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Township of Piscataway v. South Washington Avenue, LLC

400 N.J. Super. 358, 947 A.2d 663 (App. Div. 2008)

CONDEMNATION — According to New Jersey statutes, once a property owner withdraws all or part of a condemning authority’s deposit from the court, the property owner is barred from challenging the validity of the condemnation, but this does not mean that the property is no longer entitled to argue that the proper valuation date is when the declaration of taking was filed and not the date of the condemnation action.

A municipality brought a condemnation action to take a seventy-five acre farm in order to preserve it as open space. After the condemnation action had been pending for five years, the municipality filed a declaration of taking and deposited, in court, its estimate of the fair market value of the farm as of the date the complaint was filed five years earlier. The owners withdrew the deposit, but continued to challenge the municipality’s right to condemn their property. They argued, that since the fair market value of the farm increased substantially in the five years between the date the complaint was filed and the declaration of taking was filed, the farm should be valued as of the date of the declaration of taking. Without abandoning their challenge of the municipality’s right to condemn their property, the owners asked the lower court to find that the proper valuation date was the date the declaration of taking was filed, and not the date the condemnation action was filed. The lower court agreed with the owners, and a jury determined the fair market value of the farm to be more than four times the amount the municipality had deposited with the court.

On appeal, the Appellate Division found that once a property owner withdraws a deposit made in connection with a declaration of taking, the owner waives all rights to challenge the municipality’s right to condemn. The owner’s sole remaining right is to challenge the amount of compensation. The Court noted that the statute, N.J.S.A. 20:3-27, provides that neither the making of the deposit nor the withdrawal of the deposit shall prejudice the rights of the municipality or the property owner with respect to the determination of compensation. The Court agreed with the municipality’s argument that the statute implicitly bars a property owner from challenging the validity of the condemnation after the owner withdraws the deposit. The Court rejected the owner’s argument that since the statute does not mention the right to challenge, it is not barred.

The Court then grappled with the issue of the valuation date for the farm. The municipality noted that the statute provides that compensation is determined at the earliest of: (a) the date of possession by the municipality; (b) the date of filing of the condemnation action; (c) the date upon which the municipality takes action which substantially affects the property owner’s use and enjoyment of the property; or (d) the date of the declaration of blight. The municipality argued that the statute should be interpreted literally, that compensation is determined at the earliest date possible, which, in this case was the date the condemnation action was filed. The Court noted that a court is not obligated to set the valuation date as of the date of the filing of the condemnation action where it would result in unjust compensation to the property owner. It found that when a property increases in value due to inflation or market factors unrelated to the initiation of the condemnation action, then the valuation date for the property must be the date the declaration of taking was filed and not the date the complaint was filed. The Court noted that the municipality had the power to file the declaration of taking at the time it filed the complaint, or any time thereafter, and by filing sooner it could have avoided the risk that the property would be valued much higher at a later date. The Court rejected the municipality’s argument that its ability to file the declaration of taking was delayed due to the owners’ efforts to avoid condemnation. If found that the owners should not be penalized for pursuing their statutory rights.


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