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DKM Residential Properties Corp. v. The Township of Montgomery

182 N.J. 296, 865 A.2d 649 (2005)

DEVELOPERS; VIOLATIONS; CERTIFICATE OF OCCUPANCY—There is no general lack of power on the part of a municipal enforcing agency to issue a notice of violation with an appropriate penalty to a developer notwithstanding that a certificate of occupancy may have issued.

Over the course of three years, a residential developer obtained certificates of occupancy for the homes built within a development. All of the homes were sold even though the developer retained ownership of a few of the non-residential structures at the development. About two years after the last residential certificate of occupancy was issued, the municipality’s construction department began receiving complaints about the Exterior Insulating Finish System (EIFS) that was applied to the homes. In response, after consulting a representative of the Department of Community Affairs, the municipality’s construction official served five notices of violation identifying 62 individual incidents of violation against the developer. The notices gave the developer a time frame for correcting the alleged defect and also contained a specific provision for the imposition of fines if the corrective work was not completed on time. The developer appealed to the municipality’s Construction Board of Appeals. A major basis for its challenge was that the developer no longer owned the properties. The Board, believing that the municipality had the authority to issue the notices of violation, ordered the developer to submit a remediation plan. The developer appealed to the Law Division. That lower court “stayed all aspects of the Board’s decision with the exception of the requirement that [the developer] submit a remediation plan.” On further appeal, the Appellate Division reversed the lower court and ruled entirely in favor of the developer, holding that neither the Uniform Construction Code (UCC) “nor its regulations authorized the Township to bring an enforcement proceeding against [the developer] concerning property that [the developer] no longer owned.” According to the Appellate Division, “the municipal enforcing agency was authorized to bring an enforcment proceeding against a builder/owner/developer only during the construction process.” The municipality appealed to the New Jersey Supreme Court, which reversed the Appellate Division.

According to the New Jersey Supreme Court, “[a] municipal construction official has the authority under the Uniform Construction Code Act [(UCC)] to cite a developer for a construction code violation in respect of property that has been conveyed and for which a certificate of occupancy has issued.” Its reasoning was that the UCC “is remedial in nature, and designed to address directly matters that affect health, safety and welfare.” The UCC deserves liberal construction to advance its purposes and grants the Department of Community Affairs Commissioner “with all powers to effectuate its purposes.” The Commissioner is assisted by municipal construction officials and subcode officials. According to the Court, “[b]ecause the penalties under the UCC accomplish goals other than merely to secure immediate compliance with the Act by exerting a continuing and increasing penalty for an unabated condition, the penalty does not evince a legislative intent to restrict penalty enforcement to actions only against the landowner in possession, and not against a violating developer who had been issued a certificate of occupancy on the property.” Consequently, according to the New Jersey Supreme Court, “[a]bsent any express or clearly implied limitation on the municipal enforcing agency’s authority, there is no general lack of power on the part of the municipal enforcing agency to issue [a notice of violation] with an appropriate penalty to a developer notwithstanding that a certificate of occupancy may have issued.”

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