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New Jersey Appellate Division Reinforces Clear Terms of Loan Agreement Banner Image

New Jersey Appellate Division Reinforces Clear Terms of Loan Agreement

Month: February 2026

New Jersey Appellate Division Reinforces Clear Terms of Loan Agreement

Posted on by Jessica Haspel

What You Need to Know

  • The New Jersey Appellate Division affirmed summary judgment in favor of a lender that declined a construction draw request based on the clear terms of its loan agreement.
  • A construction lender may limit advances to “work-in-place” and require inspection approval before disbursing funds.
  • Off-site prefabricated materials do not qualify as “work-in-place” if the loan agreement conditions advances on work being physically in place and approved by the lender’s inspector.
  • Disclosures during underwriting do not override or modify unambiguous loan agreement terms between sophisticated parties.

New Jersey Appellate Division Upholds Lender’s Right to Deny Construction Loan Advance

 

In Vineland Chestnut Ave., LLC v. Fulton Bank, N.A., 2026 N.J. Super. Unpub. LEXIS 156 (Super. Ct. App. Div. Jan. 30, 2026), the Appellate Division affirmed the trial court’s grant of summary judgment to a bank on borrower’s claims that a construction draw should have been advanced. In doing so, it focused on the terms of the construction loan agreement that gave the Bank the right to inspect all “work-in-place” before advancing funds for same.

Dispute Over Whether Off-Site Prefabricated Materials Qualified as “Work-in-Place”

 

Defendant, Vineland Chestnut, LLC (“Vineland”), contracted with Family Dollar Stores of New Jersey, LLC (“Family Dollar”) to construct a store.  To finance the construction, Vineland entered into a construction loan agreement with Fulton Bank (the “Bank”).  Section 11(f) of the Agreement provided that:

All Advances shall be made only for work-in-place as found satisfactory by the Lender’s construction inspector . . . ., whose inspections in no case shall be construed as an acceptance by the Lender of quality of work and shall be deemed performed for the Lender’s sole benefit and not for the benefit of the

Vineland contracted with a sub-contractor to prefabricate the store’s steel structure off-site and deliver it to the construction site with cash on delivery (“COD”). The Bank knew of this arrangement through the loan agreement and underwriting process. Two weeks before the structure was to be delivered, Vineland requested that the Bank advance $97,952 in loan proceeds to pay for the structure.

The Bank declined the advance maintaining a pre-fab building was not “work-in-place” and that an inspection report was necessary with sufficient time for it to be reviewed before any funds were advanced. Because the sub-contractor would not deliver the structure without payment, construction delays ensued, liens were filed, and Vineland defaulted on its Loan. It eventually obtained financing from another lender and completed the project.

Vineland subsequently sued the Bank for breach of contract, breach of the implied duty of good faith and fair dealing, and tortious interference. After discovery and voluntary dismissal of the tortious interference claim, the trial court granted the Bank’s summary judgment motion based on the clear terms of the loan agreement.

Court Finds Loan Agreement Clear and Unambiguous

 

On appeal, Vineland argued the contract terms were ambiguous and the fact that the Bank knew the sub-contractor’s off-site work and COD terms prior to closing the Loan required the Bank to advise it as an “issue” in providing the Loan.

The Appellate Division affirmed the trial court finding that the Loan Agreement was clear and unambiguous. Per Section 11(f), the Bank agreed to only advance on “work-in-place,” and had the right to inspect same. It then found that while the agreement did not define “work-in-place,” it defined “work” as “all of the work of the [c]ontractor in pursuit of completing the project.” Thus, the pre-fab steel structure could qualify as “work.” However, Section 2(h) of the agreement required “work” to be “in place and found satisfactory to the As such, “in-place” could not include a steel structure built off-site. Thus, the Bank was within its right to decline the advance. Since the breach of implied duty claim mirrored the rejected contract claim, it failed too.

Key Takeaways for Lenders and Borrowers in Construction Financings

 

This decision emphasizes the significance of the definition of terms in loan documents. It also reinforces that the loan documents control and disclosures in the underwriting process do not justify deviating from the clear terms between sophisticated parties.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Keshav Agiwal at kagiwal@riker.com.

Time to Get REAL: NJDEP Finalizes Coastal Permitting Rule Amendments

Posted on by Jessica Haspel

What You Need to Know

  • NJDEP’s REAL rule amendments are now final and in effect, changing coastal permitting standards across New Jersey’s land use programs.
  • A limited 180-day “legacy” window (through July 20, 2026) allows certain technically complete applications to proceed under pre-REAL standards.
  • Tidal flood elevations are now climate-adjusted to four feet above FEMA’s 100-year flood elevation, significantly expanding regulated areas and affecting project design.
  • New Inundation Risk Zones and hardship provisions, including recognition of affordable housing as a “compelling public need,” create both new compliance obligations and potential relief pathways.

In January, the New Jersey Department of Environmental Protection (“NJDEP”) adopted the Resilient Environments and Landscapes (“REAL”) rule amendments to its coastal permitting rules, moving the REAL framework from merely a “proposed” rule to the operative permitting standards going forward.  As discussed in our prior post, this adoption followed a Notice of Substantial Change, whereby many of the key provisions of the original rule proposal were modified in response to public comments.  But with the final rule now adopted, owners and developers in affected areas now must consider: (i) whether a project can qualify for “legacy” treatment, and (ii) if not, how the project should be designed to meet the new standards. These adopted amendments apply statewide across NJDEP’s land-use programs, but for coastal development, they chiefly affect projects located in NJDEP-mapped tidal flood hazard areas and, within those, newly mapped Inundation Risk Zones.

Effective Date and “Legacy” Transition Window

Although REAL is now in effect, NJDEP has provided a limited “legacy” window whereby applications deemed technically complete within 180 days can be reviewed under the pre-REAL standards.  Developers of current or contemplated coastal projects should determine whether their projects can be positioned for a technical completeness determination before the legacy deadline of July 20, 2026.  If not, then the new flood elevation, access, and related standards will apply.

Climate-Adjusted Flood Elevations in Tidal Areas

Under the adopted rules, NJDEP will evaluate tidal flooding using a “climate-adjusted flood elevation” that is four feet above FEMA’s 100-year flood elevation.  This greatly expands the number of sites that fall within NJDEP’s flood standards, impacting finished floor elevations, access design, grading, and other technical elements of projects in those areas.  Projects already designed according to prior flood elevations should be re-evaluated to determine whether they now fall within a regulated flood zone.

Inundation Risk Zones

With REAL comes the creation of so-called Inundation Risk Zones, which are areas that NJDEP has determined are likely to be subject to regular tidal inundation by the end of the century.  Residential buildings, critical buildings, and infrastructure projects within these zones must now make additional demonstrations as part of their coastal permitting applications.  For example, these projects must now undertake inundation risk assessments that address how projected future tidal inundation will affect the proposed development’s safety and long-term functionality.  The new IRZ rules do not apply to non-critical commercial, industrial, hospitality, gaming, or recreational structures.

Hardship Relief and “Compelling Public Need”: Affordable Housing

The new rules include a hardship exception that may allow deviation from certain flood standards when the rules’ other criteria are met and public safety is not unreasonably compromised.  The adopted REAL amendments expressly recognize affordable housing as a category that may satisfy the “compelling public need” component of a hardship request. That recognition, however, should not be viewed as guaranteeing approval – NJDEP can still require additional mitigation and will closely scrutinize the hardship application for life-safety, emergency access, and other risk-reduction measures.

Access and Emergency Services: “Dry Access” Flexibility

“Dry access” is the requirement that a building within a flood area must have at least one access route (road or walkway) that remains passable during the design flood, which often requires that route to be constructed above the applicable flood elevation. The adopted REAL rules have added some flexibility by allowing relief from strict dry access requirements where the applicant can demonstrate, among other things, that every reasonable effort has been taken to provide primary access to affected buildings and that no extraordinary risk is posed to any person using such buildings.

Planning for Regular Updates

REAL also requires periodic re-evaluation of the underlying precipitation and sea-level rise projections at least every five years, which may result in adjustments to the regulations as needed. This means that today’s +4 feet benchmark, for example, is not necessarily the end state.  Accordingly, parties that might seek NJDEP permits in five years or more should treat REAL compliance as a moving target subject to change.

Going Forward

Developers should start new projects with an early REAL compliance review to identify which of the new requirements govern the site and the proposed work, and what design standards or additional analysis will be required.  For projects already in progress, assess promptly whether a technically complete application can be submitted within the legacy window.  If not, assume REAL will apply and adjust the design and permitting approach accordingly.

For more information, please contact the author, Michael Antzoulis, or any attorney in Riker Danzig’s Environmental Practice Group.

 

New Jersey Court Defines Standards for Immediate Tax Foreclosure on Abandoned Property

Posted on by Jessica Haspel

What You Need to Know:

  • The New Jersey Appellate Division confirmed the procedures that tax certificate holders must take to foreclose immediately under the Abandoned Properties Rehabilitation Act (APRA).
  • Abandonment may be established through a municipal certification or by proof presented to the trial court, either of which can satisfy the statutory requirements.
  • A valid municipal abandonment certification must meet the criteria set forth in N.J.S.A. 55:19-81, including findings related to habitability, safety hazards, lack of rehabilitation, and impact on surrounding properties.
  • Unsupported, self-serving statements from a property owner are insufficient to overcome credible evidence demonstrating abandonment.

Background: Tax Foreclosure Under Abandoned Property Law in New Jersey

In Beggars Tomb, LLC v. Block 333.01, 20226 N.J. Unpub. LEXIS 112 (N.J. App Div. January 23, 2026), the New Jersey Appellate Division affirmed the trial court’s decision that a tax sale certificate holder was entitled to foreclose immediately on the tax deficiency property as it was deemed abandoned under N.J.S.A. 55:19-81, New Jersey’s recent amendment to its tax sale laws to address blighted properties.

Key Facts Supporting the Finding of Property Abandonment

Defendant, Cherry Hill Acquisitions, LLC (“CHA”) purchased a vacant and dilapidated building in 2010. Over the course of the next decade, Cherry Hill Township (the “Township”) issued forty-nine property maintenance violations to CHA on the property. Despite the violations, CHA failed to remediate the hazardous conditions on the property or even secure it from squatters. Eventually, the Township disconnected gas and electric service to the building in 2021. In 2022, a sewerage leak originated from the private sewerage pump on CHA’s property, requiring the Township to install a new sewerage pump and engage in ongoing monitoring and wastewater removal at a cost of $122,305.47.

In 2022, CHA failed to pay its property taxes and in June 2022, the Township sold a tax sale certificate in the amount of $83,631.73. Plaintiff, Beggars Tomb LLC (“Beggars”) acquired the certificate from the entity who purchased it from the Township. Beggars then served CHA with the requisite pre-foreclosure notice in January 2023 and brought a foreclosure complaint in accordance with the Abandoned Properties Rehabilitation Act (“APRA”),  N.J.S.A. 55:19-78 et. seq. The APRA allows tax certificate holders and municipalities to forego the two-year waiting period to foreclose on a property set forth in N.J.S.A. 54:5-86 and to immediately foreclose on abandoned properties. The goal of the APRA is to address towns being overcome with blighted neighborhoods due to properties being abandoned and left to deteriorate. See N.J.S.A. 55:19-79; Kearney v. Terrace, 2021 N.J. Super. Unpub. LEXIS 2984, at *9 (Super. Ct. App. Div. Dec. 9, 2021).

Beggars supported its claim that the property was abandoned with: (1) “Notice of Unsafe Structure” issued by the Township, (2) an engineering report from the Township with photographs of the property, (3) a May 19, 2023, abandoned property certification from the Township, and (4) abandoned property report from a private inspector. Default judgment was entered on September 11, 2023, in favor of Beggars in the amount of $214,759.20 and vested title in Beggars.

On October 18, 2023, CHA moved to vacate the default judgment, which the trial court granted conditioned on CHA paying Beggars $22,289.44 in expenses Beggars incurred installing electrical service, repairing the sewerage pipe, and abating hazardous conditions. CHA made the payment. Beggars then filed an amended foreclosure complaint.

At the close of discovery, Beggars moved for summary judgment and CHA cross-moved for the return of the $22,289.44 it paid. The trial court granted summary judgment to Beggars finding that there were no disputed material facts as to the property’s abandonment and dismissed CHA’s cross-motion.

How the New Jersey Appellate Division Addressed Proof of Abandonment Under the APRA

On appeal, the Court first noted that the APRA was intended to provide local governments with a means to rehabilitate abandoned properties and prevent blight by removing the two-year waiting period for commencing a tax foreclosure where the property is abandoned. The Court then noted that there were two ways to establish abandonment: (1) providing a municipal determination the property was abandoned or (2) demonstrating abandonment to the trial court’s satisfaction. Beggars relied primarily on the Township’s certification as to the abandoned property. The Court found that certification met the standards set forth in N.J.S.A. 55:19-81 in that it stated that the property: (1) was one in need of rehabilitation and no rehabilitation had taken place for at least six months , (2) was unfit for habitation, occupancy or use, (3) was subject to unauthorized entry that could result in health and safety hazards, (4) created health and safety hazards, and (5) materially affected the welfare of the resident in close proximity to it. It then rejected CHA’s unsupported assertions that the property was not abandoned, noting they were no more than self-serving statements of its registered agent. Finally, it found that CHA made no attempt to redeem the tax sale certificate before final judgment was entered.

Practical Takeaways for Tax Certificate Holders and Municipalities

While the facts in this case are clear-cut, it does provide an excellent primer for how to proceed with a tax foreclosure on an abandoned property in New Jersey. It also shows the effectiveness of the APRA in addressing properties that have been deteriorating for years or even decades in the case here.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Keshav Agiwal at kagiwal@riker.com.

NJ Appellate Division Finds Easement Abandoned by Its Holder’s Actions

Posted on by Jessica Haspel

What You Need to Know

  • A recorded easement may be deemed abandoned under New Jersey law based on the easement holder’s long-term conduct, even in the absence of a formal written release.
  • Non-use of an easement, when combined with affirmative actions such as physical segregation of the easement area and decades of acquiescence, can support a finding of abandonment.
  • Courts will look beyond the language of recorded instruments and closely examine historical use, physical conditions, and the parties’ course of dealing over time.
  • Equitable principles, including estoppel, may bar an easement holder or its successor from asserting rights where prior conduct induced reasonable reliance by the servient owner.
  • The decision underscores the importance of thorough due diligence in New Jersey real estate and title insurance matters, including review of both recorded documents and actual property use.

Overview of PC Clark Property LLC v. Halstead Realty LLC

In a January 13, 2026 opinion, the New Jersey Appellate Division found that a holder of a recorded parking easement abandoned same by its action and inaction over the course of decades. PC Clark Prop. LLC v. Halstead Realty, LLC, 2026 N.J. Super. Unpub. LEXIS 52 (Super. Ct. App. Div. Jan. 13, 2026).

What Led to the New Jersey Parking Easement Dispute

In the mid-1970s, Anthony and Helen DiGiovanni purchased three contiguous parcels designated as Parcels 1213, 1219 and 1225 in Westfield, New Jersey. After the purchase, the DiGiovannis transferred Lots 1219 and 1225 to their children, Tony and Maria, who then put the two parcels in the name of a holding company they formed, Halstead Realty Company, on behalf of American Specialty Plumbing, Heating & Air, LLC, d/b/a  Good Tidings and Good Tidings International Franchising, Inc. (“Good Tidings”). In 1987, the DiGiovannis entered into a long-term lease for Parcel 1213 with Clark Nursing and Convalescent Associates (“Clark Nursing”) to develop a nursing facility. To enable the development, the DiGiovannis  granted Clark Nursing a parking easement for Parcel 121. The plans presented to Westfield for the facility’s approval included fencing, curbing and paving for 14 spaces on Parcel 1219, which was needed to remedy a parking shortfall for the development  After the initial development, the DiGiovannis rented five parking spots to tenants unrelated to Clark Nursing in a portion of Parcel 1219 that was outside of the fenced-in area for the 14 spots. They also maintained and used that area for their business purposes. That use continued for more than the 30-year period required for adverse possession in New Jersey. See J & M Land Co. v. First Union Nat'l Bank ex rel. Meyer, 166 N.J. 493, 496 (2001).

In 2022, PC Clark Property LLC and Complete Care at Clark LLC (PC Clark”) acquired Parcel 1213. Soon thereafter, PC Clark asserted a claim to an easement over all of Parcel 1219. It also insisted on the removal of the fencing and all improvements built in the area where the five parking spots were. This action ensued.

The Bench Trial

The trial court conducted a bench trial. PC Clark’s witness admitted that he had no historical knowledge of the use of the easement area. Good Tidings’ witnesses testified that the 14 spaces were needed for zoning requirements and that “curbing and layout was done by the site contractors for the nursing home.” In that context, PC Clark’s witness conceded that Good Tidings had not interfered in its use of the 14 spaces that were fenced in. Good Tiding’s witness further testified that Clark Nursing never used the five spaces in the disputed area.

The trial court credited the essentially unrebutted testimony of Good Tidings’ witnesses and held that Clark Nursing had abandoned the easement and PC Clark was equitably estopped from asserting any rights on the disputed area. This appeal followed.

Court Affirms Easement Abandonment and Equitable Estoppel Under New Jersey Law

PC Clark argued that abandonment of a recorded easement cannot be established by non-use or physical modifications and it requires nothing less than a formal release or express renunciation. They further maintained that equitable estoppel was inapplicable because the rights of a recorded easement run with the land. In applying a deferential standard to the trial court’s factual findings while still reviewing the questions of law de novo, the Appellate Division had little difficulty in affirming the decision and rejecting PC Clark’s argument.

First, it found that while PC Clark’s predecessor Clark Nursing (the dominant estate) was entitled to a larger easement by the terms of the recorded instrument, it made a conscious decision to limit its use to 14 spaces by first, segregating those spaces from the rest of the portion of Lot 1219 with fencing and curb cuts. Next, it allowed Good Tidings (the servient estate) to maintain the remainder of Lot 1219 without objection for over thirty years. In fact, Clark Nursing even pursued alternative parking arrangements elsewhere without ever laying claim to the disputed are. By doing so, the Court held that PC Clark and its predecessors abandoned any easement rights it had to the disputed area.

Second, relying on Restatement (Third) of Property, Servitudes 7.6, the Appellate Division affirmed the estoppel ruling. It found that by fencing and only using the 14 spots and not objecting to Good Tidings’ use of the disputed area and placement of improvements thereon, Clark Nursing and its successor (PC Clark) are also estopped from doing so now as matter of equity.

Takeaways

This case is significant, first, as it shows that despite the words of a recorded instrument (in this case, an easement), how the parties use and possess land over an extended period of time matters. It also provides a lesson for litigants that, when challenging title to property, it is important to know the complete history of the property and conveyances that includes recorded instruments and actual use of the property. Finally, it is an excellent example of how a court uses its equitable powers to fashion a remedy when one side sits on its rights.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Keshav Agiwal at kagiwal@riker.com.

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