On certification to the Superior Court, Appellate Division.
For reversal and remandment -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. For modification -- None. The opinion of the Court was delivered by Pollock, Justice. Stein, Justice, concurring. Wilentz, C.J., and Stein, J., concurring in the result.
This appeal presents the question whether a "hardship" variance sought pursuant to N.J.S.A. 40:55D-70(c) must be denied because an adjoining property owner offers to purchase the property at fair market value. Defendant, Planning Board of the Township of Cherry Hill (the Board), determined that the offer did not compel the denial of the variance and that the offer was one factor, among others, to be considered in determining whether to grant a variance to defendants Richard and Jack Karpf, who were purchasers under contract. The Law Division ruled, however, that the variance would be defeated if the adjoining property owner, plaintiff, Davis Enterprises (Davis), offered to purchase the property for a price equal to that offered by the Karpfs. In an unreported opinion, the Appellate Division affirmed. We granted certification, 103 N.J. 479 (1986), and now reverse the judgment of the Appellate Division.
In 1939, Mrs. Schallenhammer and her late husband purchased the subject property, which included the existing house and garage. At no time did Mrs. Schallenhammer, who conveyed the property to the Karpfs during the pendency of the appeal to this Court, increase or decrease the size of the lot. Initially, the Schallenhammers operated a tap room in the house until they lost their liquor license during World War II because,
according to Mrs. Schallenhammer, her husband was not an American citizen. Thereafter, until 1973, they conducted an upholstery business in the house, following which their son operated a tool and dye shop in the garage until 1975. Throughout the entire time of her ownership, Mrs. Schallenhammer used the house as her residence.
The property in question is rectangular in shape and abuts a traffic circle at the intersection of Coles Avenue and Route 38 in Cherry Hill. It is located in a highway business (B-2) zone, and is bordered on two sides by property owned by Davis. The property is surrounded by an office and business complex, a gas station, a bank, a fire hall, and a diner. Jack Karpf, a lawyer, and his brother Richard, a commercial realtor, proposed to use the house as a small real estate and law office, a use that is permitted in the B-2 zone.
Although the proposed use is permitted, the lot is undersized and the location of the house on it is such that the Karpfs applied to the Board, pursuant to N.J.S.A. 40:55D-60(a), for site plan approval and for certain variances:
SECTION SUBJECT ORDINANCE VARIANCE
1803 Lot size 20,000 sq. ft. 6,571 sq. ft.
1803 Frontage 120' 45.87'
1803 Front setback 30' 14'
1803 Side aggregate 20' 12.8'
2401.12 Driveway width 25' 10.8'
2403.20 Parking spaces 19 6
The Board proceedings are colored by animosity between Davis and Mrs. Schallenhammer, apparently because Davis tried to thwart her efforts to sell the property. A proposed sale in 1982 to Philip Kogan for $50,000, which was conditioned
upon obtaining certain variances, collapsed in the face of opposition by Davis. An offer for $60,000 from another purchaser was withdrawn, apparently because of the prospect of litigation with Davis. In 1982, after the Kogan sale fell through, Mrs. Schallenhammer rejected offers from Davis for $15,000 and then $30,000. Davis then increased its offer to $40,000, contingent on the removal of the existing structure and the construction of a new 3,000 square foot office building. Although Mrs. Schallenhammer said through a realtor that she would accept $45,000, before Davis responded, she entered into a contract of sale with Richard Karpf for $45,000, which was contingent upon site plan approval and necessary variances. Subsequently, Davis offered her $45,000 without conditions. Davis proposed to raze not only the existing structure but also, on the expiration of a five-year lease, a gas station on a contiguous property. According to Davis, the consolidated lots "would almost equal" the required minimum lot size, and he proposed to construct a yet undesigned building on that lot.
At the conclusion of the hearing, the Board granted site plan approval and the requested variances, finding that the property would be subject to exceptional or undue hardship if the variance were not granted (the "positive criteria") and that the variance would not result in a substantial detriment to the public good or the zoning plan (the "negative criteria"). N.J.S.A. 40:55D-70(c). Although the Board considered the Davis offer as a relevant factor, it found that "even while considering this offer the board determines that the applicant has the necessary hardship which allows the granting of the requested variances."
The Law Division sustained the Board's finding as to both criteria, but concluded that the variance should have been granted on the condition that Davis be permitted to purchase the property at his offering price of $45,000, the payment of which would eliminate the hardship to the property. Accordingly, the court imposed a condition upon the grant that the variances were to become null and void if Davis made an
unconditional offer to purchase the property for $45,000 within 30 days.
In affirming, the Appellate Division ruled that "[i]f the property owner refuses to sell at a 'fair and reasonable price,' he would not be considered to have suffered undue hardship." Finding that Davis's unconditional offer of $45,000 was "fair and reasonable," the court declared the variances to be null and void.
The crux of this case concerns the relationship between the offer of an adjoining owner to purchase the property in question for fair market value and the finding that "the strict application" of the zoning requirements would result in "peculiar and exceptional difficulties to, or exceptional or undue harm upon, the developer of the property." N.J.S.A. 40:55D-70(c)(1). In short, does an adjoining owner's offer to purchase prevent a planning board from finding that the positive criteria have been satisfied?
Underlying the request for a hardship variance is the premise that without such relief the property will be zoned into inutility. See Commons v. Westwood Zoning Bd. of Adjustment, 81 N.J. 597, 607 (1980). In balancing the interests of the property owner, adjacent owners, and the municipality, a board may impose reasonable conditions on the grant of a variance. Nash v. Board of Adjustment of Morris Township, 96 N.J. 97, 105 (1984); 6 P. Rohan, Zoning and Land Use Controls § 43.03(1), at 43-41 (1985). One such condition, described as a conditional variance, "affords the adjoining property owners the opportunity to purchase the property for its fair market value." Nash v. Board of Adjustment of Morris Township, supra, 96 N.J. at 106; see also Chirichello v. Zoning Bd. ...