the insured’s wrongful acts. The liability insurance policy should name the Lender as an additional insured and should waive all rights of subrogation against the mortgage lender. Often times, an insurance broker will claim that the lender has no insurable interest, and therefore cannot be added as an additional insured on the commercial general liability policy. The lender is concerned that if its borrower suffers an uninsured loss that is beyond its ability to absorb, the borrower’s continued viability is at stake. Furthermore, even though the likelihood of a claim against a mortgagee for injuries incurred at the mortgaged property is small, the lender wants to reduce its chance that its own insurance will be required to pay a claim that would be covered by the borrower’s required insurance. As an additional insured, the lender is entitled to the benefits of the policy but is not charged with the obligations of the named insured, moreover, the insurer cannot exercise subrogation rights against its own insured.

To prove you have the correct insurance in place, the Lender typically requires specific types of insurance proofs to be produced and approved prior to closing. In the past, certificates of insurance were provided to Lenders in the form of an ACORD 27 (for residential property) or ACORD 28 (for commercial property) as evidence of property insurance, and an ACORD 25, as evidence of commercial general liability insurance. In 2006, the ACORDs were revised to indicate that they do not grant any rights in coverage to the policy holder or to the mortgagee, additional insured, certificate holder, lender, etc. Essentially, these certificates are often prepared by insurance brokers as a summary of what coverage is purported to exist, but they do not prove that there is coverage under a particular policy and they do not grant coverage. This essentially makes these certificates or evidences of insurance ineffective in the risk management arena. They are merely for informational purposes only and their validity and accuracy cannot be verified without the underlying policy documents. As a result, many lenders now require, in addition to the ACORD forms, that as part of the normal due diligence process, a copy of the policy be produced and reviewed by the lender and the lender’s insurance advisor. In order to avoid delays, the ACORD forms and policy documents should be provided to the lender well in advance of closing so that the lender has sufficient time to process and review the insurance.

New Jersey Land Use Law: Is Your Proposed Use Permitted?

Published on: May 25, 2016 | by Roger Mehner

Are you planning on starting or relocating a business? As part of your planning process you need to do a careful analysis of the local zoning ordinances governing your proposed location. The threshold question is whether the proposed use is permitted in the zone in which the property is located. There is often no simple answer to that question, and the answer will affect not only where the owner needs to file for the necessary approvals, but will greatly impact the time required to obtain approvals and the chances of success. Municipal ordinances vary widely in their definitions of permitted and excluded uses, and often do not contain clear definitions as to the permitted uses. Many times ordinances include blanket statements providing that uses not expressly permitted are deemed to be excluded. In addition, uses which did not exist when the ordinance was drafted can be a gray area.

There are several steps which should be taken at the outset to ensure the best opportunity to obtain the required approvals in an efficient and cost-effective way. The owner, his architect, engineer and attorney, should jointly do the following:

1. Review the applicable ordinance and all definitions.

New Jersey Appellate Division Clarifies Law on the Liability of Property Owners Whose Vegetation Encroaches on the Neighbor’s Property

Published on: April 20, 2016 | by John J. DeLaney, Jr.

Recently, the New Jersey Appellate Division, in the case of Scannavino v. Walsh (Docket No. A-0033-14T1), issued a fourteen page Opinion (Approved for Publication on April 14, 2016), setting forth the law on the liability of property owners whose trees/vegetation encroaches on the neighbor’s property. In that case, plaintiff alleged that defendants improperly allowed the roots of trees on their property to cause damage to a retaining wall between the parties’ properties. Because the defendants did not plant or preserve the trees, they were deemed a natural condition for which the defendants were not liable. The Opinion is very helpful in dealing with many situations involving encroaching trees/vegetation between neighbors.

There was a three day bench trial which gave the Appellate Division many facts from which to analyze the law on the subject, and most particularly the law on nuisance. The Appellate Division noted that when analyzing nuisance claims, involving vegetation and trees, New Jersey courts are guided by the principles set forth in the Restatement (Second) of Torts. The court recognized that the Restatement (Second) of Torts “draws a distinction between nuisances resulting from artificial and natural conditions. The former are actionable; the latter are not.” Thus, New Jersey courts have held that injury to an adjoining property caused by roots of a planted tree are actionable as nuisance. Similarly, a property owner will be liable for dangerous conditions caused by hanging branches or matter dropping from trees which are not deemed “natural”, when specifically planted for the purposes of the defendant land owner.

There are fine lines of liability, which require an analysis of the specific facts of each case. There is no liability for the natural growth of tree roots; instead it is the positive acts – the affirmative acts – of the property owner in the actual planting of the tree or vegetation, which imposes liability. For example, as set forth in the Restatement (Second) of Torts §840 and noted in the Walsh case, where a possessor of land or his predecessor has planted a number of eucalyptus trees near the boundary line of B’s land and the roots of the eucalyptus trees grow onto B’s land causing damage, the landowner is subject to the rule of liability for artificial conditions, since the eucalyptus trees are not a natural condition. In contrast, there is no strict liability in nuisance where a branch of the defendant’s tree falls onto the neighbor’s garage. Burke v. Briggs, 239 N.J. Super. 269, 275 (App. Div. 1990). But then, there are gray areas under the Restatement (Second) of Torts at §363 – which may permit liability for damages caused by a tree not planted by the possessor of land where the possessor has “preserved” the tree. Liability may be imposed because the preservation is some sort of affirmative act (e.g. fertilizing or maintenance to keep the tree alive) on the part of the defendant, and not simply its failure to act.

EPA Proposes Changes to Accident Prevention and Risk Management Plans

Published on: March 24, 2016 | by David R. Pierce

The United States Environmental Protection Agency has proposed new changes to the requirements for the accident prevention programs and risk management plans under Section 112 of the Clean Air Act as a result of a review initiated in response to Executive Order 13650. One of the targets of Section 112 of the Clean Air Act was the reduction and prevention of industrial incidents involving hazardous chemicals.

The rules promulgated by the EPA would subject stationary sources that have more than the threshold quantity of a regulated substance in process to comply with, among others, various accident prevention, emergency response coordination, training and risk management requirements. Facilities subject to these requirements are further divided into Program 1, 2 and 3 facilities, depending upon the risk to public receptors and their history of accidents with off-site consequences, whether they are subject to OSHA’s Process Safety Management standard or their classification within any one of ten different certain North American Industrial Classification System codes specified in the regulations.

The proposed rules will impose significant new compliance obligations on any regulated facility and fall within one of three basic concepts:

Remediation and Sale of Contaminated Industrial Site at Substantially Reduced Cost

Published on: January 21, 2016 | by David R. Pierce

Lindabury assisted an international industrial commodities supplier in all phases of the closure, cleanup and eventual sale of their environmentally contaminated Northern New Jersey industrial property. The property which was first devoted to industrial use in early 1930s, had been in heavy continual use for over 70 years until its closure in 2006.

Just prior to the plant’s closure our client was served with a Proposed Administrative Consent Order regarding its obligation to investigate and remediate environmental conditions at the property at an anticipated cost of approximately $15-20,000,000. The property’s soil and ground water were contaminated and the existence of buried containers and potential off-site contamination were determined to exist.

Due to the harsh stipulated penalties of the Proposed Administrative Consent Order our clients did not sign the Order. Instead, we partnered with our client and assisted them in working with leading environmental consultants and later an LSRP to investigate and remediate the site. The site remediation involved unique investigation and cleanup requirements which we helped manage in conjunction with an environmental consultant. We negotiated and prepared contracts with specialized remediation contractors, including a group expert in asbestos remediation and saw the cleanup to conclusion.

Shift from COAH to State Courts Could be a Boon to Developers

Published on: March 11, 2015 | by David R. Pierce

On March 10, 2015 the New Jersey State Supreme Court issued a unanimous ruling allowing trial courts in the state, rather than the state Council on Affordable Housing (“COAH”), to decide if towns are providing enough low- and moderate-income housing. The Court issued its decision after finding that COAH has repeatedly failed to establish new affordable housing guidelines.

The Court has delayed the implementation of its ruling for 120 days in order to allow parties to prepare “fair share” or “higher density” arguments. Ninety days after the Court’s March 10th ruling, municipalities will have 30 days to file declaratory judgment actions seeking immunity from litigation. Municipalities will need to show the court they have either (1) achieved substantive certification from COAH under prior iterations of the Third Round Rules before they were invalidated, or (2) had achieved “participating” status before COAH. If at the conclusion of the 120 day period municipalities have not either filed for a declaratory judgment, or have not been granted immunity, “builder’s remedy” actions may be brought against the municipality.

Currently 314 of 565 municipalities in New Jersey have plans pending before COAH. Developers and their counsel should remain vigilant as to how trial courts rule on declaratory judgment motions filed by these municipalities. For developers seeking to begin real estate development projects in any of the 251 New Jersey municipalities that do not have plans pending before COAH, developers may seek the assistance of the courts after 90 days from March 10, 2015.