In condemnation cases, the government must pay the fair market value of your land.- If your vacant land needs a variance to build, you need proof that variance approval will likely be given by the Zoning Board of Adjustment.
- A recent NJ Supreme Court decision mandates proof of the probability of variance approval.
In a recent NJ Supreme Court decision, the Township of Manalapan challenged a condemnation award in favor of defendants entered after a jury trial. The issue was whether it was an error to admit testimony that the condemned property’s highest and best use would require a variance without first determining whether there is a reasonable probability the variance would be granted.
At trial, the Township’s expert explained that in arriving at his estimate of $2.83 million fair market value, he assumed the continued zoning ordinance of the property and evaluated the property by reference to the sale price of similar properties. He acknowledged, however, that unlike the subject property, those he compared did not have sanitary sewer or a municipal water system. Land owner’s expert planner opined, over the Township’s objection, that the highest and best use of the property would be to divide it into smaller lots. He explained that such a use of the property would yield “up to six times the density” under the current zoning but that “the Township committee would have to agree to change the zone.” Importantly, he did not offer any opinion about the value of the property “as is” or if a variance was not granted, or even about the probability that such a variance would be granted. Indeed, in ruling on the Township’s objection to his testimony, the court cautioned defendants’ expert not to “opin[e] on possibilities or likelihoods or odds or procedures about getting variances.”
At the close of evidence, the court ordered defense counsel not to argue in closing that, when calculating the property’s value, the jury could assume a variance would be granted. But the court allowed the question of fair market value to go to the jury.
On appeal, the court held that while a property’s highest and best use “is ordinarily evaluated in accordance with current zoning ordinances[,] [c]ertain circumstances may permit valuation to include an assessment of a change in the permitted use of a property, but only if there is a reasonable probability that a zoning change would be granted.” For determination, the trial court must examine the parties’ evidence as to the probability of the zoning change to “determine whether [the court] can render its required determination.”
Because there was no finding that a variance would likely be granted, the jury should not have been permitted to evaluate the property on any basis other than its highest and best use “in accordance with current zoning ordinances.”
The court remanded the case and if the land owner seeks once again to admit testimony of the highest and best use that requires a variance, the trial court must conduct a hearing to determine whether there exists a reasonable probability that a variance would be granted. Only if the court makes that finding may the jury consider, for valuation purposes, uses of the subject property that would require a zoning variance.
To discuss your NJ zoning matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Zoning Attorney