Freshwater wetlands permits often involve a Transition Area Waiver Averaging Plan (“TAW”).  A TAW gives the developer the flexibility to modify what otherwise would be the required shape of a transition area without reducing its total square footage.  That flexibility makes TAWs an important tool for developers to maximize the development footprint on an environmentally constrained site.  Under DEP regulations, a TAW includes a condition requiring the property owner to record a deed restriction prohibiting development in the modified transition area without DEP approval.  The deed restriction runs with the land and binds subsequent owners.

What happens when someone gets a TAW and then goes ahead and builds without recording the deed restriction?  Under the Freshwater Wetlands Rules, DEP may allow modification of a recorded TAW where the changes meet the regulatory standards for a “de minimis modification”.  However, the rules suggest that if any development has occurred without the deed restriction having been recorded, a de minimis modification may no longer be available.  Rather, if the deed restriction has not been recorded, modifying the TAW would be through the onerous process under in the Conservation Restriction and Historic Preservation Restriction Act.  Among other things, this requires a public hearing following newspaper publication.

A recent court decision known as In Re Flood Hazard Area Verification Approval makes clear that the courts will strictly enforce this sanction for failure to record a deed restriction even when DEP is willing to cut a subsequent developer some slack.  In 2001, the Italian American Sportsmen’s Club (“IASC”) subdivided its property into several single-family lots and sold these to a developer while retaining the remaining 38 acres.  The subdivision involved a TAW that modified  the contour of the transition area.  The houses were built and sold but the deed restriction was never recorded.

More than a decade later, a second developer agreed to buy approximately 33 acres of the remaining IASC property for a 48-lot residential subdivision.  However, the developer’s plans required a minor modification of the 2001 TAW.  Because the earlier development was complete and the homes sold to individuals who may have had no knowledge that their backyards are subject to transition area restrictions, DEP agreed to allow the new developer to modify the original, unrecorded TAW by recording a modified TAW.

As is often the case in New Jersey, a local “citizens group” opposed to the development filed multiple appeals to stop it.  While most of these claims were rejected by the courts, the Appellate Division of Superior Court agreed that when it comes to modifying a TAW, DEP must strictly follow its rules.  Had the original TAW been duly recorded back in 2001, the TAW might have been amended under the “de minimis modification” rule.  But because the 2001 TAW had never been recorded, the Court threw out DEP’s approval of the modified plan.  The developer now faces the choice of redesigning its project to eliminate the TAW modification or going through the public hearing and other procedures mandated by the Conservation Restriction and  Historic Preservation Restriction Act.

Various types of State and local permits and approvals require recording deed restrictions.  In the long run, it pays to comply.