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New Jersey Turnpike Authority v. Witt

A-0995-09T3 (N.J. Super. App. Div. 2010) (Unpublished)

CONDEMNATION; BILLBOARDS — A billboard may not be a real property interest if it is not an essential integral part of the land, such as when it is clearly capable of removal and is located in a small part of the condemned real property that cannot be used for a similar billboard function.

A double-sided billboard was located on private property adjacent to the New Jersey Turnpike. The owner of the billboard, in order to maintain the billboard, leased a portion of the property on which the billboard stood. The New Jersey Turnpike Authority (NJTA), as part of a turnpike widening program, sought to acquire the private property and extended a $1,800,000 purchase offer to the landowner. The offer was based on an appraisal report which indicated that $400,000 of the property’s market value was attributable to the billboard.

Negotiations proved unsuccessful and the NJTA sued to acquire the property by eminent domain. The landowner did not oppose the taking, but the billboard owner opposed the taking. It moved to dismiss the proceedings, asserting the NJTA’s failure to value all interests condemned. The billboard’s owner claimed that the NJTA was legally obligated to negotiate directly and separately with both parties. The lower court concluded that the billboard was personal property and did not qualify for direct compensation under the eminent domain statute. The lower court said that bona fide negotiations are only required to take place with the holder of title of record of the property, and that the billboard owner had no right to participate in negotiations with the NJTA. The court indicated that the billboard owner could participate in an allocation proceeding with the landowner to be made whole for damages sustained as the result of the taking. The billboard owner appealed, challenging the lower court’s finding that the billboard did not meet the definition of real property under the Eminent Domain Act. It also claimed that, under its lease, it had reserved a right to participate in the condemnation process.

The Appellate Division affirmed that the billboard was not realty because it was not an essential or integral part of the land. The Court adopted the lower court’s ruling that the billboard was clearly capable of removal and was located in one area of a sizable piece of real property - property not otherwise used for a similar function or similar business as the billboard. The Court also referenced the valid lease between the parties which contained language that the billboard was personal property capable of removal, and that the billboard owner had reserved its right to remove the billboard at any time during the term of the lease. The Court therefore concluded from the lease that the billboard owner never considered the billboard as real property.

The Court also rejected the argument that the lease reserved the billboard owner’s right to participate in the condemnation proceeding. The governing lease indicated that it would terminate should the property be condemned or taken in any manner for any public use. The Court concluded that the billboard owner contracted away its right to participate in condemnation proceedings, as its tenant relationship when the NJTA initiated condemnation proceedings.

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