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State of New Jersey v. Fairweather

298 N.J. Super. 421, 689 A.2d 817 (App. Div. 1997)

MUNICIPALITIES; CONDEMNATION—The value of an historic building for condemnation purposes is the cost to replicate the structure, not the cost to build a new structure with modern techniques and equivalent utility.

A landowner appealed a jury award in a condemnation proceeding. The house on the land being taken was built by the landowner’s father, using the foundation already in place from a mill built in 1834. The father was an architect who specialized in colonial American architecture and constructed the house to re-create a colonial structure. The appraiser testified that he evaluated the property based on what it would cost to build such a structure of similar utility, using modern construction techniques, and not what it would cost to replicate an historic building. The appraiser also stated that the house was in poor and uninhabitable condition, and therefore had extremely limited market appeal.

Citing numerous cases from other states, the Appellate Division first stated that the reproduction cost of an historic structure has been held to be a valid basis for determining condemnation value. An additional issue concerned the appraiser’s failure to consider the value of two retaining walls. The trial judge refused to allow testimony concerning the price the landowner paid for the stones used to construct the walls. The landowner argued that this information was relevant because it would have influenced a hypothetical buyer. The Appellate Court agreed, stating that all considerations which would influence a willing buyer should be considered in a condemnation case. Furthermore, the original cost of an improvement has been held admissible as an aid to valuation in condemnation actions where the improvement is of an unusual kind with value not readily discernable. The Court concluded that this evidence should have been admitted as relevant to a determination of fair market value. Next, the Court agreed with the owner that the limitation of evidence concerning the historical significance of the property was erroneous. Finally, the Court held that the owner was entitled to a reasonable commercial rate of interest from the date of commencement of the condemnation action until the date of payment, with a possible abatement for that time during the condemnation process in which he had free, unimpeded use of the property. The Appellate Division reversed the jury award and remanded the case for retrial.


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