N.J. Supreme Court: Tenant Has Clout to Negotiate in Condemnation
Yesterday, the New Jersey Supreme Court decided Town of Kearny v. Discount City (A-76-09) and held that a condemnation action should have been dismissed for a failure to engage in bona fide negotiations with the only condemnee, a tenant occupying a building within a designated redevelopment area. Along the way to reversal, the Court reaffirmed its earlier decision that a tenant was not entitled to individualized notice of redevelopment proceedings (Iron Mountain v. City of Newark – covered in our blog here), and confirmed that the power of eminent domain includes the ability to acquire only an easement, tenancy, or other interest in property less than full ownership. The court held that since the condemnation only concerned the leasehold, the Town’s designated redeveloper had a duty to engage in bona fide negotiations with the tenant – the failure of which was fatal to the action. Of interest was the fact that the landlord was also the designated redeveloper.
There was also a dissenting opinion that focused on the fact that the tenant’s lease contained a “condemnation clause” that precluded the tenant from recovering any damages in the event of a condemnation of “any portion of the premises.” The dissent argued that the tenant contracted away its rights when it signed the contract, and criticized the majority opinion’s crafting of a better contract than the tenant had negotiated.
The entire opinion is available here .
We previously covered this matter in this story last year:
New Jersey Supreme Court Agrees to Hear Another Redevelopment Case Involving Tenants’ Rights
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