This complaint in lieu of prerogative writs centers on the question of whether a municipality, after approving a developer's plans for a condominium project, may deny him permission to amend those plans so that ownership of the common elements in the project would be severed from ownership of its individual units and so that unit ownership would include ownership of the plot of land upon which the unit improvements are to be constructed.
On June 23, 1976 the Planning Board of Franklin Township granted tentative approval to 1020 Associates to construct a planned unit development on some 700 acres of its property located within the township. The resolution of approval provided for construction in seven phases extending over a period of 15 years. It contemplated that approximately 375 acres in the development would be devoted to commercial, industrial and recreational uses, including public parkland and common open space. The remainder of the tract would be used for residential purposes and would ultimately include 244 single-family units, 1228 townhouse units, and 985 apartment units. The resolution further provides that "all multi-family dwelling units shall be constructed substantially in accordance" with certain floor plans submitted to the planning board; however, par. 25 states that
On August 26, 1976, 1020 Associates conveyed to Bonner Properties, Inc. all rights under the aforementioned resolution as well as title to the 700-acre tract in question. Bonner then proceeded to expend "substantial monies" to provide utility, sewer, water and road facilities to the entire development.
In March 1979, within the time limit set out by the resolution, Bonner applied for final approval of Phase I, Section A, B, and C, of the development (hereinafter "Phase I"), a lateral project of 334 condominium units and common elements to be constructed on some 47 acres of the development tract. At about the same time, on March 6, 1979, Bonner transferred title to Phase I to Quail Brook, Inc., a wholly-owned subsidiary of Bonner. Although the deed of conveyance was recorded on March 13, 1979, the planning board was allegedly without knowledge of the transfer when it granted Bonner final approval for Phase I, on April 11, 1979. Later, on March 6, 1981 Quail Brook entered into agreement with Kaufman and Broad of New Jersey, Inc., which provided for the sale of the subject property to Kaufman for $3,006,000, but this agreement is not directly relevant here.
On May 21, 1981 Quail Brook applied to the planning board for an amendment to its April 11, 1979 resolution of final approval. Under the proposed amendment the 334 residential units would be sold, not as condominiums but in "fee simple form." This term is admittedly inaccurate in that condominium properties are also typically held in fee simple. What the proposed amendment sought was rather an extension of the unit property held in fee simple to include not only the improvements but also the plot of ground on which they are to rest, thereby necessitating subdivision of the 47-acre tract. In addition, whereas condominium owners hold an undivided interest in the common elements of a project, under the amended Quail Brook regime the common elements would be owned by an incorporated nonprofit homeowners' association. As was to be the case under the original plan, the homeowners' association would have the responsibility of managing the common elements. Further, in both cases membership in the homeowners' association and the right to enjoy the common elements would arise only in conjunction with the ownership of the residential units.
Quail Brook sought the amendment described above in order "to utilize new concepts and ideas" and "to meet present market conditions . . . and be fully competitive in the housing market."
On June 10, 1981, after considering the evidence with respect to the proposed amendment, the planning board concluded that the reasons advanced in its support were outweighed by the "detrimental effect of the proposed change upon the Township," including possible taxation and aesthetic difficulties. The board therefore resolved to deny the requested amendment. This decision was affirmed by the Franklin Township Council on October 22, 1981 by a vote of 5 to 3, with one abstention. Two of the majority votes were cast by persons who were members of the planning board when it decided to reject the proposed amendment.
On November 18, 1981 Bonner Properties filed this complaint in lieu of prerogative writs. Bonner alleges that the decisions of the planning board and township council were unreasonable, arbitrary and capricious in that the requested amendment seeks "relief associated with the form of ownership of real property, [which] cannot be denied as a matter of law." Bonner also contends that the township council should have granted Bonner's motion to disqualify from the council proceedings in regard to the matter the two councilmen who had considered it while members of the planning board.
Thereafter, on January 29, 1982, this court approved a consent order permitting Bonner to amend its complaint to include Quail Brook as an additional plaintiff. Bonner and Quail Brook then moved for summary judgment. Defendants, in turn, filed answers, counterclaims and motions for summary judgment on the counterclaims. Plaintiffs responded by filing a cross-motion for summary judgment to dismiss the counterclaims. The issues raised and argued by the parties with respect to the merits of these motions will be considered after two preliminary questions are resolved: standing and ripeness for summary judgment.
Defendants argue that neither Bonner nor Quail Brook has standing to prosecute this action -- Bonner in that it did not
apply for the resolution amendment and Quail Brook in that the conveyance of the subject property to it on March 16, 1979 by Bonner was void ab initio.
In arguing that Quail Brook lacks standing defendants rely on N.J.S.A. 40:55D-55, which states:
If, before final subdivision approval has been granted, any person transfers or sells or agrees to transfer or sell, except pursuant to an agreement expressly conditioned on final subdivision approval, . . . any land which forms a part of a subdivision for which municipal approval is required by ordinance pursuant to this act, such person shall be subject to a penalty not to exceed $1,000.00, and each lot disposition so made may be deemed a separate violation.
In addition to the foregoing, the municipality may institute and maintain a civil action
a. For injunctive relief; and
b. To set aside and invalidate any conveyance made pursuant to such a ...