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City of Camden v. Formosa

A-0644-05T3 (N.J. Super. App. Div. 2007) (Unpublished)

CONDEMNATION; AWARDS — Where a property owner remains on its property after the issuance of a condemnation order for possession because the owner has either refused to vacate the property or challenges the order, that property owner is responsible for the payment of property taxes as a consequence of having remained there.

As a remedy for its economic decline, a municipality approved a redevelopment plan. There was a warehouse, in average condition, in the neighborhood. The municipality sought to acquire this property and offered compensation to its owner. The property owner responded with an expert appraisal that valued the property at more than four times the amount offered by the municipality.

The municipality brought a condemnation action, and the lower court found that the municipality had properly exercised the power of condemnation. The parties stipulated to a consent order giving the municipality the right of possession upon making a deposit of the amount recommended by a court-appointed commission which turned out to be the same amount that the municipality had offered the property owner. The lower court, however, denied the municipality’s motion for immediate possession. The property owner was dissatisfied with the amount awarded by the commission and requested a trial. In that trial, a jury found that the property owner was entitled to about double the municipality’s deposit. The Court subsequently denied the property owner’s request that the municipality reimburse him for the property taxes he paid while he remained in possession. At the same time, it denied the municipality’s request that the property owner maintain liability insurance while still in possession of the property. Both parties appealed.

On appeal, the Appellate Division rejected the property owner’s argument that the lower court was in error for refusing to allow his expert to testify at trial. The Court pointed out that a court has the discretion to decide whether a witness is competent to testify as an expert. Further, it found that the expert for the property owner specialized in masonry and not in the appraisal of real estate. The Court also pointed out that in a government taking of private property for public use, the compensation amount is to be based on its fair market value. It found that the lower court did not abuse its discretion when it chose the fair market value approach over the method propounded by the property owner’s expert, who had used the replacement cost approach. It additionally pointed out that using replacement value would be acceptable in situations where a property is dissimilar to other properties in the area, but found that, in this case, the property owner never established that the property couldn’t be valued through the use of comparable sales.

The property owner’s argument that the action brought by the municipality should have been dismissed because the municipality never engaged in meaningful negotiations was also rejected. This was because the property owner raised the matter at the valuation trial, but not earlier when he first challenged the municipality’s right to condemn the property. The Court, however, noted that a condemnation action could be dismissed if the condemning authority failed to consider the actual rents being received but also found that the appraiser had actually considered higher rents than actually being paid. It also rejected the property owner’s arguments that the municipality had made calculation errors in its appraisal and that any material change in the value of the property occurred over the one month span from the time that the taking was ordered until it was valued.

The property owner’s argument that the lower court wrongly denied his request for reimbursement of property taxes he paid while he retained possession of the property was also rejected. The Court pointed out that the property owner remained on the property for more than twenty days after the order for possession in favor of the municipality was issued and that under such circumstances he was legally responsible for the payment of property taxes as a consequence of having remained there. Additionally, the Court held that the property owner could not have had it both ways by challenging the municipality’s authority to condemn the property but avoid paying real estate taxes while maintaining possession. It further pointed out that the statute relied on by the property owner, which required the reimbursement of real estate taxes by the condemnor effective with the date of the order for possession did not apply because the law did not address circumstances where a condemnee challenges the order or refuses to vacate the property. The Court held that municipality’s cross-appeal of the lower court’s denial of its request for reconsideration of an order that denied it immediate possession was moot since the city was entitled to immediate possession at the time that the appeal was decided. All of the lower court’s findings, including the award to the property owner, were affirmed.


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