USA - NEW JERSEY Law and Practice Contributed by: Steven Fleissig, David Freylikhman, Cory Mitchell Gray and David Jensen, Greenberg Traurig LLP
investigations strictly confidential, except as required by law. Purchasers seek to protect themselves by reserving extensive environmental due diligence rights, including the right to conduct a Phase I environmental assessment and, if required, a Phase II which would include soil samples and borings. These issues are often very heavily negotiated by sellers and purchasers. As a gen - eral matter, the contract negotiation often results in the purchaser and seller allocating responsi - bility in the purchase and sale agreement, each taking responsibility for any conditions on the property that were caused during its respective period of ownership and indemnifying the other during such period. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law In New Jersey, zoning matters are governed by state law and by municipal ordinances, so the rules vary by municipality and location. A buyer may have legal counsel perform a zoning analy - sis of the property during due diligence. Munici - palities will typically provide a zoning letter which certifies that a property is compliant with current zoning and/or may be used as intended by a purchaser of the property. Owners who wish to change the zoning of a property may seek to change the municipality’s zoning ordinances, or they may obtain variances or other approvals and permits from local municipalities. 2.9 Condemnation, Expropriation or Compulsory Purchase While it is typically only a remote risk, govern - mental taking through eminent domain or con - demnation is possible in New Jersey where such power has been delegated to various agencies, public bodies, and public utilities. New Jersey’s exercise of condemnation rights is most typically
seen with respect to widening roads and high - ways and otherwise in connection with utilities. As a general matter, the condemnation process is as follows: • there must be an attempt to resolve the acquisition outside of litigation through bona fide negotiations with the property owner (which includes an offer in writing by the condemnor); • provided that such attempt does not result in an agreement, there must be a final disposi - tion by judgment of the authority and due exercise of the power of eminent domain by the condemnor; • there must be a non-binding arbitration of the issue of just compensation by commissioners appointed by the court; and • there is a trial of the issue of just compensa - tion. Issues relating to condemnation are typically addressed in the purchase and sale contract and will often recite that upon any taking by a governmental authority, the parties would have the ability to terminate the transaction and the purchaser would receive a refund of the deposit. Occasionally, termination rights are tied to the taking of a given percentage of the property (eg, upon a taking of 10% of the property or a taking that affected access, visibility, or a main tenant, the purchaser would be entitled to terminate). 2.10 Taxes Applicable to a Transaction New Jersey does not have any mortgage record - ing taxes. However, New Jersey does have a realty transfer fee (RTF), a controlling interest transfer tax (CITT) and a mansion tax. The man - sion tax, paid by the purchaser, is 1% of the consideration where that consideration exceeds USD1 million, and applies to purchase of cer - tain real estate in classes 2 and 4A, including
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