A New Jersey appeals court has established an important precedent allowing reconstruction of Superstorm Sandy-damaged properties to flood-safety standards “as of right” without municipal approval.

The June 5 ruling in Gross v. Iannuzzi applied to a townhouse owned in fee simple as defined by Flood Hazard Area Control Act amendments, expanding the statute's protections to residents who were excluded because they shared a wall with another homeowner.

Moreover, the ruling allows reconstruction in such cases even if conflicting deed restrictions exist.

The court retroactively applied the amendments to allow a townhouse owner to meet the flood-safety standards, notwithstanding deed restrictions precluding construction. This decision comes after the legislature amended the statute in 2017 in response to the trial court's order in this case overturning municipal approval for the applicant to rebuild and elevate the townhouse after Sandy.

In the case at hand, applicant Kevin Iannuzzi, sought to demolish a beachfront townhouse destroyed by Sandy and replace it with an elevated and enlarged free-standing residence. The townhouse had been declared uninhabitable by the City of Margate for safety and structural reasons. Margate's zoning officer issued a zoning permit for demolition and construction of a new larger home after Iannuzzi bought the damaged property.

Plaintiff Steven Gross appealed to Margate's Zoning/Planning Board and sued, along with others, to stop construction. They asserted that a 1978 declaration of covenants and restrictions, which set forth requirements for the townhouse community, required property additions to win approval from a majority of homeowners in the development, and conform to the character of the development. Iannuzzi did not receive such approval.

In response to the complaint, Iannuzzi asserted a right to build the new larger house, but in the alternative, a right to rebuild to the original footprint, elevated to meet flood-safety standards.

On July 14, 2015, the trial court overturned Margate's approval for construction of the new home and rejected Iannuzzi's alternate plan to rebuild and elevate using the original footprint. The court held that either alternative constituted an “addition” under the declaration, requiring approval of a majority of unit owners. The court also held that the statute did not apply to the project because the townhouse did not meet the definition of “structure” under the act. The trial court denied a motion for reconsideration on Aug. 16, 2016.

In August 2017, the legislature passed two significant amendments to the Flood Hazard Area Control Act. First, the amendments added row houses and attached townhouses owned in fee simple to the definition of “structure,” thereby prohibiting enforcement of development ordinances that would prevent flood-safe construction. Specifically, pursuant to the amended act, structure is defined as:

Any dwelling or building; however, in the case of attached townhouses or row houses for which title to each townhouse or row house building, including the roof and other structural elements, is held in fee simple, “structure” means a single townhouse or single row house. “Structure” shall not include a unit which is part of a condominium ….

N.J.S.A. 58:16A-103(a).

Second, the amendments provided that deed restrictions cannot be enforced to prevent elevation of a structure damaged by Sandy. Specifically, the amendments provide:

Notwithstanding the provisions of any other law to the contrary, any deed restriction or agreement, no matter when entered into or made, that prohibits or has the effect of prohibiting any otherwise lawful raising or constructing of a structure to a new and appropriate elevation is contrary to public policy and therefore shall be unenforceable.

N.J.S.A. 58:16A-103(d).

In response to the amendments, Iannuzzi, along with Margate and two city officials appealed the 2015 trial court order and August 16, 2016, order denying reconsideration.

On appeal, the plaintiffs argued that: 1) the townhouse does not meet the new definition of structure because the unit includes a party wall and owners share rooftop condensers, and 2) the applicant should be required to give up living space on the first floor to avoid raising the roofline in conformity with the declaration.

In response, the Appellate Division found that the deed provides for ownership of the unit's roof, and there is no authority that a shared rooftop condenser defeats fee simple ownership to the townhouse. Further, the court held that the act permits an owner to “raise the entire structure several feet off the ground, while maintaining the original dimensions of the structure—including the original amount of living space.” The act does not require the homeowner to sacrifice the original square footage to accommodate the elevation.

The Appellate Division affirmed the court order preventing the applicant from replacing the damaged home with an elevated and enlarged free-standing structure, but reversed the court order preventing the applicant from elevating and rebuilding using the original footprint.

The court's opinion explained that, as amended, the act applies to the townhouse and permits elevation to the flood-safety standards, notwithstanding any ordinance provisions to the contrary. Not only does the act override the local development regulations, but it also overrides limitations set forth in the declaration to the extent that they preclude compliance with the flood-safety standards.

Approval by the Margate Planning/Zoning Board is unnecessary where the applicant, as here, has a statutory right to elevate the townhouse to flood-safety standards, the appeals court said.

Moreover, the exemption precludes the need to seek an amendment to the site plan ordinance, as the site plan ordinance is necessarily included in the act's exemption from development regulations.

The court noted that the legislative amendments appeared to be in response to the trial court's decision in this case and stressed that “the legislative history leaves no room for doubt as to the Legislature's continuing intent to sweep away obstructions to flood-safe construction.”

This case demonstrates the proper application of checks and balances between the legislative and judicial branches. Here, the judiciary did not overstep its authority in expanding the statute unilaterally, but rather deferred to the state legislature to solve a statutory-language problem.

The legislature acted in response to the judiciary's analysis of the statute by clarifying and expanding the statute's language in a way that makes practical sense. Finally, the judiciary retroactively applied the amended statute to the case to permit the result that the legislature intended: protection from flood hazards.

Carmella Gubbiotti is an associate with Giordano, Halleran & Ciesla in Red Bank. She concentrates her practice on environmental and land use law.