Case Law Summaries

Casino Reinvestment Development Authority v. Katz

• Opinion Date: July 13, 2000
• Real Property Law
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CONDEMNATION—A condemning authority that fails to engage in bona fide negotiations with a property owner may not institute a condemnation suit.

A business partnership owned three contiguous lots, and a second business partnership owned a lot adjacent to the three lots, along a roadway that the development authority planned to widen. The two landowners leased these four contiguous lots to a commercial laundry facility. After the development authority made an offer to purchase the four lots from the landowners, the landowners rejected the offer contending that the offer did not take into account the rental income from the laundry tenant. The development authority took no action to reappraise the property taking into consideration the actual rents and subsequently sued the landowners to acquire the land by eminent domain at the initial price it offered to the landowners. The Court, in reliance on N.J.S. 20:3-6 and supporting case law, held that “at the prelitigation stage of eminent domain proceedings it is up to the condemning authority to offer the full, fair value of the property, and if the offer is not acceptable, to continue to negotiate with the property owner to try to find a compromise before suit is filed. [The development authority’s] failure to consider the actual rents as an element for purposes of valuation does not fully compensate the property owner for the loss of the property; rather, it represents a failure to offer the property owner full value before suit is instituted, which is fatal to the condemning authority’s offer to purchase.” As a result of the development authority’s failure to comply with its obligation to engage in bona fide negotiations, the Court dismissed its complaint.

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