New Jersey Supreme Court Clarifies Property Valuation Date in Condemnations

In Mount Laurel Township v. Stanley, 885 A.2d 440 (2005), the New Jersey Supreme Court clarifies the valuation date of property for purposes of condemnation under the New Jersey Eminent Domain Act.  The court held that N.J.S.A. 20:3-30(c) can only be used as the valuation date when property values change as a direct result of the impending condemnation.

In Stanley, a judgment of repose had been entered on December 3, 1997 approving the Township’s fair share housing plan which included the Stanleys’ property.  The Township did not file its condemnation action on the Stanley property until May 8, 2002, almost 5 years after the date of the judgment.  During this 5-year period, “inflationary circumstances” resulted in a significant increase in the value of the property.

The court in Stanley was asked to determine what date to use for valuation purposes of the condemnation proceedings.  N.J.S.A. 20:3-30 requires the earliest of the following dates to be used as the valuation date for compensation under the N.J. Eminent Domain Act:

(a)  the date possession of the property is taken by the condemnor;
(b)  the date of commencement of the action;
(c)  the date on which action is taken by the condemnor which is substantially affects the use and enjoyment of the property by the condemnee; or
(d)  the date of the declaration of blight by the governing body.

The Township argued that, under N.J.S.A. 20:3-30(c), the appropriate date for valuation was December 3, 1997; the date of the judgment which identified the Stanley property as property to be acquired by the Township and conveyed for purposes of the Fair Share Housing Development. 

The Stanleys argued that December 3, 1997 did not satisfy the requirements of subsection (c) because the use and enjoyment of their property was not substantially affected until November of 2002.  The Stanleys instead asserted the valuation date should be governed by N.J.S.A. 20:3-30(b) and that the value of the property should be ascertained as of May 8, 2002, when the Township filed its condemnation action. 

The trial court agreed with the Township, holding that N.J.S.A. 20:3-30(c) governed and the date of the judgment of repose should be used for valuation purposes.  Basing its decision on the case of Township of West Windsor v. Nierenberg, 695 A.2d 1344 (1997), the court held that the December 3, 1997 date satisfied subsection (c) because the “judgment of repose clearly and unmistakably identified the Stanley property as a property to be acquired by the Township.”  The trial court recognized that some use and enjoyment of the property would continue beyond that date, but that certain ownership rights, such as the right to sell, were impinged upon entering of the judgment thus satisfying the requirements of N.J.S.A. 20:3-30(c).
      
On appeal, the case was reversed and remanded for valuation proceedings using May 8, 2002 as the valuation date.  The New Jersey Supreme Court affirmed the appellate decision holding that the critical determination under Nierenberg, as to whether N.J.S.A. 20:3-30(c) determines the valuation date, is not whether the condemnation is certain, but “whether the effect of that certainty causes an increase or decrease in the property’s value such that just compensation requires valuation as of the date of that effect.”  In the Stanleys’ case, the property value fluctuation was not attributable to the certainty of condemnation, but rather regular market forces.  Only where a condemnation proceeding “directly unequivocally and immediately stimulates an upward or downward fluctuation in value which is directly attributable to a future condemnation” will subsection (c) represent just compensation. 
    
The court did not address whether, aside from its value, the Stanleys’ use and enjoyment of their property was substantially affected by the entry of the judgment of repose.

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