Court Opinion

ID: 9754643
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:08:41.269648+00
Date Added: 2024-06-11T07:27:56.127855
License: Public Domain

The opinion of the Court was delivered by
GARIBALDI, J.
This is another in our series of zoning cases involving conditional relief to avoid undue hardship under N.J.S.A. 40:55D-70 c. For the latest such case, see Commons v. Westwood Zoning Bd. of Adjustment, 81 N.J. 597 (1980). Specifically, the issue here is, after- there has been a determination that the property owner is entitled to a variance, what is the proper method of determining the fair and reasonable price for property in a one family residential zone that adjoining property owners must offer the owner to avoid the grant of the variance.
The Board of Adjustment of the Township of Morris (Board) granted a variance under N.J.S.A. 40:55D-70 c1 to Diana and *102Edward Rochford. Plaintiffs, adjoining property owners, instituted this action in lieu of prerogative writs to set aside the variance granted by the Board.
To receive a variance under N.J.S.A. 40:55D-70 c, applicants must satisfy two criteria: (1) that they will suffer exceptional or undue hardship if the variance is not granted — the so-called positive criteria; and (2) that the variance will not result in a substantial detriment to the public good or the zoning plan — the so-called negative criteria.
The Board, the trial court, and the Appellate Division all agree that in this case the negative criteria had been satisfied; the granting of this variance would not damage the zoning plan or the public good.2 We agree.
Property owners who meet the positive and negative criteria of the statute are entitled to a variance. In some circumstances, the court may decide to make the variance conditional on whether adjoining land owners offer to buy the property for its fair market value. This option to buy the property is a condition subsequent that may be imposed for the benefit of adjoining property owners. The question here is what is the proper standard to determine the property’s fair market value in such cases.
*103The Board concluded that the alternative offer must approximate the value of the property as a buildable lot assuming the variance has been granted. The trial court disagreed. It concluded that the owners were not entitled to a price based on the property’s highest and best use, but only to a price based on a fair and reasonable use. As long as they received a fair and reasonable offer for the property, they could not be said to suffer undue hardship even though the property’s value as a buildable lot was much greater.
The Appellate Division affirmed the trial court’s judgment insofar as it upheld the grant of the variance, but reversed the court’s finding as to a fair and reasonable offer price for the property. It held that the fair and reasonable price was the value of the property as though the variance had been granted.
We granted certification, 94 N.J. 529 (1983), and now affirm the judgment of the Appellate Division.
I
The property in question is Lot 5 in Block 343 on the tax map of the Township of Morris. It is an isolated undersized, vacant, corner lot, located in the RA-353 single family detached residential zone under the Morris Township Zoning Ordinance. The lot was created by subdivision in 1932. From its creation until 1955, it conformed to the local zoning code, which required a minimum lot area of 15,000 square feet. In 1955, the area’s zoning changed over to RA-35. Since then the lot has been nonconforming.
In 1976, defendant Dr. Myles C. Morrison, Jr. acquired the lot from his father by gift. In 1979, Dr. Morrison and his wife contracted to sell the property to the Rochfords for $35,000 with no contingency for a variance. A second contract dated August 6, 1979, superseded the first; in it, the Rochfords’ promise to pay was conditioned on their ability to obtain the *104variances necessary to build a single family residence on the lot. The contract’s purchase price was reduced to $34,600.00, in part to reflect variance application costs. The Rochfords agreed to bear any risk of appeal of the variance approval.
On November 9, 1979, the Rochfords applied to the Board pursuant to N.J.S.A. 40:55D-70 c for the necessary variances. The home that the Rochfords proposed to build required the following variances:
Required Proposed
Lot Area 35.000 sq. ft. 18.594.05
Per Family Area 35.000 sq. ft. 18.594.05
Lot Width 200 ft. 110 ft. +.
Lot Frontage 200 ft. 110 ft. +-
Lot Depth 200 ft. 175 ft. +.
Front Yard 75 ft. 55 ft.
Rear Yard 50 ft. 28 ft.
Prior to the hearing before the Board, the Morrisons, with the Rochfords’ knowledge and approval, offered to sell the lot to the DeSenas, the owners of the adjoining lot, for $34,600, the same price offered to the Rochfords. The DeSenas rejected the offer, but made a counter-offer of $17,250, which the Morrisons rejected. The DeSenas then made a “final offer” of $22,000, which the Morrisons also rejected. At the hearing, Mr. DeSena testified that he was still willing to purchase the property for $22,000.
After hearings conducted over a four month period, the Board granted the necessary variances. The Board found that “there was no feasible means of aggrandizing the property since the adjoining lot on Westminister [the DeSenas’] was improved * * * and acquisition to the north was blocked by a sewer easement”; the “subject lot is the only isolated lot in single ownership”; a substantial number of nonconforming lots within the zone “established the character of the neighborhood and one more drop in the bucket will not add or detract from that condition”; and “the proposed use would not adversely *105affect values in general * * *. Indeed, the testimony was that it would be of more benefit than a vacant lot.” Further, the Board accepted the applicant’s expert’s testimony that assuming a variance was granted, “the lot in question had a value of between $31,000 and $34,000”; and if not buildable, presumably the only likely purchaser would be the owner of the adjoining lot. “[I]n that case, he [the expert] felt that a reasonable purchase price would be $17,000, although * * * he thought a fair price might be as high as $22,000 but he did not think on resale of the combined properties the higher price would be fully recovered.”
In its resolution, the Board held that the “strictures on any other use than residence make it evident that the suitability of the premises in question is limited to a single family dwelling”; that the nonconformity of the subject lot resulted from “an historical process in which the owners (and applicant) and their predecessors in title played no culpable part; and, if not afforded relief, will suffer an unwarranted loss.”
Thus, the Board concluded that the “positive” criteria of exceptional hardship under N.J.S.A. 40:55D-70 c were met. Since the DeSenas’ offer would be at least $10,000 less than the established value of the premises, the Board held that it was not sufficient to relieve the hardship.
II
A Board of Adjustment and a trial court have the power to grant a conditional variance. We specifically recognized this power in Chirichello v. Zoning Bd. of Adjustment, 78 N.J. 544, 555-56 (1979), where we stated:
It would certainly be consonant with the interest of all parties to deny a variance conditioned on the purchase of the land by adjoining property owners at a fair price. The immediate benefit to the adjoining property owners of maintenance of the zoning scheme and aesthetic enjoyment of surrounding vacant land adjacent to their homes is self-evident. The owner of the odd lot would suffer no monetary damage having received the fair value of the land.
*106See also Harrington Glen, Inc. v. Municipal Bd. of Adjustment, 52 N.J. 22 (1968) (implying power to grant conditional variance).
 After an applicant has satisfied both the positive and negative criteria, a Board of Adjustment or court may grant a conditional variance, an equitable remedy, that affords the adjoining property owners the opportunity to purchase the property for its fair market value. When an adjoining property owner is willing to pay a fair and reasonable price for the property, the applicant may either sell or retain the property. Should the applicant decide to retain the property, however, the court could find that since he is able to receive full price for the property, exceptional hardship no longer exists and, therefore, the requested variance should not be granted. If no fair and reasonable offer is made, however, the hardship continues to exist and, therefore, the court should grant the variance.
The dissent misconceives the essential purpose of the conditional variance. It fails to recognize that here the applicants have satisfied both the positive and negative criteria of N.J.S.A. 40:55D-70 c, thereby establishing their right to a variance. Thus, in the absence of anything more, the property owner gets the variance. The purpose of this condition is to enable the adjoining property owner to avoid the variance to which the property is entitled. By choosing to ignore the underlying theory of N.J.S.A. 40:55D-70 c and by failing to come to terms with this Court’s most recent precedents, Chirichello, supra, 78 N.J. at 562-563 (Pashman, J. concurring), and Commons, supra, 81 N.J. at 608, the dissent has become mired in an analysis that has no basis in either New Jersey statutory or case law. Commencing with Justice Francis’ decision in Harrington Glen, Inc., supra, 52 N.J. at 30, we have discussed the possibility that the opportunity of an owner to sell property at a fair price may preclude application of the hardship exception under N.J.S.A. 40:55D-70 c. We cautioned, however, in Gougeon v. Borough of Stone Harbor, 52 N.J. 212, 224 (1968), that:
*107Of course, no offer to purchase should play any part in the consideration of the case unless it represents at least the fair market value of a * * * lot on which a home could be built * * *.
Here, there is no dispute as to the various values placed on the property assuming it was buildable ($34,000) or assuming it was nonbuildable ($16,000-$17,000). The only question before this Court is what constitutes a fair offer.
In his concurring opinion in Chirichello, supra, 78 N.J. at 562, Justice Pashman set forth his view that, “the ‘fairness’ of any such offer must be gauged in relation to the fair market value of the premises assuming that the variance had in fact been granted.” [Emphasis in original.] In Commons, supra, 81 N.J. at 608, Justice Schreiber, writing for a unanimous court, indicated that
the preferred method to determine value is on the assumption that a variance had been granted so that a home could be constructed on the lot. See Gougeon v. Stone Harbor Bd. of Adjustment, 52 N.J. at 224, and Chirichello v. Monmouth Beach Zoning Bd. of Adjustment, 78 N.J. at 562 (Pashman, J., concurring). It is possible that other methods of valuation may be feasible. However, the parties have not briefed or argued the issue and accordingly we do not foreclose such possibilities.
Today, we eliminate any uncertainty in this area of the law. We hold that the proper standard of valuation in deciding the fair price to be offered to an owner to avoid hardship under N.J.S.A. 40:55D-70 c is the fair market value of the property assuming that all necessary variances have been granted. We find this to be the only measure of valuation that can truly relieve the hardship of an owner of an isolated lot who has satisfied the positive and negative criteria of N.J.S.A. 40:55D-70 c.
When a Board of Adjustment decides that an owner of a lot has satisfied both the positive and negative criteria, that owner is entitled to a variance. Under section c, if as here, the positive and negative criteria are met, the property owner is entitled to the value of the property with that variance. The provision for a hardship variance under section c represents a legislative determination that a property owner whose lot has *108been zoned into inutility shall be allowed to build on it provided that the construction does not interfere with the intent of the community’s zoning and planning scheme. This legislative scheme favors the building of homes where circumstances permit.
The dissent fails to appreciate the distinction between this statute which favors land use and the condemnation statute which provides owners with a remedy if their proposed use is shown to violate the intent of the zoning and planning scheme and no other use is possible. Valuation under the two statutes is different because the property is affected differently. Whereas property subject to condemnation is by definition zoned into inutility, property entitled to a section c variance is valuable as a buildable lot. Thus, the dissent’s comparison between valuation methods in the two situations is specious at best. The properties must be valued differently since the one is valuable and useful to its owner and the other is not.
Finally, the dissent seems to imply that Dr. Morrison, by being allowed to sell his property based on its value as a buildable lot, is somehow being unjustly enriched because he received the lot as a gift from his father who acquired it as a nonbuildable. lot. Implicit in this reasoning is the mistaken assumption that the term “hardship” refers to financial loss. By so reading the statute the dissent concludes that the majority has “read the positive criteria out of the statute” post at 120. This is clearly erroneous. The positive criteria remain intact and continue to refer to a lot’s utility as a buildable lot. Financial loss alone has never been a basis for a finding of hardship under the statute. See Commons, supra, 81 N.J. at 605 (“undue hardship” involves underlying notion that no effective use can be made of property in the event a variance is denied).
 This argument also fails to recognize that it is only in the unusual case where the hardship is created by the property owner that the situation of the property owner rather than the *109property itself becomes an issue. In all other cases it is the situation of the land and not that of the owner that is the critical factor. Here, since the Board of Adjustment held that the hardship was created neither by the owner nor by his predecessor in title, Dr. Morrison’s acquisition of the lot is of no significance.
If we accepted the dissent’s valuation method local neighbors and Boards of Adjustment would acquire undue power over and discretion as to the value of property. As Justice Pashman said in his Chirichello concurrence:
Indeed, any other conclusion would be manifestly unjust. Were fair market value determined without assuming the existence of a variance, a plaintiff would rarely, if ever, meet the statutory criterion of “undue hardship.” That is, if no use whatsoever can be made of a particular parcel of property, its “fair market value” would approach zero. Hence, any offer to purchase would effectively negate the existence of “undue hardship.” Such a state of affairs would allow adjacent property owners to take advantage of a particular plaintiffs plight inasmuch as only they would be able to put the premises to productive use by merging it with their lands. [78 N.J. at 562-63.]
The conditional variance is intended to give adjoining property owners the opportunity to prevent the granting of a variance by paying the owner of the property that property’s fair and reasonable market value. It should be clear, however, that the conditional variance is for the benefit of those who oppose it, not the owner. The owner who reaches this stage has satisfied both the positive and negative criteria of the statute and is entitled to a variance. Making the variance conditional gives the neighbors a choice that they would otherwise not have.
Applying our holdings to the case at bar, we find that the value of the property is $34,000, the value of the property with the variance. We find that the sum of $22,000 is inadequate to overcome the hardship to the Rochfords. We affirm the Appellate Division’s judgment denying plaintiffs another opportunity to purchase the property for $34,000. Mr. DeSena was offered the property at $34,000 before the Board hearing; he refused that offer and there is no reason to give *110him, or any of the other neighbors, a second chance at this late date. The Rochfords have already expended too much time, energy, and money on this project to allow others a chance to buy their property. The plaintiffs in this case cannot get “a second bite of the apple.”
Judgment of the Appellate Division is affirmed.

 40:55D-70. Powers
The board of adjustment shall have the power to:
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c. Where by reason of exceptional narrowness, shallowness or shape of a specific piece of property, or by reason of exceptional topographic conditions, or by reason of other extraordinary and exceptional situation or condition of such piece of property the strict application of any regulation pursuant to article 8 of this act would result in peculiar and exceptional practical difficulties to, or exceptional and undue hardship upon the developer of such property, grant, upon an application or an appeal relating to such property, a variance from such strict application of such regulation so as to relieve such difficulties or hardship, including a variance for a conditional use; provided, however, that no variance shall be granted under this subsection to allow a structure or use in a district restricted against such structure or use; and provided further that the proposed development does not require approval by the planning board of a subdivision, site plan or conditional use in conjunction with which the planning board shall review a request for a variance pursuant to subsection 47a. of this act; and
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No variance or other relief may be granted under the terms of this section unless such variance or other relief can be granted without substantial detriment to the public good and will not substantially impair the intent and *102the purpose of the zone plan and zoning ordinance. An application under this section may be referred by any appropriate person or agency, including the planning board pursuant to section 17 of this act, for its report; provided that such reference shall not extend the period of time within which the zoning board of adjustment shall act.

 In the trial court and the Appellate Division, plaintiffs alleged that the negative criteria had not been met because of Galdieri v. Board of Adjustment Tp. of Morris, 165 N.J.Super. 505 (App.Div.1979). In that case the court upheld a denial of the Board's variance to owners of an undersized lot located in the RA-35 zone on the same street as property in issue. Both the trial court and the Appellate Division in this case noted that the critical distinction here is that this lot is an isolated lot, not part of a larger tract as was the case in Galdieri, supra.

 RA-35 requires a minimum lot area of 35,000 square feet.