Case Law Summaries

City of Long Branch v. Bassinder

• Opinion Date: August 22, 2001
• Real Property Law
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CONDEMNATION; LEASES—Absent a lease clause to the contrary, a tenant under a 99 year lease may have the right to share in a condemnation award.

A ninety-nine year lease contained a provision reading as follows: “[i]f the land and premises leased herein, or of which the leased premises are a part, or any portion thereof, shall be taken under eminent domain or condemnation proceedings, or if suit or other action shall be instituted for the taking or condemnation thereof, ... the Tenant shall have no claim or right to claim or be entitled to any portion of any amount which may be awarded as damages or paid as of the result of such condemnation proceeding ...; and all rights of the Tenant to damages, if any, are hereby assigned to the Landlord… .” The Court held that such a provision in a negotiated lease was clear and unambiguous and therefore, when the municipality sought to condemn the leased property, the entire award belonged to the landlord. The lower court also held that under the so-called “unit rule” that “allows only one [condemnation] award to be made for all of the separate interests in the property,” the tenant could not make a separate claim for the condemnation award even though it held a ninety-nine year lease. The Appellate Division agreed and held that if it were not for at least the cited lease clause, it would have allowed the long-term tenant to participate in a trial respecting the value of the property and would have directed the lower court to determine the parties’ respective rights to share in the single award. This is because for some purposes, “New Jersey Courts have held that ninety-nine year lessees are equivalent to fee simple owners.” In an earlier case, that exception was not extended where a long-term tenant filed an objection to a condemnation proceeding because the New Jersey Supreme Court held that a municipality seeking condemnation of a parcel of real estate is only required to negotiate with the record title owner. Notwithstanding the holding, the Supreme Court in that same decision, “to assure that the public interest would be served ... and to assure that fair value would be paid,” allowed the holders of the ninety-nine year lease to participate in the trial “to present noncumulative evidence of fair value,” despite its recognition that the leaseholders “may not have had compensable interests in the award itself… .”

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