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The County of Sussex v. Merrill Lynch Pierce Fenner & Smith, Inc.

351 N.J. Super. 66, 796 A.2d 958 (App. Div. 2002)

CONDEMNATION— A condemning authority can condemn lesser interests than a fee interest, such as a leasehold interest.

A county intended to condemn an office building so that it could utilize the space for government offices. It negotiated a purchase agreement with the owner and bought the property subject to the tenant leases. The county then negotiated with the tenants to terminate their tenancies. All but one agreed. The county then brought an eminent domain proceeding to condemn the space belonging to the remaining tenant. The tenant challenged the county’s right to condemn its space. It argued that the county had purchased the building subject to the rights of the existing tenants. Therefore, it had no authority to condemn the property. The tenant also claimed that, under New Jersey law, it was entitled to remain in possession until all appeals were exhausted. The lower court rejected the tenant’s arguments. It held that a governmental entity’s right to condemn interests in property includes, in addition to fee interests, lesser interests, such as leaseholds. The county exercised its condemnation powers to use the tenant’s space for its own use, consistent with its plans in purchasing the building. As to the tenant’s argument that it was entitled to retain possession until all appeals were exhausted, the lower court noted that the legislature did not intend to give the owner or tenant the power to delay the condemning authority for a long period of time simply because it challenged the government’s authority to condemn the property. The Appellate Division affirmed.

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