The New Jersey Supreme Court recently entered a ruling in which it no longer requires the condemning authority to negotiate with mortgagees. Clearly, this is not the rule in most jurisdictions given that most jurisdictions deem the mortgagee a party in interest and property owner. One should recognize that the statutory delegation differs in each State.
This ruling is so bothersome because many mortgage agreements provide that the attorney fees for the lender will be borne by the borrower. This process does not provide a favorable result for owners, although at least it provides the owner the opportunity at the owner’s sole discretion to make a mess of the case. Such is eminent domain in New Jersey.
In a unanimous ruling in Merchantville v. Malik & Son, the court said New Jersey’s Eminent Domain Act, N.J.S.A. 20:3-1 to -47, states unambiguously that a condemning authority is only obligated to negotiate with the property’s title holder.
“The act does not recognize real parties in interest or those with more interest or concern about the state of the property than the title holder of record,” Appellate Division Judge Mary Cuff, who is currently temporarily assigned to the Supreme Court, wrote. “This limitation to the title holder of record is consistent with generally recognized and applied principles throughout the country.”