“Standing” Up for Yourself: Landowner Can Appeal Denial of Use Variance When a Contract Purchaser Filed the Variance Application

Agreements for the sale of real property are commonly contingent upon the contract purchaser’s obtaining some sort of development approval. If the approval is not granted, the contract purchaser can walk away from the deal. But what if the landowner wants to challenge the denial? Does the landowner have a sufficient interest in the dispute to step into the contract purchaser’s shoes? Last month, the Appellate Division of the New Jersey Superior Court answered in the affirmative. In Campus Associates, L.L.C. v. Zoning Board of Adjustment of the Township of Hillsborough, No. A-0690-08T2, — N.J. Super. — (App. Div. June 4, 2010), the court held that a landowner can appeal the denial of a use variance that was sought by a contract purchaser, as long as the application depended on property-specific proofs, and not on factors unique to the applicant.

The case arose in Hillsborough, N.J., where The Richman Group of New Jersey, L.L.C. (Richman) wanted to build affordable housing on a site owned by Campus Associates, L.L.C. (Campus). In 2006, the parties entered into a contract under which Richman would apply for the necessary approvals, and then purchase the property if the approvals were secured. Richman ran into trouble, however, with the township’s Zoning Board of Adjustment (Board), which denied its application for a use variance and related bulk variances in early 2008. Richman decided not to appeal, and terminated the contract.

Campus, though, had other ideas. If the variance were granted, it could develop the project itself, or seek to reinstate the contract with Richman, or even seek another contracting partner. So it filed an appeal with the Law Division. But upon the Board’s motion, the trial court dismissed the action, finding that Campus did not have “a sufficient stake and real adverseness” regarding the subject matter of the litigation. Campus appealed the dismissal to the Appellate Division, which agreed with Campus, reversed the dismissal, and remanded the matter to the Law Division.

Campus had standing to bring the challenge the Board’s decision, said the Appellate Division, because as the owner of the land, it was directly affected by the denial of the variance, which if granted would run with the land. Regardless of whether Richman actually went forward with the project, the variance would be of great benefit to the land and to Campus, which could pursue the project on its own or with another developer. Conversely, the denial of the variance application harmed Campus by denying it this potential advantage.

The Appellate Division distinguished an earlier decision upon which the Board relied, Spinnaker Condominium Corp. v. Zoning Board of Sea Isle City, 357 N.J. Super. 105 (App. Div. 2003).  Spinnaker involved the denial of a variance to a telecommunications company that wanted to install an antennae on a building to address a gap in its coverage. In that case, the court held that the landowner did not have standing to appeal the denial because the variance sought was “unique to the applicant.” The owner was not a telecommunications company, and so could not install the equipment on its own, and the variance sought required the board to consider whether the particular applicant really needed the variance to fill a coverage gap. Such factors were unique to the applicant, said the Campus Associates court, while the factors to be considered with Richman’s application were specific to the property.

Campus Associates is good news for landowners. If a development partner chooses not to appeal an adverse municipal decision, then in most circumstances the landowner can pick up the torch and avoid the expense and delay of another application process.