Deed restrictions on properties, also known as restrictive covenants, are extremely difficult to get lifted in New Jersey, unless you can sufficiently argue that there has been a "change in circumstances" which causes that the purpose of the restriction can no longer be accomplished.

The New Jersey Appellate Division this week affirmed this to be the case.

The Glenwood Terrace housing development in the Township of Bridgewater includes a lot which their land use approval required - by way of a deed restriction - to be used, in perpetuity, solely for recreation purposes for all of the present and future homeowners of Glenwood Terrace.

Ever since the Glenwood Terrace Homeowners Association, Inc. (HOA) obtained title to the property in 1958, they operated a swimming pool on the subject property. To cover the pool's operating expenses and the land's property taxes, the HOA relied on membership dues, fees, and assessments.

Over the years, the HOA's membership fell in numbers, resulting in their inability to meet its operating budget. This led to tax lien certificates being issued against the property in 2012 and 2013.

For the next seven years, the HOA explored and proposed joint recreational use or transfer of title to various public and private entities capable of operating the pool or maintaining recreational use on the subject property. This included proposals to sell the property to the Township to maintain the property as parkland, to sell the property to the Jewish Community Center to use as a summer camp and/or pool, and to sell or donate the property to the Martinsville Community Center for recreational purposes or to maintain the property as unimproved natural land. These proposals, however, were either rejected or ignored.

Soon thereafter, Michael and Carol Enos purchased the property, assuming the risk of attempting to remove the deed restriction after closing.

Subsequently, the new owners filed legal action in New Jersey Superior Court, Chancery Division, in Somerset County, seeking judgment terminating the deed restriction on the grounds of impossibility, ambiguity, abandonment, waiver, and changed circumstances.

Their petition contained six counts.

In counts one and two, they alleged that the recreational use restriction should be "terminated" because "it has become impossible as a practical matter to accomplish the purpose for which the deed restriction was created." In count one, the plaintiffs claimed that "as private citizens," they "lack sufficient time, training, manpower, and relevant experience to safely and competently operate a publicly used pool or maintain the premises for any other reasonable recreational purpose." In count two, the plaintiffs claimed "it has become impossible as a practical matter to accomplish the purpose for which the deed restriction was created" because "the intended beneficiaries," identified in "the deed restriction" as HOA members, no longer exist with the dissolution of the HOA.

Nearby property owners filed opposition to the lifting of the deed restriction.

On June 22, 2022, Judge Margaret Goodzeit denied the lifting of the deed restriction.

In addressing the plaintiffs' claim of changed circumstances, Judge Goodzeit explained that relief under the doctrine of changed circumstances required plaintiffs to show that a change has taken place since the creation of the servitude that makes it impossible as a practicable matter to accomplish the purpose for which the servitude was created.

The judge concluded that, as a matter of law, the plaintiffs failed to offer a factual basis to support the essential requirement that it was impossible for the property to be used for recreational purposes. Instead, according to the judge, the plaintiffs merely alleged their personal inability to maintain the prescribed use. The judge reasoned that the pool could have been shut down and filled in, with the property to be used as a park. Because the plaintiffs ignored this possibility, the judge concluded that the plaintiffs' changed circumstances claim was futile.

The new owners filed an appeal of this ruling.

Appellate Division Judges Haas and Gooden Brown were not at all persuaded to reverse Judge Goodzeit's ruling.

The Appellate judges reviewed the 2012 New Jersey Supreme Court ruling in American Dream at Marlboro, L.L.C. v. Planning Bd. of Marlboro in which the court observed:

The essential test that applies to such a claim of
changed circumstances requires the applicant to
demonstrate that it has become impossible as a
practical matter to accomplish the purpose for which a servitude or restrictive covenant was created.

The doctrine of changed circumstances is
narrowly applied and the test is stringent: relief is
granted only if the purpose of the servitude can no longer be accomplished.

"Guided by these principles, we affirm substantially for the sound reasons expressed by the judge in her comprehensive statement of reasons. The judge properly dismissed plaintiffs' complaint with prejudice because the factual allegations are palpably insufficient to support a claim upon which relief can be granted," the Appellate judges concluded in a written ruling.

The winning attorney is Nicholas A. Duston Esq.

Deed restrictions on the use of a property are very prevalent in Lakewood. It's important to review any deed restrictions with a competent attorney prior to purchasing a property.

As previously reported here on FAA News, Somerset Walk lost their case in Court in which they sought to lift a deed restriction on a lot which they purchased from the Township with a restriction that it is to be used solely for "parking, recreation, and open space." The neighborhood HOA sought to lift this deed restriction so they could expand their shul on this lot.

Newark Attorneys Jaimee Katz and Andrew Schwartz Esq. representing the shul argued that "the neighborhood's explosive growth has created a changed circumstance which warrants the need to extinguish the deed restriction."

Their legal petition quoted case law from American Dream which found that relief from a deed restriction should be granted only when "it is ordinarily clear that the continuance of the servitude would serve no useful purpose and would create unnecessary harm to the owner of the servient estate." The attorneys argued that the Somerset Walk neighbors feel that the deed restriction does not presently satisfy a necessary public purpose. Additionally, not permitting them to expand their shul will cause them "unnecessary harm" and therefore their deed restriction should be lifted.

In response to Somerset Walk's arguments that they need to expand their shul to accommodate their population growth, and that open space, parking and recreation is no longer a suited use for the land, Attorney Ron Gasiorowski Esq., representing an opposing neighbor, countered that actually, "open space in Lakewood is at a premium and rapidly diminishing and therefore, keeping the deed restriction in place would provide highly valuable open space which would certainly serve the interests of all Lakewood residents." Mr. Gasiorowski added that Somerset Walk is not arguing that it's no longer possible to retain the deed restriction - simply because they can not make such a claim.

Ocean County Superior Court Assignment Judge Francis Hodgson agreed that "explosive growth" of the neighborhood simply does not constitute "changed circumstances" as required pursuant to American Dream.

"It's undisputed that this land sale was with a specific deed restriction 'in perpetuity' that everyone was aware of at the time of the sale. The Court can only modify the terms of a deed restriction when there are 'changed circumstances' which cause that the purpose of the servitude can no longer be accomplished and are no longer feasible. Here, there are no 'changed circumstances' which make it impossible to accomplish the purpose of the servitude, as the purpose of the deed restriction was to preserve open space which can still be accomplished. Increased density is not a changed circumstance, particularly when the deed restriction's whole purpose was to anticipate the density increase by specifically preserving open space for the increased density, and therefore the Court finds that there are no 'changed circumstances' which would permit the Court to seek to modify the terms of the deed restriction", concluded Judge Hodgson.

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