USA – NEW JERSEY Law and Practice Contributed by: David Freylikhman, Cory Mitchell Gray, David Jensen and Jody Saltzman, Greenberg Traurig LLP
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 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. 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 supplemental fee to the RTF pursuant to N.J.S.A. 46:15-7.2, known simply as the “mansion tax” . The mansion tax, paid by the purchaser, is 1% of the consideration where that consideration exceeds USD1 million, and applies to all deeds where the property con - veyed is classified as any of: • Class 2 residential;
Foreign investors that are non-US entities or per - sons should pay attention to the usual issues on a federal level, such as: • international tax considerations; • collateral regulatory burdens; and • the Committee on Foreign Investment in the United States (CFIUS) review. No additional regulations for non-US purchasers are imposed by the State of New Jersey. 2.7 Soil Pollution or Environmental Contamination New Jersey is known for having some of the strictest environmental statutes in the United States. Typically, the purchase and sale agree - ment will allocate responsibility for any condi - tions on the property that were caused during each party’s 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. Munici - pal ordinances typically do not apply to property owned by a greater governmental authority, such as a county or state agency or by the federal government’s agencies. A buyer may have legal counsel perform a zoning analysis of the prop - erty during due diligence. Municipalities will typi - cally provide a zoning letter that 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.
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