Norris, McLaughlin & Marcus

It’s All About Performance, Specifically

Let’s say you’ve entered into a contract to buy a piece of property: your dream house, horse farm, or cattle ranch. The price has been negotiated at arm’s length, the contract is signed, you’ve applied for a loan, and you are looking forward to the closing date. The closing date finally approaches, but the seller puts it off. This happens several more times, and you start to get that sinking feeling. Ah, the best laid plans of mice and men oft go astray. There can be any number of reasons why a seller balks at a sale: 1) seller’s remorse; 2) failure to plan properly for the move; or, 3) seller found a better offer and is going to trying to deprive you of your dream.

Fear not, for there is a remedy available to force the seller to come to his or her senses: specific performance. This particular equitable remedy is as its name implies. It is generally available when the remedy at law is inadequate. In this case, you, the buyer, aren’t so much interested in money damages as you are in getting your dream home, horse farm, or cattle ranch. And, not just any dream home, horse farm, or cattle ranch – you want that specific dream home, horse farm, or cattle ranch. There is no other piece of property like it in the world – literally. The remedy of specific performance is custom-built for just this type of situation. Our courts have recognized that “[t]here is a virtual presumption, because of the uniqueness of land and the consequent inadequacy of money damages, that specific performance is the buyer’s appropriate remedy for the [seller’s] breach of the [sales contract].”

Note, however, that in New Jersey there is a three-day attorney review period during which either party may cancel the contract for any reason or no reason at all.  Nevertheless, if an agreement is reached within the three-day period, the seller cannot back out of that agreement and it will be specifically enforced by the courts.

So, at the end of the day, equity comes to the rescue and you will get your dream house, horse farm, or cattle ranch. Three cheers for equity!

Courts Take Over Administration Of Affordable Housing in New Jersey

On March 10, 2015, the New Jersey Supreme Court essentially “benched” the Council On Affordable Housing (“COAH”) as a result of its continued failure to adopt “Third Round Obligations”, the Second Round Obligations having expired in 1999. In re Adoption of N.J.A.C. 5:96 and 5:97 by the N.J.Council on Affordable Housing (M-392-14; 067126).

The Court ruled that New Jersey courts may resume their role as the forum of first resort for evaluating municipal compliance with Mount Laurel obligations. The Court delayed the effective date of its Order for a period of 90 days to effectuate an orderly transition to the judicial remedies authorized by the Court. The upshot of the Court’s ruling is that certain municipalities will now be able to go to court to obtain a judicial stamp of approval of the municipality’s compliance with their affordable housing obligations.  In addition, in those instances where a municipality has failed to meet its obligations, developers AND low and moderate income residents will have the right to seek relief in the courts to ensure municipalities are meeting their constitutional obligations to provide a fair share of affordable housing.

The Court’s decision can be found here.

No Good Deed – Realtor Exposure Under FDCPA For Attempting To Collect Rent

A New Jersey Federal District Court recently refused to dismiss a plaintiff’s claim under the Fair Debt Collection Practices Act (FDCPA) brought against a realtor who took steps on behalf of the landlord-client to try and collect overdue rent from the plaintiff.

What happened to the plaintiff in this case seems rather draconian. Apparently, plaintiff was approximately 10 days behind on her rent. At or about that time, plaintiff, who was a US Army officer, had received a mobilization order that included an annual salary of $84,000.

The real estate agent, on behalf of the landlord, contacted plaintiff’s military superiors and advised them plaintiff was late on the rent. Based on information supplied to them by the realtor, plaintiff’s superiors revoked her mobilization along with the accompanying $84,000 salary.

When plaintiff sued both the landlord and the real estate broker under the FDCPA, the broker moved to dismiss, arguing that she was not a “debt collector” as defined under the FDCPA. The FDCPA defines a debt collector as

“Any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due, or asserted to be owed or due to another.”

While the broker’s liability has yet to be decided, the court ruled that plaintiff had the right to conduct discovery to determine whether the broker was a “debt collector” under the FDCPA.

While it appears the broker may have been attempting to better service the landlord-client, the better practice is to have the landlord collect its own debt. In that instance, the FDCPA would not apply. Any broker who feels compelled to try to collect rent on behalf of a landlord-client should first become fully conversant with the sometimes labyrinthine provisions of the FDCPA, and then fully adhere to its requirements. Those who fail to do so could very well find themselves enmeshed in expensive litigation in their Federal District Court.

NJ Supreme Court on The New Jersey Spill Act: “Take Your Time.” Under No Time Limit On Private Actions For Contribution

The below post is authored by contributor Martha N. Donovan.

Having been silent on the interpretation and application of the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. (“Spill Act”) for many years, the New Jersey Supreme Court has, over the past two years, been very active in interpreting and applying the language of the New Jersey Spill Act, clarifying and fundamentally changing the practice of environmental law in New Jersey.

The latest in the series of decisions beginning with New Jersey Department of Environmental Protection v. Ofra Dimant (A-2-11)(067993) (holding that the nexus required, even for governmental entities, to establish Spill Act liability is “a reasonable link between the discharge, the putative discharger, and the contamination at the specifically damaged site”) is  Morristown Associates v. Grant Oil Co., (A-38-13)(073248). Morristown was handed down by a unanimous New Jersey Supreme Court on January 26, 2015, and held, based on the plain wording of the Spill Act and its legislative history, that no statute of limitations applies to private party contribution actions pursuant to the Spill Act.  See N.J.S.A. 58:10-23.11f(a)(2) (a).   Emphasizing the use of the word “only” modifying the word “defenses” found in N.J.S.A. 58:10-23.11g(d)(1), the Court noted that the only defenses to Spill Act liability are: war, sabotage, God or the so-called innocent purchaser defense included in the Act by subsequent legislative amendment. The first three defenses are virtually worthless, and the last has not been fully tested by our courts as to its value.

The Morristown decision puts a stop to forum shopping by environmental attorneys, since the Federal District courts in New Jersey have routinely, heretofore,  applied a six-year statute of limitations for private party contribution actions, whereas New Jersey state courts never have.

Aside from clearing up the statute of limitations issue, the New Jersey Supreme Court also hints at a possible resolution to an open issue it failed to address in the matter of Magic Petroleum Corporation v. ExxonMobil Corporation (A-46-12)(069083).  That case, the second in the series of decisions by this Court, held that New Jersey Department of Environmental Protection (“NJDEP”) approval was not required as a pre-condition to a private party initiating a Spill Act contribution action seeking an allocation of liability. Magic Petroleum further stated, however, that such pre-approval would be necessary before a damage award could be entered by a court based on the Spill Act’s definition of “cleanup and removal costs.” Footnote 5 of  Morristown ,which seems out of place in that opinion, specifically notes that in 2009 the Legislature amended existing legislation to require remediation to proceed under the supervision of a licensed site remediation professional “without prior approval from DEP.”  Thus, based on this footnote, parties may now be able to obtain pre-approval for their “cleanup and removal costs” from their LSRPs rather than the NJDEP. At the very least they can make this argument.

For more information, please contact Martha N. Donovan at mndonovan@nmmlaw.com

Love Is In the Air In Deed – Legal Rights When Purchasing Property As An Unmarried Couple

Valentine’s Day will soon be upon us, when everyone’s fancy will turn to — real estate ownership issues? Well, of course! It seems more and more couples (as in unwed couples) are choosing to put off marriage, but not the purchase of a love nest. As the old adage goes, there’s nothing certain in life except for death and taxes. In many instances, love is not forever but regret can be. To avoid unnecessary regret, or unnecessary additional pain that often accompanies a breakup, unwed couples who purchase real estate together should consider what happens to “home sweet home” if the relationship sours or, worse, one of the co-owners suffers an early demise.

The first consideration is how title to the property is to be held. Unless the manner in which the parties are taking title is noted on the deed (other than husband-and-wife or same-sex partners in a civil union), the presumption is that they are taking ownership as tenants in common. In that instance, the lovebirds would each own a 50% undivided interest of the property. Either owner could, if he or she chose to do so, transfer his or her interest to someone else without the consent of or notice to the other cotenant. A tenant in common may also mortgage his or her undivided interest. Moreover, if some tragedy were to befall one of the owners, his or her share of the property would go to the deceased’s heirs. Great. Now you own the property with your significant other’s parents or oddball siblings. That can be awkward if not planned for or considered as a possibility in the first place.

A more appropriate form of ownership where the unmarried couple wants their share of the property to go to their significant other in the event of death is that of joint tenancy. This is a type of ownership where each party owns an undivided interest in the whole. The significant difference between “joint tenancy” and “tenants-in-common” is that of survivorship. That is, if one party happens to leave this mortal coil prematurely, then the survivor will receive the entire estate. In order to create a joint tenancy the deed must specify that the grantees are to hold title as joint tenants. The downside is that a joint tenant may still transfer his or her interest to a third party…which breaks the joint tenancy and creates a tenancy in common as described above.

In either of the above situations, the parties may wish to consider what happens if the relationship terminates, and then address those concerns in a separate agreement.

If the couple decides to get married, or form a civil union in the case of same-sex partners, then the property may be held as tenants by the entirety. Under that situation, neither party may transfer their interest in the property without the consent of the other party. Plus, upon the death of either spouse, the surviving spouse will be deemed to have owned the whole of all rights under the original deed. These are significant benefits of owning property as tenants by the entirety, along with other benefits the limited space in this blog precludes me from going into.

Suffice it to say that purchasing property as a couple carries with it significant rights and responsibilities, starting with the manner in which title to the property is held.

For more information, please contact Tim McKeown at tpmckeown@nmmlaw.com

Transactional Lawyers May Be Obligated To Explain The Obvious Terms Of A Contract

A recent New Jersey Appellate Division case ruled that lawyers handling transactional matters – such as real estate contracts – may have a legal duty to explain to their clients the terms of a contract, even if those terms are unambiguous and the client personally negotiated them.

In the unpublished decision of Cottone v. Fox Rothschild, the Appellate Division overturned the trial court’s dismissal of plaintiff’s claim that his lawyer committed malpractice by missing a last minute revision of a key provision in the contract, which ended up costing the client a lot of money. In doing so, the Appellate Division noted that, although it was clear a professional duty existed, there was no written retainer agreement outlining the scope of the attorney’s duty. In addition, the Appellate Division judges found that material issues of fact existed as to whether the scope of the attorney’s professional duty included a duty to inquire into, or explain to the client, the terms of the agreement, in particular the important contract provision revised at the last minute. So, a jury will get to decide whether the attorney in this case had an obligation to explain the obvious to his client.

The takeaway for lawyers is to not be shy about giving too much information. As Cicero once said, “advice is judged by results, not by intentions.” The takeaway for clients is to read your agreements and ask questions.

Flag On The Play: Tortious Interference

In football, if you interfere with the receiver trying to catch the ball, that’s pass interference. In basketball, if you impede the forward progress of the player with the ball, you will draw a foul. In baseball, it is illegal to interfere with the runner between the base paths. Are you starting to discern a pattern here?

Much like in some of our favorite sports, it is also illegal to interfere with a prospective purchaser’s contract, or prospective contract, to purchase property. This was made clear in the recent unpublished Appellate Division case of D’Agostino v. Gesher LLC et als.

In D’Agostino, a broker or brokers allegedly deep-sixed plaintiff’s offer to a foreclosing bank to purchase a foreclosed property. The property was later sold to someone the broker knew for less than what Plaintiff had offered (the bank was unaware of the alleged shenanigans). Plaintiff sued, but his case was dismissed at the trial level because the judge felt there was no case without a signed contract with the bank. The Appellate Division reversed and found that plaintiff presented enough evidence to withstand a motion to dismiss his tortious interference claim. In doing so, the Appellate Division outlined the elements of a tortious interference claim as follows:

1) the existence of a protectable interest;

2) malice — i.e., defendant’s intentional interference without justification;

3) a reasonable likelihood that the interference caused the loss of the prospective gain; and

4) resulting damages.

It is okay to compete against others; however, the “play fair” rule of the playground “play fair” applies in all cases, including the purchase of real estate.

The Effect Of A Judgment For Possession On Other Potential Lawsuits Between A Landlord And A Tenant

Generally, where there is a final judgment on the merits by a court having jurisdiction, that judgment is conclusive between the parties to a suit as to all matters that were litigated or that could have been litigated in that suit. In other words, you generally can’t have two bites at the proverbial apple.

How does this concept affect the entry of a judgment for possession in favor of a landlord, or a judgment in favor of a tenant dismissing an eviction action? For example, if the landlord evicts a tenant for nonpayment of rent is the landlord then precluded from suing the tenant for damages for the rent that is due? Or, if the landlord loses an eviction action on the basis that the tenancy court did not have jurisdiction because the court could not find a landlord-tenant relationship existed between the parties, is the landlord precluded from filing an action in ejectment in an attempt to remove the tenant from the space?

Fortunately, this concept, known as “res judicata,” generally does not apply to judgments from summary dispossess actions. Thus, examples of where the doctrine of res judicata does not apply after a judgment is entered in an eviction action include:

1. An action by a landlord for ejectment.
2. An action by a landlord for rent.
3. An action by a tenant for wrongful eviction.
4. An action by a tenant for return of the security deposit.
5. An action by tenant for damages.

Thus, a landlord or tenant need not fear being shut out of court on additional claims simply because either party was successful in either prosecuting an eviction action or defending one.

Anatomy Of A Tenancy Trial

If you are a commercial landlord, then chances are you have a relatively good relationship with your tenants. However, there are instances where a landlord and one of the tenants fall into a toxic relationship, or the tenant simply runs into financial difficulties resulting in nonpayment of rent, forcing the landlord to file an eviction action.

What can a landlord expect to have happen at the trial?

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Property Tax Appeals Can Save Money

Tax

One obvious reason for filing a real estate tax appeal is to obtain a lower assessment on your real property and thereby save significant tax dollars. An equally important reason to keep taxes low is to help maintain the value of the property, making it more saleable in the event that the tax appeal is successful.

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