Assisted Living Associates of Moorestown, L.L.C. v. Moorestown Township

31 F. Supp.2d 389 (D. N.J. 1998)
  • Opinion Date: December 29, 1998

RESTRICTIVE COVENANTS; INTERPRETATION—In interpreting a restrictive deed covenant, the terms “development” and “subdivision” have different meanings.

A developer sought to construct an “assisted living” facility designed to care for the elderly and disabled. Previous litigation had involved alleged conflicts between the actions of the local planning board and the Fair Housing Act. Although those matters were settled, a further issue arose involving the interpretation and effect of a deed restriction of record against the property. The text of the restrictive covenant stated, in relevant part: “declarant desire[s] to prove for the preservation of the above said lands and to limit the development thereof, ... [t]he above described lands and premises shall not be further subdivided EXCEPT that a two lot residential subdivision shall be permitted, subject to subdivision approval by the Township… .” The municipality contended that the restrictive covenant was intended to restrict all development with the exception of a two lot subdivision. The developer contended to the contrary, that the restrictive covenant did not prevent all development of the property, rather, it only proscribed further subdivision of the property and the proposed assisted living facility did not constitute a subdivision.

New Jersey adheres to the minority view which treats an equitable servitude as a contract right, not a property right. Thus, in New Jersey, an equitable servitude creates no possessory interest in the burdened land. The burden imposed is enforceable only as a contract right. In addition, the purpose of contract construction in New Jersey is to find the intention of the parties as revealed by the language used by them. Whether a contract provision or term is clear or ambiguous is a question of law. Here, the resolution of the dispute turned on whether the meaning of the term “subdivision” was coterminous with the meaning of the term “development.” The Court, interpreting the “ordinary meaning” of those terms, concluded that the terms “subdivision” and “development” do not mean the same thing. “Development is a general term, whose meaning in ordinary usage is “converting a tract of land to a specific purpose, as by building extensively.” “Subdivision” by contrast, is a specific form of development, meaning “the act or process of ... dividing land into lots.” Those definitions have been incorporated into the New Jersey Municipal Land Use Law. Thus, according to the Court, construing the restrictive covenant to give effect to all of its terms leads to the conclusion that the covenant only prohibits a specific type of further development, namely, subdivision of the property into more than two residential lots. Consequently, the proposed development of property was found not to constitute further subdivision of the property and therefore was not prohibited by the restrictive covenant. In fact, the proposed assisted living facility would result in the development of the entire property, thus precluding “division of [the property] into two or more lots… .”

The municipality further contended that construction of the restrictive covenant conflicted with the common intention of the parties as evidenced by the minutes of a planning board meeting held over 13 years earlier. Not only did the Court find the municipality’s certifications unpersuasive and self-serving, constituting post hoc reevaluations of an event 13 years past, but it also rejected the municipality’s contention that the restrictive covenant charged the developer with inquiry notice of the planning board’s minutes. To the Court, a prospective buyer is only charged with inquiry notice if the recorded instrument contains a “statement or recital” of the existence of another document affecting the property’s title. Based on that understanding, the developer was not charged with inquiry notice of the planning board’s minutes.