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Avalon Bayfront Developers, LLC v. Borough of Avalon

A-2032-03T4 (N.J. Super. App. Div. 2005) (Unpublished)

DEEDS; RESTRICTIONS—A deed restriction stating that the conveyed lot is too small for building purposes and may only be used for lawn or setback purposes bars not only the construction of homes or buildings but also bars the construction of other improvements.

A developer owned two adjacent tracts of land. In all, they totaled four tax lots. Two of the tax lots “were undersized, non-conforming plots adjacent to a bulk-head bordering on [an inlet].” They had been owned by the municipality until 1973, “when they were conveyed to the then owners” of the adjacent full size lots. The deed to the two undersized lots contained the following restrictions: “1. These lots are too small for building purposes; and may be used for lawn and/or setback purposes only. 2. Purchaser shall grant an easement to [the municipality] for the maintenance of bulkhead and stone revetment as stated above. 3. These lots shall be used solely for residential purposes and shall comply with all ordinances of [the municipality] applicable thereto.” The developer intended to build single-family homes on the two full size lots. While it did not intend to construct any “buildings” on the two smaller, restricted lots, it “intend to construct a pool, patio and fence in each of the restricted areas” on them. This raised some questions and the municipal construction official withheld building permits “pending a determination by the [municipality’s governing body] as to the meaning and intent of the restriction as it relates to the restricted lots.” The developer and neighboring property owners appeared at the governing body’s hearings and presented evidence. The municipality ruled that the restrictions prohibited the proposed improvements and that there was no justification to issue a waiver of the restrictions. The developer then sued, arguing “that restrictive covenants are to be strictly construed and that the language of the subject covenant [was] ambiguous. It contend[ed] that ‘too small for building purposes’ means that the lots are too small to support individual residences, but that they are not too small for accessory uses.” Their opponents “argued that the challenged terminology [was] unambiguous and preclude[d] the construction of not only buildings, but of any structure, including patios, swimming pools and the like in the restricted areas.” The lower court “concluded that the restriction ‘means what it says and says what it means.’” It ruled that the lots could not be used for any type of construction or development. The developer further appealed.

At the outset, the Appellate Division held “that the interpretation of the deed is not to be determined by the intent of the grantor. A restrictive covenant is a contract.” Whether a term is clear or ambiguous is a question of law. Further, the Court believed that “[t]he intended purpose of the restriction [was] apparent from its language. Not only did the restriction state that ‘these lots are too small for building purposes,’ but also stated they ‘may be used for lawn and/or setback purposes only.’” According to the dictionary, a lawn is “an open space between woods.” The second dictionary meaning is “ground covered with grass and not tilled; esp: ground covered with fine grass kept closely mowed esp. in front of or about a house or as part of a garden or park.” Based on the dictionary reading and a close reading of the restriction, the Court ruled that the lower court properly held that the restriction was unenforceable and that no improvements at all could be built on the undersized, restricted lots.

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