On appeal from the New Jersey Department of Environmental Protection, CAF 1517-99- 0048.1.
Before Judges Wallace, Jr., Ciancia and Axelrad.
The opinion of the court was delivered by: Ciancia, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This appeal presents the question of whether a bona fide purchaser of unimproved property will be held to a land use restriction imposed on a predecessor-in-title by a state agency even though that restriction could not be found by a diligent search of record title. The court last addressed this troublesome issue in Aldrich v. Schwartz, 258 N.J. Super. 300 (App. Div. 1992), where we held that a variance condition undiscoverable by a diligent search of title was binding on an innocent purchaser of property. We expressed our rationale as follows:
The balance of competing concerns is not an easy one to strike. Any resolution creates a real risk of unfairness, either to innocent buyers or to the protected public. We approach the problem not as one involving title searches and what they can reasonably reveal, but as one implicating the strong public interest in the enforceability of variance conditions, in the neighborhoods they protect, and in the expectations that have reasonably grown up around them. Our holding that plaintiff is bound by the 1969 restriction is dictated by land planning considerations, and by the danger that a decision devitalizing long- standing variance conditions may prejudice existing development and the zoning plan of some towns and neighborhoods.
[Id. at 310.] We have no disagreement with the rationale or result in Aldrich. On the facts there presented the balance was properly struck. As discussed more fully below, however, the present case reflects competing public interests which, on the facts here presented, we believe should be resolved in favor of the integrity of our property recording system.
In light of the nature of our resolution, only an abbreviated factual presentation is necessary. We are assisted in that regard by a thorough and detailed opinion issued by Chief Administrative Law Judge Jeff S. Masin, whose decision was adopted by the Department of Environmental Protection (DEP).
In 1994 appellant, Island Venture Associates, purchased two unimproved lots on Long Beach Island in the Township of Long Beach designated as lots 3.03 and 3.04, block 25.12. The intent was to build residential dwellings on the parcels. It is undisputed that prior to closing Island Venture performed a diligent title search that revealed no restrictions antithetical to residential construction on these two upland lots. The deed to Island Venture also contained no such restrictions. In actuality, however, the parcels were subject to a restriction previously imposed by the DEP pursuant to the Coastal Area Facility Review Act (CAFRA), N.J.S.A. 13:19-1, et seq. The restriction limited the lots to "water-dependent" uses.
The restriction arose in 1988 when Island Venture's predecessor-in-interest, High Bar Harbor Development Company (High Bar), sought to develop a significantly larger parcel in the township. The development proposal included a marina site that, in turn, contained several lots including property later to be designated as lots 3.03 and 3.04. High Bar was ultimately granted permission by the DEP to use a portion of the land to construct eighteen single-family homes on condition that the adjacent marina site be limited to water- dependent uses. One of the lots within that restricted marina site was designated as lot 3. At some later time lot 3 came to be designated as lot 3.02, although the record does not reflect the exact mechanism for that change in nomenclature. In turn, lot 3.02 was subdivided and part of it became lots 3.03 and 3.04, the parcels ultimately purchased by Island Venture.
Initially, Island Venture disputed that the land now designated as lots 3.03 and 3.04 was ever intended by the DEP to be within the marina site, but there is substantial credible evidence in the record to the contrary. ALJ Masin's opinion details the basis for such a finding and the opinion of the DEP Commissioner proceeds on that assumption. We find no reason to question the finding that the property that became designated as lots 3.03 and 3.04 was within the restricted "marina site" as referenced in the CAFRA permit.
A January 1989 CAFRA permit to High Bar required a deed restriction to limit the use of the marina site. High Bar drafted the necessary deed restriction language and the DEP approved it. High Bar recorded a master deed stating that the marina site, referred to therein as the "Condominium Property," *fn1 shall "remain a water-dependent use in perpetuity." The master deed, however, failed to properly identify the restricted property. In ALJ Masin's words:
The metes and bounds description and the survey attached to the Master Deed as Exhibits thereto do indicate that the Condominium Property did not include Lots 3.03 and 3.04. The southern boundary of the Condominium Property is shown as the northern boundary of Lot 3.03. Thus, examination of the Master Deed, survey and metes and bounds description would not alert one to the possibility that Lots 3.03, or 3.04 for that matter, might be included in the deed restriction stated in the Master Deed, which by its terms applies only to the "Condominium Property." . . . [I]t is recognized that a reasonable examination of the Master Deed and survey and metes and bounds would not identify to an examiner or a prospective purchaser that the Master Deed, while properly reciting the limitation placed upon the "Condominium Property," failed to properly indicate the totality of the area encompassed within that restriction. Thus, the Master Deed and its accompanying exhibits misled such persons about what area actually constituted the "Condominium Property," a term that should properly have been understood by all, including the DEP personnel who reviewed the language, to include all of the area formerly encompassed by Lots 3 and 3.01.
Before taking title to lots 3.03 and 3.04, Island Venture received a title search report that did not reveal any recorded restrictions on the two lots. ALJ Masin found, and it is undisputed on the record, that Island Venture reasonably understood from its good-faith search that it could ...