Transactional Real Estate & Leasing - Real Property & Environmental Law Alert

Chapter 91 - Failure to Comply Still Absolute Bar to Tax Appeal in N.J.

Shepard A. Federgreen — Mon, 14 May 2012 11:44:25 -0500

In United Parcel Service v. Secaucus, UPS failed to properly respond to a request for information as to income and expenses made by the tax assessor pursuant to N.J.S.A. 54:4-34, universally known as a “Chapter 91 request.” Later, when UPS brought an action in the Tax Court to challenge its 2011 assessment, the assessor moved to have the action dismissed due to UPS’s failure to properly respond to the Chapter 91 request. This is what a tax assessor typically does in these circumstances because the statute is clear that the failure of the owner to respond to a Chapter 91 request within 45 days is an absolute bar to the right to bring an appeal of the assessment.

The Tax Court, noting the “severity of the sanction,” also noted the trend in the cases to hold the assessor to strict compliance with its obligations when making a Chapter 91 request, i.e., providing a copy of the statute and adequate notice to the property owner framed in language that is both clear and unequivocal. Here, where the tax assessor could not produce a copy of its notice, and there were various issues of proof, the Tax Court ruled that the Chapter 91 request was defective and UPS could prosecute its appeal.

So if a property owner fails to respond or properly respond to a Chapter 91 request and then brings an appeal of its assessment, the property owner might be able to defeat the assessor’s motion to dismiss for failure to comply with the Chapter 91 request by demonstrating some element of the assessor’s request did not meet the assessor’s obligations with regards thereto. That’s good to know, and might be very useful in the right circumstances. But that’s not the lesson here. The lesson is to respond to Chapter 91 requests in a timely and informative manner. Then, should the taxpayer bring an appeal, the assessor will not be in a position to even raise Chapter 91 as a basis to dismiss the property owner’s appeal.

Shepard A. Federgreen is a Director in the Gibbons Real Property & Environmental Department.

Nancy Lottinville to Speak at PLI's NJ Basic Law CLE Marathon Program on Real Estate Closing Procedures

Gibbons P.C. — Mon, 09 Apr 2012 12:37:46 -0500

Nancy A. Lottinville, Esq., Counsel to the Gibbons Real Property & Environmental Department, will speak at the Practicing Law Institute’s New Jersey Basic Law CLE Marathon on May 29, 2012. Nancy will present on New Jersey real estate closing procedures.

The all-day program is designed to satisfy part of the newly instituted mandatory continuing legal education requirements in New Jersey and to hone legal professionalism. In accordance with New Jersey’s requirements, this one-day program will include New Jersey-specific instruction and discussion on topics authorized by the Supreme Court of New Jersey Board of Continuing Legal Education, including Civil Trial Practice, Criminal Trial Practice, Basic Estate Adminsitration, Real Estate Closing Procedures, Trust and Business Accounting and New Jersey Professional Responsibility and Ethics.

]]>Nancy’s presentation will cover Real Estate Closing Procedures, including:

Classes of property and types of ownership
Land use controls and regulations
Financing and the mortgage market mandated disclosures
Transfer of property

For those unable to attend, the program is also being webcast. For more information and to register for the program, click here.

Gibbons Real Property & Environmental Lawyers Listed as Leaders in Their Fields

Gibbons P.C. — Thu, 05 Apr 2012 09:34:54 -0500

Twelve lawyers in the Gibbons Real Property & Environmental Department were listed by New Jersey Super Lawyers and New Jersey Super Lawyers Rising Stars as leaders in their fields. In addition, Russell B. Bershad, Co-Chair of the Gibbons Real Property & Environmental Department, was listed as a top 100 attorney in New Jersey. Overall, 69 lawyers in the firm were featured in these two publications.

The following members of the department were listed in the 2012 issue of Super Lawyers:

Russell B. Bershad, Real Estate, Co-Chair of the Gibbons Real Property & Environmental Department
Irvin M. Freilich, Environmental Litigation
Howard Geneslaw, Land Use/Zoning
Douglas J. Janacek, Land Use/Zoning, Co-Chair of the Gibbons Real Property & Environmental Department
John H. Klock, Construction/Surety
Susanne Peticolas, Environmental

Those listed in the Rising Stars section were:

Michael Miceli, Land Use/Zoning
Sandro G. Ocasio, Environmental Litigation
Uzoamaka N. Okoye, Business Litigation
Jennifer M. Porter, Land Use/Zoning
Jennifer P. Smith, Real Estate
Jason R. Tuvel, Land Use/Zoning

NJ Bulk Sales Notification Requirements

Gibbons P.C. — Mon, 02 Apr 2012 15:22:23 -0500

Russell B. Bershad, Co-Chair of the Gibbons Real Property & Environmental Department and Peter J. Ulrich, a Director in the Gibbons Corporate Department, recently co-authored an article published in the New Jersey Law Journal entitled, “N.J. Bulk Sales Notification Requirements: Recent Changes and Guidance.” The article describes key issues of concern with applicability of the law which was broadened significantly in 2007 and then scaled back last fall.

The article outlines the notification and escrow process and also highlights potential pitfalls that arise in special cases. To read the complete article, click here.

The Extension of the Permit Extension Act is on the Move, To Be Reviewed Today By Assembly Appropriations Committee

Jason R. Tuvel — Mon, 12 Mar 2012 15:15:44 -0500

About two months ago, several NJ Legislators, including State Senator Paul Sarlo (Bergen/Passaic) and Assemblyman Ronald Dancer, proposed bills that would amend the 2008 “Permit Extension Act.” Designed to give developers breathing room in the sluggish economy by extending the validity of development approvals, Proposed Bill S743 (the “Bill” or “S743”) is gaining traction and is moving through the necessary legislative committees. On March 5, 2012, S743 passed by a vote of 4-0 by the Senate Budget and Appropriations Committee. The Bill is scheduled to go before the Assembly Appropriations Committee on March 12, 2012.

Under the current version of the Permit Extension Act, the expiration of all “approvals” that were granted during the “extension period” as defined in the statute have been tolled through December 31, 2012. The “extension period” is currently defined as “the period beginning January 1, 2007 and continuing through December 31, 2012.” S743 proposes that the definition of the “extension period” be changed so that it runs through December 31, 2014. Therefore, based on the 6-month tolling provision currently in the Permit Extension Act, approvals received during the extension period could be extended as far out as June 30, 2015. It should be noted that A337 proposed to extend the “extension period” through December 31, 2015. However, A337 has not gained the same head of steam as S743.

S743 as amended includes language to make it clear that as it pertains to Statewide planning areas, the definition of “extension area” shall remain in effect until June 30, 2013, or until such later time as the State Planning Commission revises and readopts New Jersey’s State Strategic Plan and adopts regulations to refine this definition. Further, all underlying municipal, county, and State permits or approvals within the Pinelands Area are extended pursuant to the “Pinelands Protection Act,” N.J.S.A. 13:18A-1 et seq.

]]>The definition of “approvals” under the Permit Extension Act covers most permits issued by State rule or regulation, including, preliminary and final approvals for development applications under the New Jersey Municipal Land Use Law. S743 proposes that the definition of “approvals” be amended to include any “agreement with a municipality, county, municipal authority, sewerage authority, or other governmental authority for the use or reservation of sewerage capacity.”

S743 appears to be the bill that may amend the Permit Extension Act to help developers that need to wait a little longer for the economy to bounce back to save projects for which they have spent significant funds in obtaining approvals for development.

Jason R. Tuvel is an Associate in the Gibbons Real Property & Environmental Law Department.

The Time for Electronic Recording is Now: New Jersey Passes New Law Updating Title Recordation Procedures

Nicole E. Taplin — Fri, 27 Jan 2012 12:47:56 -0500

In our electronic age, New Jersey’s antiquated laws governing document recordation were in serious need of some updates. A new law was recently passed modernizing the New Jersey Statutes by requiring the acceptance of electronic alternatives to paper documents, in addition to paper documents. In addition, provisions of the statute, disbursed over various sections that logically belonged together, have been compiled in a more concise and coherent fashion, and antiquated language and procedures have been removed. The revisions clearly result in a much more reader- friendly version of the law relating to title recordation in New Jersey.

Assembly Bill A-2565 P.L.2011, c.217 revising the New Jersey statutes pertaining to the recording of title documents was signed into law by Governor Christie on January 17, 2012. The New Jersey Law Revision Commission (NJLRC) approved this revision project following the enactment of the federal Electronic Signatures in Global and National Commerce Act (E-sign), and New Jersey’s enactment of the Uniform Electronic Transactions Act (UETA). The legislative statements (Statements) issued by the Senate Community and Urban Affairs Committee (Senate) and Housing and Local Government Committee (Assembly) related to A-2565 note that “while the use of electronic deeds and mortgages is not expected to occur in the near term, both E-sign and UETA encourage the development of systems that will accept electronic documents without disrupting the ongoing process of title recordation.”

Title 46, chapters 15 to 26 of the New Jersey statutes currently govern the recording and indexing of title documents. Most of these statutes were written when recording meant storing and including paper documents in large books. Amendments then allowed recording offices to microfilm documents and later permitted the use of any other method of recording that was “in conformance with rules, standards and procedures promulgated by the Division of Archives and Records Management (Division) in the Department of State (Department) and approved by the State Records Committee pursuant to its authority under section 6 of P.L.1994, c.140 (C.47:1-12) and the “Destruction of Public Records Law.” The recording system is intended to be fluid, preventing its extinction, by allowing for the approval of new methods of recording documents as recording technology advances. However, as the Senate and the Assembly note, with an increase in the use of new recording methods, comes an increase in the need for regulatory authority to assure uniformity.

]]>The new law is a significant revision to Title 46 in many ways including the addition of three new chapters, chapters 26A, 26B, and 26C, replacing and repealing certain sections, and the legislature’s attempt to simplify the statutes by “combining overlapping provisions and deleting unnecessary ones,” simplifying language and reassembling numerous sections. Some of the material, substantive revisions as highlighted in the NJLRC’s comments include (but are not limited to):

TITLE 46, CHAPTER 26A, RECORDING:

Definition added: “Document” includes both: (1) Paper documents, and (2) Electronic documents, documents created, communicated or stored by electronic means.
Definition added: A document is “recorded” if (1) The document or its image has been placed in the permanent records of the recording office, and (2) The document has been indexed as provided by this chapter. Prior to this revision, the statutes did not state directly what is meant by “recording” and the NJLRC notes that cases were not consistent as to when a document is recorded.
Documents that may be recorded: The portions regarding the recording of instruments concerning personal property have been deleted since as the NJLRC notes, “Liens against personalty, other than personalty that is or will be fixtures, are recorded by filing a UCC form with the division of Commercial Recording.”
Prerequisites for recording: The opening language has been changed to facilitate the electronic filing of documents such that the recording office need not receive an original document to record and an image will suffice if certain requirements are met.
Form of documents and maps; cover sheet or electronic synopsis: The section preserves the ability to file paper documents but also allows for acceptance of electronic documents. Authority is given to the Division of Archives and Records Management to establish statewide form requirements for electronic recording. The form requirements for maps are also now included in this section.
Duty to record; recording officer's books, methods: This section states requirements for recording standards and methods including the requirement that the method produces a clear, accurate and permanent image of a document and a method that allows the document to be found by the indexes maintained. References to other books for different kinds of documents required by Title 46 or other law have been deleted, with the NJLRC noting that this revision allows for a single set of books and indexes for newly-recorded documents. The revision also permits unique identifying numbers to be used in addition to book and page numbers. Time limits for recording or rejection of a document by recording officers are also added.
Sequence of recording: This section is new in that it allows the person submitting two or more documents at the same time to determine the order in which they are recorded rather than having the recorder record according to the priority of their dates.
Documents filed as provided by other statutes: This section provides that documents that are now “filed” pursuant to other laws be recorded and indexed with recorded documents using the same methods. The NJLRC notes that this change will not only simplify the recording office processes, it will allow a single search to disclose all county-filed or county-recorded documents that affect real estate.
Notices of settlement: This section clarifies that one notice of settlement can be recorded for a conveyance and a mortgage and the form of the notice has been slightly simplified. The timeframe for effectiveness for the notice is changed from 45 days to 60 days from the date of recording and the effective period may be extended for one period of 60 days by recording an additional notice of settlement before the expiration or discharge of the notice of settlement.
Effect of recording: The revision requires that documents have to actually be recorded to give notice. The new definition of “recording,” as noted above, requires that a document be indexed and placed in the permanent records of the recording office. In addition, the revision does not require that a document be duly acknowledged or proved and certified to have the effect of notice. The section that limits the notice effect to documents on record for six years despite defects in acknowledgement, proof or certificates has been removed. As long as a document is recorded, notice is effective. The revision goes further to state that a deed or other conveyance of an interest in real estate shall be of no effect without notice. The NJLRC notes that the section “embodies one of the basic principles underlying the recording statutes, that an unrecorded document is ineffective against later claimants who have no notice of it…If a party makes a conveyance in a form that does not permit it to be recorded, then a subsequent bona fide purchaser, mortgagee or creditor who could not learn of the conveyance from the land records is not bound by the conveyance absent notice of it at the time he acquired the interest for value or docketed the judgment. This principle is in accord with the statute of frauds, 25:1-11, which makes unwritten conveyances enforceable as conveyances only in some cases where possession is transferred. Transfer of possession frequently is notice to prospective purchasers or mortgagees.

TITLE 46, CHAPTER 26B, MAPS:

The substance of most of the sections pertaining to maps remains unchanged. Some sections have been reworded or rearranged. In the section entitled “Filing and indexing of maps, fee,” references to the way that maps are stored and the format of a map and its copies have been deleted, and, the new law seems to aim to allow for technological advances in map filing.

TITLE 46, CHAPTER 26C, GENERAL AND TRANSITIONAL:

Regulations: This section states that the Division in consultation with the County Clerks and Registers of Deeds shall adopt regulations to establish format and technical requirements for recorded documents to foster state-wide uniformity in title recordation and otherwise to implement the new law. Regulations shall be adopted within 12 months after the effective date of the new law.

Uniform Electronic Transactions Act (UETA) superseded: This section states that to the extent that the new law conflicts with Sections 17 and 18 of the UETA, the new law supersedes. The new law modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act but does not modify, limit, or supersede Section 101(c) of that act or authorize electronic delivery of any of the notices described in Section 103(b) of that act.

Review of Document Filing and Recording Fees: Within 2 years of the effective date of the new law, the Division and the Department shall adopt rules and regulations requiring county clerks and registers of deeds and mortgages to report the number of documents recorded or filed and all document filing and recording fees that are collected by their offices, categorized by document type, to the Division and to the Department. The goal of the rules and regulations will be to develop and implement a standard form and procedure for county clerks and registers of deeds and mortgages to utilize so as to report on the foregoing in a clear and concise manner. Within 3 years of the effective date of the new law, the Division and the Department will issue an interim report on same and within 4 years, a final report. The report will specify an average state-wide fee for the filing or recording of each type of document and may contain recommendations of the division and the department to the Legislature for the establishment of standard per document filing and recording fees. 5 years after the date of adoption of the new law, the Legislature shall consider the establishment of standard per document filing or recording fees.

In summary, the new law better accommodates the recording of electronic alternatives to paper documents and will guide the development of uniform recording procedures as we progress from a technological standpoint. It will be interesting to watch how the law relating to title recordation in New Jersey evolves in our rapidly changing information age. As many county clerks and lawyers have already discovered, there will come a day when electronic recordings and filings will be mandatory because of the potentially prohibitive expense of maintaining two systems, one for paper and one for electronic alternatives. The current legislation moves our system one step closer to a world in which all of our documents will be filed and recorded electronically. As with all regime changes, advantages and disadvantages will result. For now, Happy E-recording.

Nicole E. Taplin is an Associate in the Gibbons Real Property & Environmental Department.

The Permit Extension Act May Keep Extending

Jason R. Tuvel — Tue, 24 Jan 2012 09:09:54 -0500

Apparently concerned that the economy may not be recovering rapidly enough, the 215th New Jersey Legislature now convened, introduced a new bill (A337) on January 10, 2012, by Assemblyman Ronald S. Dancer of District 12, to change the definition of the “extension period” under the Permit Extension Act so that it runs through December 31, 2015. Therefore, based on the 6-month tolling provision currently in the Permit Extension Act, approvals received for development applications during the extension period could be extended as far out as June 30, 2016. Bill A337 has been referred to the Assembly Housing and Local Government Committee.

In 2008, as the economy was sliding into recession, the New Jersey Legislature passed the “Permit Extension Act,” which tolled the expiration of all development approvals that were granted during the “extension period” as defined in the statute. The intent was to preserve the benefit of permits until the economy improved. The “extension period” is currently defined as “the period beginning January 1, 2007 and continuing through December 31, 2012.” The definition of “approvals” under the Permit Extension Act covers most permits issued by State rule or regulation, including, preliminary and final approvals for development applications under the New Jersey Municipal Land Use Law.

If signed into law, Bill A337 could provide developers with an opportunity to wait a little longer for the economy to turn around in order to build projects that have received approvals and are considered dormant at the present time.

Jason R. Tuvel is an Associate in the Gibbons Real Property & Environmental Department.

Lease Extension Notices - New York Appellate Division Ignores Lease Text in Name of Equity

Shepard A. Federgreen — Wed, 04 Jan 2012 13:50:33 -0500

New York’s Appellate Division, First Department, in 135 East 57th Street LLC v. Daffy's Inc. was faced with the following facts. A retail chain had occupied high profile space for about 15 years. The tenant had the right to renew by notice to the Landlord to be delivered by January 31, 2010, a year prior to lease expiration. For no reason other than a mistake by the tenant's controller, notice was not timely given. However an email and fax was sent (dated January 30, 2010) on February 4, 2010, purporting to exercise the option. The landlord on February 5, 2010, rejected the notice as being late, and accused the Tenant of back-dating the notice for its own purposes.

The trial court, for reasons which are not set forth in the appellate opinion, determined the tenant was entitled to equitable relief, and determined the notice exercising the renewal period, although not timely, was nonetheless effective.

The Appellate Division, reviewed the existing law of New York on honoring technically defective lease extension notices and summarized same, quoting Vitarelli v. Excel AutomotiveTech. Ctr., Inc.,

Equity will relieve a tenant from a failure to timely exercise an option in a lease to renew or purchase if (1) the tenant in good faith made substantial improvements to the premises and would otherwise suffer a forfeiture, (2) the tenant's delay was the result of an excusable default, and (3) the landlord was not prejudiced by the delay.

]]>The Court addressed these three tests in reverse order as follows:

1) Prejudice to Landlord - The Court seemingly took judicial notice of the fact the landlord was not prejudiced, which in all likelihood was true given the timing, i.e., tenant provided 11 months and 27 days notice rather than one year's notice of the extension, but since there was apparently no evidence on the issue, not necessarily so.

2) Delay in Notice was due to an "excusable default" - The Court, in one sentence and virtually without discussion, equates the tenant's Controller's "honest mistake" with "excusable default". If an honest mistake constitutes an excusable default one is forced to wonder what set of circumstances would not constitute excusable default.

3) Tenant, in good faith, made substantial improvements that would be forfeited - The Court acknowledged the tenant did not do this, i.e., this prong of the test was not met. Instead, the Court interpreted “good will” associated with 15 years at the location to be a valuable asset that would be forfeited in the absence of equitable intervention.

Then, notwithstanding the dubious thought process as to test two and the outright acknowledgment that test three was not met, but after noting the profitability of the store and the large number of employees who would lose their jobs, ruled the notice was effective.

This case seems to be a tremendous expansion of the existing law, and to stand for the proposition that the Court is free to look at all the facts and do whatever it thinks is right, given all the circumstances. Indeed, seemingly highlighting the lack of predictability, the Court quoted the Court of Appeals in JNA Realty, "By its nature, equitable relief must always depend on the facts of the particular case and not on hypotheticals."

Although the power of the court to “do equity” has a certain appeal (for no one is for unjust results), a system which allows a panel of judges, after the fact, and on a case-by-case basis, to impose their personal set of morals in lieu of the agreement reached between the parties is a system that lacks predictability and precision. And it is a system which is only equitable in the eyes of the party to whom relief is granted - I assure you it isn’t viewed as the least bit equitable by the party who sought to do nothing more than enforce the precise terms of the agreement between the parties.

Shepard A. Federgreen is a Director in the Gibbons Real Property & Environmental Department.

Upcoming Changes to ADA May Impact Landlords

Ivette P. Alvarado — Wed, 30 Nov 2011 13:52:17 -0500

For the first time in 20 years, the regulations for accessible design under the Americans with Disabilities Act (ADA) have been revised. Compliance with the new ADA Standards for Accessible Design (ADA Standards) may be required by March 2012. These changes may have significant impact on existing and new leases.

The new regulations were enacted on July 23, 2010, and while businesses had the option to start complying with the new standards beginning in September of 2010, mandatory compliance is not required until March 15, 2012. The revamped rules include non-discrimination provisions that apply only to places of public accommodation, such as stores, restaurants, movie theatres and the like, and standards for accessible design that apply to all facilities. Compliance with the ADA Standards are likely to create the bigger concern for landlords.

Unlike building codes, compliance with the ADA Standards cannot be grandfathered. Although there are “safe harbors” for businesses and property owners of existing facilities, there are also exceptions to the safe harbors. Of particular concern for landlords is the removal of architectural barriers and which standards, 1991 or 2010, need to be met. Leases should be reviewed carefully to determine whether ADA compliance is the responsibility of the tenant or the landlord. There are tax incentives available for small businesses to assist in financing ADA compliance which could impact negotiations between landlord and tenant.

]]>As the compliance deadline approaches, landlords or others undertaking company policy improvements, removal of architectural barriers, new construction or renovations in compliance with the ADA should carefully review their rights and obligations under existing leases and carefully draft provision in new leases to address which standard must be met and which party must meet them. For a more in-depth discussion of these issues, click here to read the article appearing in the New Jersey Law Journal.

Ivette P. Alvarado is an Associate in the Gibbons Real Property & Environmental Department.

Gibbons Real Property & Environmental Department Attains National and Metropolitan Rankings in 2012 Best Lawyers

Gibbons P.C. — Tue, 29 Nov 2011 12:46:11 -0500

Gibbons P.C. is proud to announce that several Real Property & Environmental Department (RPE) practice areas have achieved national and metropolitan rankings in the 2012 edition of Best Law Firms, published by U.S. News and Best Lawyers®. Best Lawyers® is the oldest and most respected peer-review publication in the legal profession. In addition, seven RPE attorneys have been individually selected for inclusion in six different categories.

The firm’s Land Use & Zoning Law practice was nationally ranked in the third tier in its category. In addition, the Department achieved first-tier rankings for the Newark, New Jersey metropolitan region in five categories:

Environmental Law
Land Use & Zoning Law
Litigation – Environmental
Natural Resources Law
Real Estate Law

]]>Because Best Lawyers is based on an exhaustive peer-review survey in which more than 41,000 leading attorneys cast almost 3.9 million votes on the legal abilities of other lawyers in their practice areas, and because lawyers are not required or allowed to pay a fee to be listed, inclusion in Best Lawyers is considered a singular honor. Corporate Counsel has called Best Lawyers “the most respected referral list of attorneys in practice.”

The RPE attorneys who earned individual rankings in the most recent edition of Best Lawyers® rankings are:

Russell B. Bershad (Department Co-Chair)

Real Estate

Peter J. Carton

Real Estate

Shepard A. Federgreen

Real Estate

Irvin M. Freilich

Litigation – Environmental

Douglas J. Janacek (Department Co-Chair)

Land Use & Zoning

John H. Klock

Environmental
Litigation – Environmental

Susanne Peticolas

Environmental
Litigation – Environmental

Nicole E. Taplin Joins Gibbons Real Property & Environmental Department

Gibbons P.C. — Mon, 03 Oct 2011 15:22:37 -0500

Gibbons is pleased to announce that Nicole E. Taplin, Esq. has joined the firm as an Associate in the Gibbons Real Property & Environmental Department. Nicole concentrates her practice on commercial real estate transactions including acquisitions, dispositions, financings and leasing matters.

Nicole received her J.D. from the University of Miami School of Law and her B.A., in economics and philosophy, from Emory University. Admitted to practice in the States of New Jersey and Florida, she represents clients in various aspects of commercial real estate, including the negotiation, documentation and closing of the sale, purchase and development of vacant land, office buildings, apartment buildings and complex mixed-use projects. She also has significant experience representing owners and developers in the structuring, creation and operation of residential, commercial, mixed-use and hotel condominiums, homeowners’ associations and planned communities.

Prior to joining Gibbons, Nicole worked at Greenberg Traurig, LLP in the Real Estate Department of their Miami office for several years and later operated her own law firm focusing on real estate transactions.

“Beyond exceptional legal skills, Nicole comes to us with several years experience running her own law firm, which we believe will greatly inform her legal practice. Like our clients, she has been a hands-on business owner and operator which will provide highly relevant insight and perspective as she addresses the varied real estate needs of our clients,” states Russell B. Bershad, Co-Chair of the Gibbons Real Property & Environmental Department.

If the Creek Don't Rise -- Montana's Right to Rental for Riverbeds Used by Power Company's Dams Now Before the U.S. Supreme Court - PPL Montana, LLC v. State of Montana

John H. Klock — Fri, 23 Sep 2011 17:15:24 -0500

The U.S. Supreme Court will take up another Montana river case. The case involves a dispute between the State of Montana and a power company that purchased dams on several Montana rivers, which are licensed under the Federal Power Act by the Federal Energy Regulatory Commission. The last time Montana visited the U.S. Supreme Court, it lost to Wyoming in a dispute over water usage under the Yellowstone River Compact. This time Montana stands to gain $41,000,000 as fair market rental for its river beds granted on summary judgment and upheld by the Montana Supreme Court.

The power company, PPL Montana, LLC, is a wholesale electric generator (exempt from public utility regulation) who owns several federally licensed dams on various rivers in Montana. At issue is the ownership of over 500 miles of rivers and 5,600 acres of riverbed under dams and reservoirs associated with two federally licensed hydroelectric facilities on the upper Missouri, Madison and Clark Fork Rivers in Montana. Most of the dams were constructed between 1891 and 1930 and the projects were approved in 1949 and 1956 under the Federal Power Act. According to the Montana Supreme Court, the riverbeds belong to the State of Montana. When the original 13 states became sovereign, they gained absolute right to all navigable rivers and the lands beneath them for public use. All states joining the Union thereafter were put on equal footing with the original thirteen and so acquired the same rights. Thus Montana’s ownership depends upon whether the rivers were navigable when the Montana joined the union, i.e. 1889. Navigability basically means whether a log can float downstream. If so, it is commercially navigable. PPL had argued that under US Supreme Court precedent, the issue of navigability for title purposes required a section by section test where there were relevant non-navigable sections of the river at the time of statehood. The trial court had concluded that a section by section analysis was not necessary and that based on current conditions of recreational usage on parts of the rivers, the entire rivers were navigable in 1889.

]]>By owning the dams, the Montana Supreme Court held that PPL uses the riverbeds both above and below the dam. PPL acquired the dams in l999 and is charged for the usage between 1999 and 2007 at the time of the trial. PPL filed a petition on two grounds: one is the State's determination of navigability was flawed and the other is that a license under the Federal Power Act preempts that State's right to seek compensation. Indeed, PPL noted that it currently pays the federal government over $500,000 in annual charges for the “use, occupancy and enjoyment” of federal lands, which includes the riverbeds held by the Montana Supreme Court to belong to the state.

Although at first glance, the dispute between a hydroelectric power company and a state may seem esoteric, the case could prove to have more extensive ramifications preemption and the interplay between federal and state authority.

John H. Klock is a Director in the Gibbons Real Property & Environmental Department.

Orange County Clerk's Office Closes, Preventing Property Searches and Threatening to Delay Real Estate Closings

Howard D. Geneslaw — Mon, 12 Sep 2011 10:45:47 -0500

Due to building conditions resulting from recent heavy rains, the County Executive of Orange County, New York, closed indefinitely the Orange County Government Center as of 3:00 p.m. last Thursday. In a press release, Orange County Executive Edward A. Diana announced having “ordered that the building be closed until further notice as we evaluate and remediate the situation.” The Orange County Government Center houses the County Clerk’s Office, among other government offices.

On an interim basis, the County Clerk’s Office will be operating out of the Department of Social Services, located at 11 Quarry Road in Goshen, and will offer the following limited services: recording and filing of documents, taking in maps, passport and pistol permits.

The closure and its indefinite duration present significant issues for real estate transactions since Orange County’s real estate records are housed at the Orange County Government Center and therefore are not presently accessible. As a result, until those records are relocated or the Orange Government Center is reopened, it will not be possible to perform searches in Orange County, including continuation searches for closings involving deals already in contract. The records to perform these searches are not available on-line.

]]>New searches will have to be placed on hold until such time as the records become available, which will likely delay closings and may require modification of the contingency periods in purchase and sale agreements. For deals where a title search has already been performed, some title companies may consider allowing closings to proceed with a seller’s affidavit in lieu of a continuation search if the closure is expected to be long-term. These situations likely will be evaluated on an individual case-by-case basis.

Although the County Executive’s press release does not give any indication about the duration of the closure, we have learned that employees were seen packing up their desks at the close of business yesterday as though they would not be returning soon. We have also learned that the County is investigating an alternative site for relocation of official records, including property records, but apparently no site has been identified as of yet, and even when one is identified, moving that large a volume of documents will be a significant undertaking.

Given the uncertainties involved, real estate attorneys should review the contracts for their pending deals to see what contingencies are included and how the inability to conduct searches may impact their clients’ rights under those contracts. For deals currently being negotiated, consideration should be given to how the contingency clauses should be drafted and what the remedy will be if a title search cannot be performed for an extended period of time.

As bad as things are in Orange County, it could be worse. We understand that in upstate Schoharie County, the entire county government complex had several feet of water on the main floor and that all the county's paper records were destroyed. The issue in Orange County appears limited to access to paper records, not damage to them or their destruction.

Howard D. Geneslaw is a Director in the Gibbons Real Property & Environmental Department.

COAH Fees - Some Certainty in an Uncertain World

Douglas J. Janacek — Thu, 25 Aug 2011 15:29:00 -0500

While much of the uncertainty regarding affordable housing requirements in NJ remains, the questions involving the applicability and future of the 2.5% nonresidential development fee were answered yesterday. Acting Governor Kim Guadagno signed into law legislation that reestablishes the exemption from the fee for eligible projects. Perhaps the most broadly applicable exemption provides that projects which obtain preliminary or final site plan approval prior to July 1, 2013 are not subject to the development fee provided that building permits are issued by December 31, 2015.

The prior exemption from the fee expired July 1, 2010. The new legislation also provides for the reimbursement of fees paid subsequent to July 1, 2010, unless already spent by the municipality in connection with an affordable housing development. A developer must seek such reimbursement within 120 days of the effective date of the bill.

“With the economy still very much in flux, the suspension of the non-residential development fee will assist New Jersey’s non-residential real estate to get back on track, produce the jobs, taxable revenue and ratables this state desperately needs,” said New Jersey Department of Community Affairs Commissioner Lori Grifa, who oversees the State’s affordable housing development efforts.

For the full text of the legislation, click here.

* Photo courtesy of FreeFoto.com.

Douglas J. Janacek Co-Chairs the Gibbons Real Property & Environmental Department.

New Jersey Releases Sensible Lease Process for State Lands

LexBlog — Mon, 22 Aug 2011 08:31:13 -0500

On August 18, 2011, DEP Commissioner Bob Martin and DOT Commissioner James Simpson released a set of guidelines to revamp and apply consistency to New Jersey’s land leasing process for State Lands. A panel of ten State Agencies was convened to analyze the current lease policies and compile a Lease Valuation Report that offers recommendations on leases for Tidelands; Linear Corridor Projects (other than Tidelands); Publicly Bid, Market-Based and Nominal Fee leases; Telecommunications Towers and Antennas, Aquaculture, and leases Related to Transportation Corridors. The guidelines will be adopted by all State agencies, with most of the guidelines implemented immediately.

The panel reported an honest and critical view of the current system for valuing certain types of leases labeling it simply as “broken.” The panel noted that some fee schedules are terribly outdated and that certain rules and statutes prevent the maximization of compensation to the State for the use of its land.

The new guidelines serve two public purposes: 1) to ensure that the State and its Citizens receive fair compensation for the use of State land and 2) to reduce the environmental impact of those that require use of State lands for private projects.

]]>One of the changes is the elimination of perpetual term leases or easements for Tideland and Linear projects as well as a switch from a parcel-by-parcel negotiation and appraisal method to a flat square footage-based rate. As a point of perspective, the DEP alone owns 800,000 acres of fish and wildlife habitats and parks often traversed by utility lines. A switch to square footage-based rates both increases the revenue generated from a utility intent on developing on State property while at the same time compels them to use as little of the land as possible.

Leases will also have built-in annual adjustments of at least 2.5% thereby forcing lessees to accommodate for inflation. Another practical shift was to allocate more revenue generated from the leasing system back to the program or agency responsible for managing the leases.

Undoubtedly, the new guidelines will affect developers of offshore wind generation projects particularly in light of the Offshore Wind Economic Development Act, a bill that was recently passed to foster development of this type of green energy.

According to Bob Martin “The State’s process for valuing leases was long overdue for a major overhaul. This is our opportunity to bring this system up to date, to provide more predictability for business and to get the best deals and most fair compensation for the people of New Jersey.”

Sandro G. Ocasio is an Associate in the Gibbons Real Property & Environmental Department.

National Association of Women Lawyers Confers Outstanding Member Award on Nancy Lottinville

Gibbons P.C. — Thu, 28 Jul 2011 13:35:21 -0500

On Thursday, July 21, 2011, Nancy A. Lottinville, Esq., Counsel to Gibbons P.C.’s Newark based Real Property & Environmental Department was awarded the Virginia S. Mueller Outstanding Member Award by the National Association of Women Lawyers, the first national bar association for women established in 1899. Ms. Lottinville, along with six other attorneys chosen from NAWL’s nationwide membership, accepted the award at NAWL’s Annual Meeting held at the Waldorf Astoria Hotel in New York City. NAWL presents the Outstanding Member Award to NAWL members for exemplary contributions to NAWL. Ms. Lottinville’s contributions include several years of service on multiple committees including the 2011 Co-Chair of the Annual Meeting Logistics Committee, as well as Program Committee member for the 2010 New Jersey NAWL Night of Giving and the 2011 New Jersey Supreme Court Appellate Advocacy Program.

Ms. Lottinville is the Co-Chair of the Women’s Initiative Community Outreach Committee at Gibbons. Her practice focuses on real estate development and redevelopment, land use permitting and commercial real estate transactions for developers of shopping centers, retail stores, banks, franchisors and mixed commercial - residential developments, as well extensive land use due diligence investigations for regional and national investors in a variety of real estate development projects.

]]>Others honored at NAWL’s Annual Meeting include: Brooksley Born, who received the Public Service Award; Susan Blount, who accepted the President’s Award on behalf of Prudential Financial Inc. Legal Department; Judge Harold Baer of the United States District Court for the Southern District of New York and Marc Firestone , General Counsel of Kraft Foods who each received the NAWL Lead by Example Award; and Michele Coleman Mayes who received the M. Ashley Dickerson Award for the promotion of diversity in the legal profession. NAWL’s most prestigious award, the Arabella Babb Mansfield Award - named for the first woman admitted to a state bar in the United States - was presented to Jamie Gorelick, one of the longest serving Deputy Attorney’s General of the United States, a former general counsel to the Departments of Defense and Energy, a former president of the Washington D.C. Bar and current Co-Chair of the ABA Commission on Legal Ethics.

Ms. Lottinville's colleague, Luis Diaz, Esq., a Director and Chief Diversity Officer at Gibbons, participated in an afternoon CLE program panel which focused on overcoming unconscious bias. Gibbons is also represented within NAWL by Kristin Sostowski, who is a Director in Gibbons Employment & Labor Law Department. Kristen was sworn in as a new member of NAWL’s Executive Board at the NAWL Annual Meeting. Christine Amalfe, Gibbons Employment & Labor Law Department Chair, is also a member of the Board of the NAWL Foundation.

Gibbons Recognized as a Leading Firm by Chambers USA

Gibbons P.C. — Thu, 21 Jul 2011 10:43:24 -0500

The 2011 edition of the Chambers USA Guide to America’s Leading Lawyers for Business features 10 Gibbons practice areas and 18 individual attorneys ranked in the top tiers. The firm has appeared in the New Jersey section of the Chambers guide since its inception, but the 2011 version includes the highest total number of firm practices and attorneys to achieve the distinction of a Chambers ranking.

“It is a great accomplishment in and of itself to achieve a Chambers ranking, but the addition of new attorneys to the rankings, and the upward mobility within the rankings, are even more impressive,” says Patrick C. Dunican Jr., Chairman and Managing Director of Gibbons. “What that says is that Gibbons does not rest on its laurels, that the firm and our attorneys are constantly striving to provide ever more exceptional legal and client service.”

Chambers annually rates the nation’s leading business lawyers and law firms through comprehensive interviews with top companies, attorneys, and business executives, plus extensive supplementary research. Chambers and client testimonials, excerpted from this year’s guide, highlight the Gibbons Real Property & Environmental Department that ranked in the guide for New Jersey:

]]>Environmental: Sources confirm that there is little beyond the capabilities of this team, which has in-depth expertise in litigation, regulatory concerns and real estate transactions affected by environmental issues. “A well-managed and responsive practice that seeks to provide the best possible representation in an affordable and pragmatic manner.”

Real Estate: Gibbons offers a broad selection of real estate services. “They are able to provide a deep well of resources, good bench strength and a rapid service.”

In addition, the following members of the Group were among the 18 individual Gibbons attorneys that received glowing reviews in the guide’s individual rankings:

Russell B. Bershad, Real Estate: Market sources consider Russell Bershad to be “easy to deal with, accessible and well connected within the business community. “He is hugely admired for his skillful handling of real estate financing, leases and transactions.”

Irvin M. Freilich, Environmental: Irvin Freilich has a wealth of experience in cost recovery and environmental litigation actions. His arrival at the firm added “a welcome layer of depth to the capabilities of the group.”

John H. Klock, Environmental: John Klock possesses a strong construction background that lends itself well to his site remediation work. Clients pay tribute to his “fantastic intellect and skillfulness in meeting our needs.”

Edward F. McTiernan, Environmental: Edward McTiernan oversees much of the team's work in his capacity as practice leader and is felt to be “indispensable in dealing with the very largest of projects.”

Susanne Peticolas, Environmental: Susanne Peticolas wins the acclaim of interviewees as a result of her “strategic, cost-conscious approach” and “practical engagement” with clients' concerns.

Russell Bershad to Moderate Panel at ScheinMedia's 5th Annual New Jersey Real Estate Conference

Gibbons P.C. — Fri, 13 May 2011 13:05:22 -0500

On Thursday, June 9, 2011, Russell Bershad, Co-Chair of the Gibbons Real Property & Environmental Department, will moderate a panel, "State of the Market: Drill down on all facets of development, finance, law and economic development" at ScheinMedia's 5th Annual New Jersey Real Estate Conference. The New Jersey Real Estate Conference has become the business standard for the state's most influential professionals from the real estate, finance, legal, and governmental communities.

This half-day conference will be held at the Harborside Financial Center - Atrium between Plazas II and III, in Jersey City, New Jersey from 2:30 - 6:30 pm.

As a Real Property & Environmental Law Alert valued reader, you will receive a 20% registration discount for this conference. Please click here to register and enter the code GPCNJREC to receive the discount!

New Jersey's Time of Application Law Takes Effect Today to Lock in Zoning

Howard D. Geneslaw — Thu, 05 May 2011 13:17:29 -0500

The long-awaited “time of application” law, which locks in zoning under New Jersey’s Municipal Land Use Law at the time an application for development is filed, takes effect today. The law was intended to undo the “time of decision” rule under which the New Jersey Supreme Court, in Manalapan Realty v. Township Committee, 140 N.J. 366 (1995), decided that a municipality could change its zoning to negatively affect or even prohibit a project which was already under review by the municipal planning board. As a result, developers often were at peril if community opposition developed during the review and approval process and a change in regulations followed.

As of today, the development regulations which apply to a project will be those in effect on the date the application is filed with the municipal land use board. The new law, S-82, approved as P.L. 2010, Chapter 9 and codified at N.J.S.A. 40:55D-10.5, allowed municipalities a year to revise and update their development regulations. That year has elapsed, and municipalities are now presumed to have gotten their zoning house in order.

Beginning today, developers will be accorded the ability to rely on the development regulations which are in effect at the time they file their application, without fear of an unexpected zoning amendment if opposition develops to their proposal. The law which takes effect today follows a number of unsuccessful efforts in recent legislative sessions to enact a “time of application” rule. Finally, its time has come.

Howard D. Geneslaw is a Director in the Gibbons Real Property & Environmental Department.

Gibbons Real Property & Environmental Law Alert Selected as One of LexisNexis Top 50 Environmental Law & Climate Change Blogs for 2011

Gibbons P.C. — Wed, 27 Apr 2011 10:17:41 -0500

For the first time, the LexisNexis Environmental Law & Climate Change Community has honored a select group of blogs that they believe set the online standard for the practice area. This Real Property & Environmental Law Alert is among those they named in their 50 Top Environmental and Climate Change Blogs for 2011.

According to LexisNexis, "The Top 50 Blogs for the Environmental Law & Climate Change Community recognizes preeminent thought leaders in the blogosphere and creates an invaluable content aggregate for all segments of the environmental law and climate change practice. Most good blogs provide frequent posts on timely topics, but the authors in this year’s collective take their blogs to a different level by providing insightful commentary that demonstrates how blogs can—and do—impact the practice of environmental and climate change law."

]]>They described our blog as:

A rotating group of contributors writes about transactional real estate, development and redevelopment, and environmental law. Although there is some focus on developments in New Jersey, New York, Philadelphia and Delaware, the content is also national in scope.

The Real Property & Environmental Law Alert content is authored by contributing attorneys from the Gibbons Real Property & Environmental Department. "Our goal is to provide timely commentary and analysis on developing legal and business issues within the industry. We are honored to be recognized by LexisNexis for our efforts," said Susanne Peticolas, Editor of the blog.