Property Law Developments—Joseph William Singer

The Supreme Court of New Jersey has ruled that benefits to the property from a partial taking must be counted against the losses in determining just compensation. Borough of Harvey Cedars v. Karan, — A.3d —, 2013 WL 3368225 (N.J. 2013). In this case, the borough government took part of the beachfront owner’s property to construct dunes to protect the property from erosion or loss during storms. The court held that just compensation for the partial taking “must be based on a consideration of all relevant, reasonably calculable, and non-conjectural factors that either decrease or increase the value of the remaining property.  In a partial-takings case, homeowners are entitled to the fair market value of their loss, not to a windfall, not to a pay out that disregards the home’s enhanced value resulting from a public project. To calculate that loss, we must look to the difference between the fair market value of the property before the partial taking and after the taking.”

That meant that, in determining just compensation for the partial taking, the court must take into account the increase in value of the property that remained because of the taking and construction of the dune. The holding overrules a traditional legal rule that distinguished between compensable benefits that were special to the homeowner and noncompensable ones that were general benefits to the whole community. Getting rid of that distinction, the court simply required any benefits to the owner to be reasonably quantifiable to be measured against losses in market value caused by the partial taking.