New Jersey Realtors v. Township of Berkeley

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1384-22

NEW JERSEY REALTORS, APPROVED FOR PUBLICATION

July 31, 2024

Plaintiff-Respondent, APPELLATE DIVISION

v.

TOWNSHIP OF BERKELEY,

Defendant-Appellant.

_________________________

Argued November 8, 2023 – Decided July 31, 2024

Before Judges Haas, Gooden Brown, and Natali.

On appeal from the Superior Court of New Jersey,

Law Division, Ocean County, Docket No. L-0991-22.

Christopher J. Dasti argued the cause for appellant

(Dasti & Associates, PC, attorneys; Christopher J.

Dasti, of counsel and on the briefs; Jeffrey D. Cheney,

on the briefs).

Barry S. Goodman argued the cause for respondent

(Greenbaum, Rowe, Smith & Davis LLP, attorneys;

Barry S. Goodman and Conor J. Hennessey, of

counsel and on the brief).

The opinion of the court was delivered by

GOODEN BROWN, P.J.A.D.

This appeal requires us to determine the validity of a local ordinance

restricting ownership at certain senior housing communities. Defendant

Township of Berkeley (Township) appeals from the December 2, 2022, Law

Division order granting summary judgment to plaintiff New Jersey Realtors

(NJR). The order effectively invalidated Berkeley Township Ordinance No.

22-13-OA (the Ordinance), which amended certain land use provisions to limit

property ownership in certain senior housing communities to persons aged

fifty-five and older. NJR sued the Township after the Ordinance was enacted,

arguing that such a restriction violated the Fair Housing Act (FHA), 42 U.S.C.

§ 3604(a), and the New Jersey Law Against Discrimination (NJLAD), N.J.S.A.

10:5-12(h), because both statutes prohibit discrimination based on familial

status. According to NJR, by setting a minimum age for property ownership in

retirement communities, the ordinance was discriminatory, and the restriction

did not fall within the limited housing for older persons exemption. Finding

that the ordinance violated the FHA and the NJLAD, the judge invalidated the

ordinance. We agree and affirm.

I.

The facts are undisputed. On March 29, 2022, the Township amended

and supplemented multiple sections of Chapter 35, the "Land Development"

section of the Township's municipal code, by enacting the Ordinance. The

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Ordinance changed existing land use provisions that required occupancy of

age-restricted units by persons aged fifty-five years or older, to now require

ownership of such units by persons aged fifty-five or older within certain

retirement communities.

Specifically, the Ordinance amended the definition of "Planned

Residential Retirement Community" (PRRC) under Section 35-101.1 to read as

follows:

"PRRC[]" shall mean a community having one . . . or

more parcels of land with a contiguous total acreage of

at least one hundred . . . acres except within the RGR

Zone which must have a continuous total acreage of at

least forty . . . acres, forming a land block to be

dedicated to the use of a planned retirement

community; through its corporation, association or

owners, the land shall be restricted by bylaws, rules,

regulations and restrictions of record, and services for

the benefit of permanent residents of communities

which mandate that in accordance with

24 [C.F.R. §] 100.306[(a)(4)], 24 [C.F.R. §] 100.[306(

a)(5)] and 24 [C.F.R. §] 100.[306(a)(6)] only persons

fifty-five . . . years of age and older, along with either

their respective spouse or domestic partner, or

otherwise if expressly authorized by the PRRC's

bylaws, rules, regulations and restrictions of record,

shall purchase a Lot or Living Unit in a PRRC to

assure that the PRRC does not have its age-restricted

status pursuant to 42 U.S.C. [§§ 3601 to 3631]

revoked and otherwise which require that residents

comply with the provisions, stipulations and

restrictions regarding senior communities allowing

occupancy of units by persons fifty-five . . . years of

age or older, as contained in the Federal Fair Housing

Act, as amended in 1988. Ownership of the

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residential units and the area comprising a PRRC may

be in accordance with the provisions of N.J.S.A.

45:22A-21[ to -56], or the ownership may be as is

commonly referred to as "fee simple" with open space

to be maintained through assessment against property

owners within the confines of the community.

[(Emphasis added).]

Next, the Ordinance amended Section 35-101.12 to state that:

The maintenance of the green areas, private

roadways, driveways, common courtyards,

recreational areas, lakes and other improvements not

intended to be individually owned shall be provided

by an association organized under the Nonprofit

Corporation Statute of the State of New Jersey (Title

15) and formed for that purpose. The applicant shall,

in the form restrictions and covenants to be recorded,

provided that title to the aforesaid enumerated areas

shall be conveyed to the association, whose members

shall be owners of lots who are only persons fifty-

five . . . years of age or older, along with either their

respective spouse or domestic partner, or other

interests, or to such other persons as a majority of the

members shall designate from time to time by duly

adopted bylaws. Such restrictions and covenants shall

mandate that in accordance with 24 [C.F.R. §]

100.306[(a)(4)], 24 [C.F.R. §] 100.306[(a)(5)] and

24 [C.F.R. §] 100.306[(a)(6)] only persons fifty-

five . . . years of age or older, along with either their

respective spouse or domestic partner, or otherwise if

expressly authorized by the PRRC's bylaws, rules,

regulations and restrictions of record, shall purchase a

Lot or Living Unit in a PRRC to assure that the PRRC

does not have its age-restricted status pursuant to

42 U.S.C. [§ 3601 to 3631] revoked and further

provide that the same shall not be altered, amended,

voided or released, in whole or in part, without the

written consent of the Township of Berkeley by

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resolution duly adopted at a regular meeting of the

Township Council and except upon proper notice

being given by the applicant or any other party in

interest to all owners of lots in the PRRC.

[(Emphasis added).]

Finally, Section 35-101.14(c) was amended as follows:

The documents shall be forwarded to the Board

and shall be subject to the review of the Board and of

the Township Council as to their adequacy in ensuring

that the community shall be constituted so as to be

consistent with the purposes and requirements of this

section, including the mandate that in accordance with

24 [C.F.R. §] 100.306[(a)(4)], 24 [C.F.R. §] 100.306[(

a)(5)] and 24 [C.F.R. §] 100.306[(a)(6)] only persons

fifty-five . . . of age or older, along with either their

respective spouse or domestic partner, or otherwise if

expressly authorized by the PRRC's bylaws, rules,

regulations and restrictions of record shall purchase a

Lot or Living Unit in a PRRC to assure that the PRRC

does not have its age-restricted status pursuant to

42 U.S.C. [§ 3601 to 3631] revoked. The proposed

documents and restrictions shall indicate a

comprehensive and equitable program for the orderly

transition of control over the homeowners' association

from the applicant or the developer to the actual

homeowners in the community.

[(Emphasis added).]

On May 11, 2022, NJR filed a complaint in lieu of prerogative writs

against the Township seeking an order declaring the Ordinance "invalid and

unenforceable" on the grounds that limiting property ownership, rather than

occupancy, violated federal and state law. In the complaint, NJR asserted that

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the Ordinance violates the FHA and the NJLAD because both statutes prohibit

familial status discrimination, which the Ordinance violates by setting a

minimum age for property ownership in PRRCs, and the restriction does not

fall within the statutory exemption. See 42 U.S.C. § 3604(a); N.J.S.A. 10:5-

12.5(a). According to the complaint, the Ordinance is preempted by the FHA

and the NJLAD, is arbitrary, capricious, and unreasonable, and violates the

State Constitution, N.J. Const. art. 1, ¶ 1.1

On August 12, 2022, NJR moved for summary judgment. In support,

NJR relied on a July 5, 2017, letter from the Commissioner of the Department

of Community Affairs (DCA) responding to NJR's inquiries on the legality of

restricting home ownership in age-restricted communities. The letter stated:

[DCA] has received your correspondence regarding

age-restricted communities limiting the ownership of

homes to those over the age of [fifty-five] or [sixty-

two]. At my direction, staff reviewed the current

federal and state law regarding age-restricted

communities with regards to ownership and

occupancy.

Our research yielded the results you expected.

Both the federal and state laws limit the age of the

1

Article I, Paragraph 1 of the New Jersey Constitution provides that "[a]ll

persons are by nature free and independent, and have certain natural and

unalienable rights, among which are those of enjoying and defending life and

liberty, of acquiring, possessing, and protecting property, and of pursuing and

obtaining safety and happiness."

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occupants of the home in age-restricted communities,

not the age of the owner of the home. Therefore, age-

restricted communities cannot prohibit the sale of a

home based on the owner's age. However, they may

require the owner or purchaser to certify that the units

will be occupied by a person that meets the age

restriction.

Additionally, in response to a request from the Township's Administrator

for clarification of the July 5, 2017, letter, in an October 26, 2017, letter, the

DCA Commissioner informed the Township in pertinent part:

I am writing in response to your letter

requesting clarification, and additional information,

regarding my letter dated July 5, 2017, which dealt

with the ownership of housing units in age-restricted

communities. That letter was written in response to a

question from [NJR]. In that letter, I indicated that

while federal and State law permit, in certain

instances, a community to restrict occupancy to

persons based on age, those laws do not include

similar language regarding the owners of units in such

communities. That conclusion was based on a review

of the applicable statutes.

In your letter, you raise several questions. First,

you inquire as to whether my letter was meant to

suggest that a community could, in fact, restrict the

age of owners, but that communities are not currently

doing so. That is not what my letter was stating;

rather, as noted above, age-restricted communities

may restrict the occupants, but not the owners of units,

based on age.

On December 2, 2022, following oral argument, the judge entered an

order granting NJR's motion and invalidating the Ordinance. In an oral

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decision, the judge determined that the Ordinance could not survive the

challenge because it conflicted with the FHA and the NJLAD by "restrict[ing]

ownership," not occupancy, "of people who are over [fifty-five]." The judge

acknowledged the DCA letters, noting that "the [DCA] made a specific finding

that . . . the exception . . . under the [FHA] and the [NJLAD] . . . relates to

occupancy and [not] ownership." The judge also ruled that the Ordinance

concerned an "area that has been preempted by . . . design on the federal and

state level . . . [and] . . . conflicts with the housing regulations and the scheme

to provide . . . age-restricted housing." Finally, the judge commented on the

"unintended consequences" of the Ordinance, which included preventing an

older owner from transferring title to the property to a non-qualifying younger

person "for purposes of estate planning." This appeal followed.

On appeal, the Township argues the judge "improperly granted [NJR's]

motion for summary judgment as the Ordinance is constitutional and neither

invalidated nor preempted" by the FHA or the NJLAD.

II.

"[W]e review the trial court's grant of summary judgment de novo under

the same standard as the trial court." Templo Fuente De Vida Corp. v. Nat'l

Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016). That standard is

well-settled.

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[I]f the evidence of record—the pleadings,

depositions, answers to interrogatories, and

affidavits—"together with all legitimate inferences

therefrom favoring the non-moving party, would

require submission of the issue to the trier of fact,"

then the trial court must deny the motion. R. 4:46-

2(c); see Brill v. Guardian Life Ins. Co. of Am., 142

N.J. 520, 540 (1995). On the other hand, when no

genuine issue of material fact is at issue and the

moving party is entitled to a judgment as a matter of

law, summary judgment must be granted. R. 4:46-

2(c); see Brill, 142 N.J. at 540.

[Steinberg v. Sahara Sam's Oasis, LLC, 226 N.J. 344,

366 (2016).]

Where there is no material fact in dispute, as here, "we must then 'decide

whether the trial court correctly interpreted the law.'" DepoLink Ct. Reporting

& Litig. Support Servs. v. Rochman, 430 N.J. Super. 325, 333 (App. Div.

2013) (quoting Massachi v. AHL Servs., Inc., 396 N.J. Super. 486, 494 (App.

Div. 2007)). "We review issues of law de novo and accord no deference to the

trial judge's [legal] conclusions . . . ." MTK Food Servs., Inc. v. Sirius Am.

Ins. Co., 455 N.J. Super. 307, 312 (App. Div. 2018).

The issue before us involves the interpretation of the FHA and the

NJLAD. Issues of "statutory construction" are also subject to "de novo"

review. Cashin v. Bello, 223 N.J. 328, 335 (2015). In interpreting a statute,

our Supreme Court recently provided the following guidance:

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Our role when interpreting a statute "is to determine

and give effect to the Legislature's intent." DYFS v.

A.L., 213 N.J. 1, 20 (2013).

To achieve that goal, "we look first to the plain

language of the statute," ibid., attributing to statutory

words "their ordinary meaning and significance and

read[ing] them in context with related provisions so as

to give sense to the legislation as a whole,"

DiProspero v. Penn, 183 N.J. 477, 492 (2005)

(citations omitted). If the statutory text has a clear

meaning, that meaning controls, but if the plain

language is ambiguous or leads "to an absurd result or

to a result at odds with the objective of the overall

legislative scheme," then we will analyze extrinsic

sources such as legislative history to best determine

legislative intent. DCPP v. Y.N., 220 N.J. 165, 178

(2014).

[N.J. Div. of Child. Prot. & Permanency v. B.P., 257

N.J. 361, 374 (2024) (alteration in original).]

"'[W]e interpret a regulation in the same manner that we would interpret a

statute.'" In re Eastwick Coll. LPN-to-RN Bridge Program, 225 N.J. 533, 542

(2016) (quoting US Bank, N.A. v. Hough, 210 N.J. 187, 199 (2012)).

Under the FHA, 42 U.S.C. § 3604, discrimination in the sale or rental of

housing on the basis of familial status is strictly prohibited. See Seniors Civ.

Liberties Ass'n v. Kemp, 761 F. Supp. 1528, 1541 (M.D. Fla. 1991) ("[T]he

Fair Housing Amendments Act of 1988 applies to both rental and ownership

housing."). To that end, subject to certain exemptions, 42 U.S.C. § 3604

makes it unlawful to "refuse to sell or rent[,] . . . or otherwise make

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unavailable or deny, a dwelling to any person;" "[t]o discriminate against any

person in the terms, conditions, or privileges of sale or rental[,] . . . or in the

provision or services or facilities in connection therewith;" and "[t]o make,

print, or publish . . . any notice, statement, or advertisement, with respect to

the sale or rental . . . that indicates any preference, limitation, or

discrimination" based upon familial status. "The Act defines the term 'familial

status' as 'one or more individuals (who have not attained the age of [eighteen]

years)' living with a parent or legal guardian." Massaro v. Mainlands Section

1 & 2 Civic Ass'n, 3 F.3d 1472, 1476 (11th Cir. 1993) (quoting 42 U.S.C. §

3602(k)).

"Members of Congress determined the need for such legislation based on

studies and hearings indicating that families with children were having

difficulty securing housing because of age limitations." Ibid. To address

concerns regarding the impact of prohibiting housing discrimination based on

familial status in retirement communities, "where elderly residents had bought

or rented homes with the expectation that they would be able to live without

the noise and hazards of children," ibid., Congress expressly exempted

qualified housing for older persons from compliance. Specifically, 42 U.S.C.

§ 3607(b) provides that "[n]othing in [the FHA] . . . . regarding familial status

appl[ies] with respect to housing for older persons." See Seniors Civ. Liberties

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Ass'n, 761 F. Supp. at 1541 ("In short, it was the legislature's intent to open up

all forms of housing to parents with children under [eighteen] except those that

are designed for older persons and qualify for an exemption." (Emphasis

omitted)). As such, "[t]he housing for older persons exemptions permit

communities satisfying certain requirements to discriminate on the basis of

familial status." Balvage v. Ryderwood Improvement & Serv. Ass'n, Inc., 642

F.3d 765, 769 (9th Cir. 2011).

The housing for older persons exemptions "apply to three types of

housing, including, as relevant here, housing for persons [fifty-five] years of

age or older." Ibid.2 To qualify for the exemption, the housing must be:

(C) intended and operated for occupancy by persons

[fifty-five] years of age or older, and—

(i) at least [eighty] percent of the occupied units

are occupied by at least one person who is

[fifty-five] years of age or older;

(ii) the housing facility or community publishes

and adheres to policies and procedures that

demonstrate the intent required under this

subparagraph; and

2

"Although not relevant here, the exemptions also include (1) housing

provided under certain state or federal programs specifically designed and

operated to assist elderly persons and (2) housing intended for, and solely

occupied by, persons [sixty-two] years of age or older." Balvage, 642 F.3d at

769 n.2 (citing 42 U.S.C. § 3607(b)(2)(A)-(B)).

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(iii) the housing facility or community complies

with rules issued by the Secretary for

verification of occupancy, which shall—

(I) provide for verification by reliable

surveys and affidavits; and

(II) include examples of the types of

policies and procedures relevant to a

determination of compliance with the

requirement of clause (ii). Such surveys

and affidavits shall be admissible in

administrative and judicial proceedings

for the purposes of such verification.

[42 U.S.C. § 3607(b)(2)(C).]

Noticeably, the exemption only addresses "occupancy" and is silent on

whether it is permissible to restrict ownership to persons fifty-five or older.

Ibid. The Code of Federal Regulations (CFR), which governs the application

of the exemption, also makes no mention of ownership, and instead explains

how the eighty percent occupancy requirement can be satisfied, 24 C.F.R.

§100.305, how a housing facility or community must demonstrate its intent to

operate as housing designed for occupancy for persons fifty-five years of age

or older, 24 C.F.R. § 100.306, and how to verify compliance with the eighty

percent occupancy requirement, 24 C.F.R. § 100.307.

To date, New Jersey courts have not expressly addressed whether age-

related ownership restrictions are permitted under the FHA. Other

jurisdictions have rendered tangential decisions without tackling the issue head

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on. Some courts appear to treat ownership and occupancy restrictions

synonymously, while other courts warn that ownership restrictions infringe

upon constitutionally protected property rights. For example, in Balvage,

where defendant homeowners' association restricted "ownership and residence

. . . to persons . . . [fifty-five] years of age or older," the "sole issue" in the

lawsuit filed by residents alleging discriminatory housing practices in violation

of the FHA was whether defendant was "exempt from the FHA's prohibitions

on familial status discrimination under . . . the housing for older persons

exemptions set out in § 3607(b)." 642 F.3d at 776.

In contrast, in Duvall v. Fair Lane Acres, Inc., 50 So. 3d 668, 671 (Fla.

Dist. Ct. App. 2010), a Florida appellate court reversed a trial court order that

an age restriction imposed on homeowners by a homeowners' association "was

a restriction on occupancy and not a restriction on 'property rights.'" In

determining that "the judgment constituted an unlawful taking of property

rights," id. at 669, the court reasoned:

To impose a limitation on who can use and

enjoy property is a direct restriction on the

Homeowners' ownership rights in their properties.

See Black's Law Dictionary 1215 (9th ed. 2009)

(defining "ownership" as "[t]he bundle of rights

allowing one to use, manage, and enjoy property,

including the right to convey it to others"). Similarly,

to restrict the ability to transfer property by imposing

an obligation to seek the approval of the Association

is an improper infringement on the Homeowners'

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property rights. These property rights are

constitutionally protected, and the trial court erred in

ordering the Homeowners to sign the Agreement by

which they would be required to surrender these

rights. See [Dep't of Law Enf't v. Real Prop., 588 So.

2d 957, 964 (Fla. 1991)] ("Property rights are among

the basic substantive rights expressly protected by the

Florida Constitution. Art. I, § 2, Fla. Const.").

[Duvall, 50 So. 3d at 671 (first alteration in original).]

Other than the ownership restriction, based on the FHA's plain language,

the Ordinance meets the requirements of the housing for older persons

exemption. See 42 U.S.C. § 3607(b)(2)(C). The Ordinance defines and

restricts PRRCs to the required level of occupancy by residents aged fifty -five

years or older, clearly expressing the intent to create housing for older persons.

In fact, NJR does not dispute that the PRRCs would otherwise comply with the

FHA's occupancy threshold requirements. Instead, NJR asserts the Ordinance

is "facially discriminatory" as a matter of law and "violative of the [FHA]."

NJR invites us to construe the FHA's silence on ownership as a prohibition

against it, reasoning that if the ability to regulate ownership is not explicitly

permissible, it is "inherently discriminatory" because of the "discriminatory

impact it would have on people who are protected under the [FHA] on the

basis of familial status."

"We have scrupulously required that state and municipal regulations

conform to the [FHA]." United Prop. Owners Ass'n of Belmar v. Borough of

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Belmar, 343 N.J. Super. 1, 48 (App. Div. 2001). On its face, 42 U.S.C. § 3604

does not expressly permit or preclude an age-restricted community from

limiting home ownership to persons fifty-five years of age or older. However,

subject to certain exemptions, it does prohibit discriminatory acts, including

refusing to sell a dwelling to any person, discriminating against any person in

the terms or conditions of sale, or indicating any preference with respect to the

sale based upon familial status. See ibid.

Discrimination on the basis of familial status does not violate the FHA if

the housing for older persons exemption applies. See 42 USC § 3607(b)(1).

Critically, the FHA's housing for older persons exemption permits restrictions

on occupancy, not ownership, to persons fifty-five years and older. Thus, the

exemption does not expressly permit the restriction on ownership embodied in

the Ordinance. "As a general matter, the primary goal of the [FHA] is to limit

discrimination in the housing arena." Putnam Fam. P'ship v. City of Yucaipa,

673 F.3d 920, 931 (9th Cir. 2012). Considering both the text and the

underlying purpose of the FHA, we can reach only one conclusion. Because

the exemption does not apply and the Ordinance's restriction on ownership in

age-restricted communities discriminates on the basis of familial status, we

conclude that the Ordinance violates 42 U.S.C. § 3604 and is therefore

unlawful.

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We reach a similar conclusion with respect to the NJLAD. Like the

FHA, the NJLAD prohibits housing discrimination on the basis of familial

status, with an exception for qualified housing for older persons. N.J.S.A.

10:5-12(h); 10:5-5(n) ("[No] provision under this act regarding discrimination

on the basis of familial status appl[ies] with respect to housing for older

persons.").

Pertinent here, the NJLAD defines housing for older persons 3 as housing

that is:

(3) intended and operated for occupancy by at least

one person [fifty-five] years of age or older per unit.

In determining whether housing qualifies as housing

for older persons under this paragraph, the Attorney

General shall adopt regulations which require at least

the following factors:

(a) the existence of significant facilities and

services specifically designed to meet the

physical or social needs of older persons, or

if the provision of such facilities and

services is not practicable, that such

housing is necessary to provide important

housing opportunities for older persons; and

3

Although not relevant here, the exemptions also include (1) housing

provided under certain State or federal programs "specifically designed and

operated to assist [elderly] persons;" and (2) housing "intended for, and solely

occupied by, persons [sixty-two] years of age or older." N.J.S.A. 10:5-

5(mm)(1), (2).

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(b) that at least [eighty] percent of the units are

occupied by at least one person [fifty-five]

years of age or older per unit; and

(c) the publication of, and adherence to,

policies and procedures which

demonstrate an intent by the owner or

manager to provide housing for

persons [fifty-five] years of age or

older.

[N.J.S.A. 10:5-5(mm)(3).]

Similar to the CFR, our State regulations provide more detailed guidance

on the qualifications for the housing for older persons exemption. N.J.A.C.

13:15-1.5. Still, both the NJLAD and its attendant regulations only delineate

occupancy restrictions and make no mention of ownership restrictions.

N.J.S.A. 10:5-5(mm); N.J.A.C. 13:15-1.5. However, in 2019, N.J.A.C. 13:15-

1.2(a) was amended to state that "[n]othing in the requirements of [the housing

for older persons regulations] shall be construed to restrict the age of any

purchaser or grantee of housing who does not reside in, or intend to reside in,

such housing."

The amendment was added after the Division on Civil Rights (DCR)

received public comments concerning retirement communities restricting

occupancy:

Commenters [two] through [thirty-three] expressed

substantially similar concerns regarding the

requirements for an exemption to the [NJLAD's] ban

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on housing discrimination based on familial status.

The commenters assert that some entities operating

and managing housing communities restricted to

occupancy by persons [sixty-two] or over as defined

in N.J.A.C. 13:15-1.4, or restricted to occupancy by

persons [fifty-five] and over as defined in N.J.A.C.

13:15-1.5, are restricting the ages of the owners as

well as the occupants. These commenters note that

State law and [f]ederal law restrict the ages of the

occupants, but do not restrict the ages of non-occupant

owners of such properties. The commenters request

amendment of the rule to clarify that individuals under

the ages of [fifty-five] or [sixty-two] can purchase a

home in age-restricted communities "so long as they

certify the occupants of that home will be over the age

of [fifty-five] or [sixty-two]." One commenter

specifically requested adding clarifying language to

N.J.A.C. 13:15-1.4(a) and 1.5(d).

[51 N.J.R. 216(a).]

DCR responded as follows:

DCR agrees that the [NJLAD's] definitions of housing

for older persons address only the ages of the

occupants of any housing, and do not address the ages

of non-occupant owners of such housing.

Accordingly, as adopted, DCR has added clarifying

language to N.J.A.C. 13:15-1.2(a) to prevent any

inaccurate interpretation of the [NJLAD] or the rule.

DCR declines, however, to add the provision "so long

as they certify that the unit will be occupied by

persons [fifty-five or sixty-two] years of age or over"

to the rules. Such a certification is already required

by a New Jersey statute governing age-restricted

communities, which is administered by [DCA]. See

N.J.S.A. 45:22A-46.2. However, no such certification

is required by the [NJLAD]. To ensure consistency

with the relevant language in the [NJLAD], DCR has

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determined that N.J.A.C. 13:15-1.2, rather than

N.J.A.C. 13:15-1.4 and 1.5, should be changed.

[51 N.J.R. 216(a).]

A plain reading of N.J.A.C. 13:15-1.2(a) clarifies that the housing for

older persons exemption applies only to occupancy, not ownership. Thus,

considering the text and the underlying purpose of the NJLAD, we conclude

that any age restriction imposed on ownership in PRRCs is a discriminatory

housing practice that violates the NJLAD on the basis of familial status. As

such, we agree with the judge that the Ordinance violates the NJLAD and is

therefore unlawful.

Given our analysis, we are also convinced that the Ordinance is

preempted by the FHA and the NJLAD. "[A] court may declare an ordinance

invalid if it . . . is preempted by superior legal authority." Rumson Ests., Inc.

v. Mayor of Fair Haven, 177 N.J. 338, 351 (2003) (internal citation omitted);

see United Bldg. & Constr. Trades Council v. Mayor & Council of Camden, 88

N.J. 317, 343 (1982) (commenting that "[w]hen a state statute has preempted a

field by supplying a complete system of law on subject, an ordinance dealing

with the same subject is void"), rev'd on other grounds, 465 U.S. 208 (1984).

In Overlook Terrace Management Corp. v. Rent Control Board, our

Supreme Court explained that "[p]reemption is a judicially created principle

based on the proposition that a municipality, which is an agent of the State,

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cannot act contrary to the State." 71 N.J. 451, 461 (1976) (citing Summer v.

Teaneck, 53 N.J. 548, 554 (1969)).

Preemption analysis calls for the answer initially to

whether the field or subject matter in which the

ordinance operates, including its effects, is the same

as that in which the State has acted. If not, then

preemption is clearly inapplicable. An affirmative

answer calls for a further search for "[i]t is not enough

that the Legislature has legislated upon the

subject . . . ."

[Ibid. (alteration in original) (citations omitted)

(quoting Summer, 53 N.J. at 554).]

If the threshold question is answered affirmatively, then five questions

should be considered to determine whether a municipal ordinance is preempted

by state law:

1. Does the ordinance conflict with state law, either

because of conflicting policies or operational effect

(that is, does the ordinance forbid what the Legislature

has permitted or does the ordinance permit what the

Legislature has forbidden)?

2. Was the state law intended, expressly or impliedly,

to be exclusive in the field?

3. Does the subject matter reflect a need for

uniformity? . . . .

4. Is the state scheme so pervasive or comprehensive

that it precludes coexistence of municipal regulation?

5. Does the ordinance stand "as an obstacle to the

accomplishment and execution of the full purposes

and objectives" of the Legislature?

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[Id. at 461-62 (citations omitted).]

Consideration of the Overlook factors leads us to conclude that the

Ordinance is preempted by the FHA and the NJLAD. Based on our earlier

analysis, it is apparent that the Ordinance conflicts with the FHA and the

NJLAD, the interpretation of which is the very issue before us. Application of

that factor alone weighs heavily in favor of preemption. The remaining factors

are met as well. "Local action is preempted when the Legislature intended 'its

own actions, whether it exhausts the field or touches only part of it, to be

exclusive.'" Essex Cnty. Corr. Officers PBA Loc. No. 382 v. Cnty. of Essex,

439 N.J. Super. 107, 121 (App. Div. 2014) (quoting Mack Paramus Co. v.

Mayor & Council of Paramus, 103 N.J. 564, 573 (1986)).

Finally, although not reached by the judge, we address whether the

Ordinance is a valid and reasonable exercise of police power or an arbitrary,

capricious, and unreasonable act that exceeds the scope of the Township's

authority. NJR maintains that the Ordinance is arbitrary and capricious

because it "has no justifiable purpose, does not address any alleged problem (it

instead creates problems), and goes well beyond any public need, in

contradiction of established [f]ederal and State laws." According to NJR, the

Ordinance would "harm existing unit owners within PRRCs by artificially

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suppressing the value of their property" because potential buyers would be

significantly limited by the age restriction.

The Township counters that the Ordinance is "reasonably calculated" to

address "a local concern: rampant house-flipping and speculation by non-

owner occupants, including corporations and persons under [fifty-five] years

of age, which is making communities unaffordable for the very persons they

are intended to serve – seniors on fixed incomes." The Township argues that

the Ordinance is well within the scope of its authority to address this problem

by "remov[ing] those unprotected classes of speculators from the classes of

persons eligible to own units within [PRRCs]."

"[W]hen reviewing a municipal action, we apply a presumption of

validity and reasonableness to adopted ordinances" and "do not 'pass on the

wisdom of the ordinance; that is exclusively a legislative function.'" Timber

Glen Phase III, LLC v. Twp. of Hamilton, 441 N.J. Super. 514, 523 (App. Div.

2015) (quoting Pheasant Bridge Corp. v. Twp. of Warren, 169 N.J. 282, 290

(2001)). The party challenging the ordinance bears the burden of showing that

"the ordinance, 'in whole or in application to any particular property,' is

arbitrary, capricious or unreasonable." Ibid. (quoting Pheasant Bridge, 169

N.J. at 289-90).

This presumption of validity is derived from our State Constitution:

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The provisions of this Constitution and of any

law concerning municipal corporations formed for

local government, or concerning counties, shall be

liberally construed in their favor. The powers of

counties and such municipal corporations shall include

not only those granted in express terms but also those

of necessary or fair implication, or incident to the

powers expressly conferred, or essential thereto, and

not inconsistent with or prohibited by this Constitution

or by law.

[N.J. Const., art. IV, § 7, ¶ 11.]

The presumption "embodies the principle that the police power of the

State may be invested in local government to enable local government to

discharge its role as an arm or agency of the State and to meet other needs of

the community." Inganamort v. Ft. Lee, 62 N.J. 521, 528 (1973). However,

the presumption is not without restraint.

On the other side of the coin is the postulate that a

local municipality is but a creature of the State,

capable of exercising only those powers granted to it

by the Legislature[, Wagner v. Mayor & Mun. Council

of City of Newark, 24 N.J. 467 (1957)], and the

equally important truism that the presumption of

validity referred to is only a presumption and may be

overcome or rebutted not only by clear evidence

aliunde, but also by a showing on its face or in the

light of facts of which judicial notice can be taken, of

transgression of constitutional limitation or the bounds

of reason. [Guill v. Mayor & Council of City of

Hoboken, 21 N.J. 574, 581 (1956); State v.

Wittenberg, 50 N.J. Super. 74, 78 (App. Div. 1957).]

[Moyant v. Borough of Paramus, 30 N.J. 528, 534-35

(1959) (emphasis omitted).]

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See also Dome Realty, Inc. v. Paterson, 83 N.J. 212, 225-26 (1980)

(establishing "a three-part analysis for determining the propriety of an exercise

of legislative authority by a municipality," including "whether any delegation

of power to municipalities has been preempted by other State statutes dealing

with the same subject matter").

In the area of land use, the Municipal Land Use Law (MLUL) authorizes

municipalities to regulate the use of land and buildings within its borders. See

N.J.S.A. 40:55D-1 to -163. Nonetheless, our courts have grappled with the

competing interests of municipalities and property owners and have recognized

that restrictions imposed by municipalities "must respect the constitutionally

protected right to own and alienate property." Ocean Cnty. Bd. of Realtors v.

Twp. of Long Beach, 252 N.J. Super. 443, 455 (Law Div. 1991).

On the one hand, our courts have recognized the right

of a municipality to "secure and maintain 'the

blessings of quiet seclusion' and to make available to

its inhabitants the refreshment of repose and the

tranquility of solitude." On the other hand, our courts

have consistently invalidated ordinances which

unnecessarily and excessively restrict the use of

private property.

[Id. at 449-50 (citation omitted) (quoting Berger v.

State, 71 N.J. 206, 223 (1976)).]

As such, we have held that neither the express nor implied powers of

municipal regulation suggest "the power to . . . deny an owner a substantial

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attribute of ownership and possession of real estate," or allow "an

impermissible arrogation of governmental power." Repair Master, Inc. v.

Borough of Paulsboro, 352 N.J. Super. 1, 10-11 (App. Div. 2002). To that

end, restraints on the alienation of property are generally disfavored as a

matter of public policy:

It is firmly established that the policy of the law

is against the imposition of restrictions upon the use

and enjoyment of land and such restrictions are to be

strictly construed. Restrictions tend to protect

property, but they also impair alienability. Nor will

equity aid one man to restrict another in the use of

his[ or her] land unless the right to restrict is made

manifest and clear in the restrictive covenant.

[Hammett v. Rosensohn, 46 N.J. Super. 527, 535

(App. Div. 1957).]

Indeed, our case law has consistently supported "the fundamental, if not

immutable, principle that 'zoning enabling acts authorize local regulation of

"land use" and not regulation of the "identity or status" of owners or persons

who occupy the land.'" Tirpak v. Borough of Point Pleasant Beach Bd. of

Adjustment, 457 N.J. Super. 441, 443 (App. Div. 2019) (quoting 5 Edward H.

Ziegler, Jr., Rathkopf's The Law of Zoning and Planning § 81.7 (4th ed.

2005)); see also DeFelice v. Zoning Bd. of Adjustment, 216 N.J. Super. 377,

381 (App. Div. 1987) ("[A] zoning board is charged with the regulation of land

use and not with the person who owns or occupies the land.").

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This wariness of ownership restrictions stems from the constitutionally

protected right to "own and dispose of real property, a right that is within the

protective scope of the Fourteenth Amendment to the United States

Constitution and Article I, § 1 of the New Jersey Constitution." Upper

Deerfield Twp. v. Seabrook Hous. Corp., 255 N.J. Super. 218, 224 (App. Div.

1992). Although that right "is subject to the reasonable exercise of the police

power," id. at 224-25, where there are extreme limitations on the right of

ownership of private property, we have not hesitated to invalidate an

ordinance. See, e.g., United Prop. Owners Assoc. v. Borough of Belmar, 185

N.J. Super. 163, 170-71 (App. Div. 1982) (invalidating provisions of ordinance

precluding temporary or seasonal rentals on residential property as defined in

the ordinance as "impermissibly arbitrary" and constituting "an unreasonable

restraint on the use of private property"); see also Upper Deerfield Twp., 255

N.J. Super. at 219, 225 (invalidating ordinance "requiring the seller of land

containing a structure to obtain a certificate of occupancy prior to sale

regardless of its intended use by the prospective buyer" where "its literal

application to every sale of real estate containing a structure reaches beyond

the legitimate police power concerns of the municipality and becomes

confiscatory").

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In such situations, we have stressed that the appropriate inquiry in a case

involving ownership restrictions "is whether the Township ordinance enacted

under the police power, affecting private rights as it does, evidences a public

need that justifies governmental action and whether the restrictions imposed

unreasonably and irrationally exceed the public need." Id. at 225.

Applying that standard, we conclude the Ordinance unreasonably

infringes upon the well-established and constitutionally protected right to own

and sell property and the restriction unreasonably and irrationally exceeds the

public need. See United Prop. Owners Assoc., 185 N.J. Super. at 170

(recognizing that "an extreme limitation on rights of ownership of private

property" will be found to be arbitrary). Although the Township posits that

enforcement of the restriction could accomplish a worthwhile purpose, the

persons to whom alienation is prohibited could be substantial and impactful.

As the judge pointed out, the restriction could impact to a significant degree

the very seniors the Township seeks to protect by preventing owners over the

age of fifty-five from transferring title to non-qualifying family members, a

common practice in estate planning. Additionally, the Ordinance would

adversely affect every owner's ability to sell by limiting the pool of eligible

buyers.

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On an alternative basis, we therefore invalidate the Ordinance on the

ground that it is arbitrary and unreasonable. We do not believe the Legislature

has imbued municipalities with the power to restrict ownership at senior

housing communities as contemplated in the Ordinance and, as we stated in

Repair Master, Inc.,

This is a power we simply will not infer in light of the

evidence and the history of our land use and

occupancy jurisprudence. If this power is conferred

on municipalities, we think it should be the result of

legislative deliberation and evaluation of all the

complex considerations, not from a judicially-created

attempt to accommodate a single, though doubtlessly

sincere, municipal effort. The problem could be

compounded if other municipalities were to take this

route and seek an arguably more desirable occupancy

mix. Specific legislative approval should be a

precondition to the exercise of a power we consider a

radical regulatory development.

[352 N.J. Super. at 14.]

Affirmed.

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