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East Orange Neighborhood Improvement Group v. The City of East Orange

A-1456-97T1 (N.J. Super. App. Div. 1998) (Unpublished)

LOCAL LANDS AND BUILDINGS LAW—For the public good, amendment by a municipality of a bid requirement for a time of the essence closing does not violate the Local Lands and Buildings Law.

A municipality’s governing council took the necessary steps pursuant to the Local Lands and Buildings Law (LLBL) to sell a small vacant parcel it had acquired through a real estate tax foreclosure. The advertised conditions of sale included a minimum bid and a “time of the essence” clause. A contract was made with the sole bidder. It contained both a sixty day time of the essence clause and an “as is” provision. Shortly after the contract was executed, the previous owners of the property filed a Declaration of Environmental Restriction indicating that the parcel was contaminated and was not fit for residential use in its current state. The contract buyer was buying the property for the purpose of developing low-income housing. As a result of the environmental restriction, closing did not take place within the sixty day time of the essence period. The municipality and the buyer worked together to clear the problem, but it took two years and an investment of nearly $300,000 on the part of the buyer. The municipal council subsequently adopted a resolution extending the closing date. A neighborhood association then filed an action seeking to set aside the sale because of the deviation between the amended contract and the original bid notice. The Court rejected that claim, holding that the buyer’s bid at the public offering, being for the purpose of developing a low-income housing project, was a matter undeniably within the public good. When the environmental condition was discovered, all parties to the transaction undertook efforts and considerable costs, in both time and money, to make sure the project could be completed. In summary, the Court concluded that the procedure adopted by the municipality was proper because making time of the essence was for its benefit and, upon making a good faith determination that it was not in its best interest to enforce the time of the essence provision, it was eminently sensible to extend the time. Lastly, the Court found no indication in the record that any other party might have been interested in the property if the buyer had not closed in the sixty day period. Given the public interest involved, the Appellate Division upheld the lower court’s summary judgment that had been granted in favor of the buyer and the municipality.


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