In Karam v. Department of Environmental Protection, the Appellate Division recently held that adjoining upland and riparian land constitute a single property unit, and thereby dismissed the property owners' takings claim. NJDEP's denial of a permit to construct a recreational dock on the riparian property was held not to constitute a taking because it did not deprive the property owners of all economically viable uses of their property, taken as a whole, even though the Court acknowledged that the denial deprived the property owners of virtually all economically beneficial use of the riparian portion of their property.
In 1924, the Schweinerts purchased from the State the riparian land adjoining their upland property on the Manasquan River. Under the riparian grant, the tide-flowed land could only be used for the construction of a dock or recreational pier and required common ownership of the riparian land along with the upland property. The Schweinerts never applied for a permit pursuant to the Waterfront and Harbor Facilities Act of 1914, which was in effect at that time and which would have permitted the construction of a dock or recreational pier.
The Karams purchased both the upland and riparian lands in 1993 and thereafter applied to NJDEP for a permit to erect a dock. By 1993, however, the riparian land was designated a "special restricted area" because it was a habitat for high densities of shellfish. Pursuant to the Coastal Area Facility Review Act and its implementing regulations, erection of a pier or dock in a "special restricted area" is prohibited. Accordingly, the Karams' permit application was denied, whereupon they brought a lawsuit alleging a regulatory taking requiring just compensation.
Generally, when government denies a property owner substantially all economic use of his land, a taking has occurred and the property owner must be compensated. In order to determine whether there has been a taking, the portion of the property that allegedly has been taken must be compared with the entire property. In Karam, the issue of whether denial of the permit constituted a taking was one of "characterizing the denominator."
The Appellate Division held that, if the denominator were considered to be only the riparian land, then classification of that land as a "special restricted area" clearly destroys the only beneficial use of the riparian land, as the effect of the regulation is to compel the Karams to leave the tide-flowed land entirely idle. However, if the upland and riparian lands together are considered the denominator, then no taking occurs because the effect of the regulation prohibiting the erection of docks or piers in a special restricted area "is merely to destroy a somewhat minor 'strand' or 'stick' in [the Karams] overall bundle of rights."
In its conclusion, the Court stressed that the prohibition against erection of docks along the Manasquan River was a matter of public record long before the Karams purchased the property. This case serves as a reminder to any person interested in purchasing riparian land adjoining upland property. Any potential purchaser should thoroughly investigate all regulations which apply to the riparian land prior to purchase. In the event that current regulations permit a property owner to build on or otherwise alter the riparian land, the property owner would be well served to exercise that option before any legislative changes come into effect which could indefinitely preclude his ability to do so, without compensation for the loss.
