Earlier this year, the New Jersey Supreme Court reversed a lower court’s decision that awarded the owners of an oceanfront home $375,000 for loss of their ocean view when the Borough of Harvey Cedars used eminent domain to acquire an easement for dune construction.  Given today’s “sound bite” culture,  many took this to mean that homeowners can no longer get compensation for loss of a view when the government condemns a dune easement.  That conclusion was reinforced when the property owners in the Harvey Cedars case subsequently threw in the towel and settled for a dollar. 

In fact, however, the Supreme Court did not decide there is no compensation for loss of an ocean view. Rather, the Court held that when a court or jury is determining how much compensation to award, it should consider not only the damage to the property, such as loss of view, but also the benefits, such as enhanced storm protection from a dune.

Where does this leave a homeowner seeking compensation for a lost view?  On October 28, 2013, the Appellate Division of Superior Court made clear that compensation is still available.  In Petrozzi v. Ocean City, the City of Ocean City had entered into easements  with oceanfront property owners to allow dune construction on the homeowners’ properties.  In the easements, Ocean City agreed to protect the homeowners’ views by maintaining the dunes at a maximum height of three feet above the average height of the bulkhead. At the time Ocean City agreed to these easements, State law and DEP regulations allowed Ocean City to grade the dunes on an ongoing basis to assure that this maximum height was not exceeded.

The Legislature subsequently amended the law and DEP adopted new regulations that required Ocean City to obtain a permit from DEP prior to grading the dunes.  DEP denied Ocean City’s application for a permit that would have allowed the dunes to be lowered to the maximum height agreed to in the easements.  The homeowners then sued Ocean City to enforce the easements.

The trial court decided that State law and DEP regulations made it impossible for Ocean City to comply with the dune height limit, and denied the property owners compensation.  The Appellate Division agreed that while impossibility of performance excused Ocean City from complying with its easements, it did not excuse Ocean City from paying compensation.  As the Court noted, “the fact remains Plaintiffs surrendered their right to compensation in reliance on Ocean City’s promise to protect their ocean views.”  The Appellate Division sent the case back to the trial court to determine the compensation the homeowners will be paid, which will consider the decrease in the value of the property caused by the loss of view as well as any quantifiable increase in its value associated with storm protection benefits from the dune.