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Clark v. Lake End Corporation of Green Pond, N.J.

A-1150-07T3 (N.J. Super. App. Div. 2008) (Unpublished)

LEASES — Even though a tenant may have an extremely long-term ground lease, it does not get the full rights of an owner when its ground lease restricts those rights and requires that the tenant obtain various consents from its landlord before doing things that a fee owner might be able to do.

Two tenants, who assumed a ninety-nine year lease, sought to expand the cottage on the property. Their landlord granted part of the request, but denied consent to expand a bedroom, which would have extended coverage to more than fifty percent of the lot, and to construct a porch roof that came within fifteen feet of the side yard. Both were restricted by the terms of the lease. A year and a half later, the tenants again sought to make the previously rejected renovations and again were denied consent. They then attempted to get approval directly from the municipality, which refused to issue a construction permit without approval from the landlord. Following an appeal to the county construction board of appeals, which declined to hear the matter, the tenants sued their landlord and the municipality. The lower court, on summary judgment, upheld the landlord’s refusal to grant consent and also awarded attorneys’ fees to the landlord. The lower court denied the tenants’ request for judgment against the municipality, finding that a factual dispute existed.

On appeal, the tenants argued that because of the lease’s extremely long lease term, they should have been treated as owners of the property. This argument was rejected largely because, according to the lease, the tenants were required to obtain consent permission from the landlord for any alterations to the existing structure or for new construction on the property. Also, the Appellate Division found that even though the landlord granted permission for similar alterations to other lease holders at the development, who, themselves, considered themselves fee owners of their leased properties, these two tenants could not construe such actions as a waiver by the landlord of its right to contest their claim that they were to be treated as fee owners. The Court also rejected the tenants’ theory that the fifteen-foot setback requirement in their lease did not apply to them because those restrictions only applied to new construction. It also rejected the tenants’ argument that previous approval to exceed fifty percent coverage on one side of the property constituted a waiver of the landlord’s right to deny consent for the porch roof.

As to the tenants’ argument that the landlord should have been estopped from denying their request because permission was withheld pending a review of the construction plans, the Court found that the landlord did not induce reliance on the part of the tenants in their anticipation of approval stemming from the conditional approval.

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