Property owners trying to rebuild after damage caused by Hurricane Sandy or other disasters got what could be a bad-news ruling from a New Jersey appeals court on Monday.

In a precedential decision, Motley v. Borough of Seaside Park, No. A-3214-11, the Appellate Division found a house that had been gutted to a shell to accomplish repairs was totally destroyed and so lost its status as a grandfathered nonconforming use under local zoning laws.

The panel strictly construed a statute, N.J.S.A. 40:55D-68, which says a nonconforming use or structure may be restored or repaired if partially destroyed but total destruction terminates it.

Whether the destruction is partial or total is not so much a matter of percentage but "whether [it] is so substantial in nature — qualitatively if not quantitatively — to surpass the ‘partial’ threshold that the statute expresses," Judges Jack Sabatino, Douglas Fasciale and Susan Maven held.

The house at issue was one of two at 213 "O" Street in Seaside Park. The area is now zoned for single-family homes, but the houses were built in 1931, decades before the adoption of the zoning laws in 1972, and thus were prior conforming uses. They violated restrictions on lot width, depth and area, as well as front-, rear- and side-yard setbacks and building coverage.

Daniel Motley, who owned the front house, applied for variances in 2007 to renovate it and expand the loft area on the upper level into a full, second story, but he was turned down.

In August 2009, Motley requested and obtained a permit to repair and renovate the house and replace the air-conditioning unit. The permit carried a notation that siding, shingles and windows could be added, but no bump-outs were allowed and the structure could not be expanded.

Once work began, however, the building, not lived in for some time, was found to be in worse shape than expected and uninhabitable. Among other problems, the roof and water system leaked, part of the first floor ceiling had collapsed, floor beams were rotted and the main center beam was sagging.

The building inspector said it needed to be demolished, which Motley proceeded to do, tearing down the structure to its foundation and footings.

By the time Seaside Park zoning officer James Mackie issued a stop-work order, the roof and siding were gone, many floor beams had been removed and new framing had been installed for all four walls, with a new foundation plate to replace a rotted one. Mackie described it as a "gutted shell" that had become an "all new construction" project, beyond the scope of the permit.

The Board of Zoning Adjustment upheld the stop-work order, based in part on an ordinance saying pre-existing nonconforming uses may be repaired or maintained, so long as the repair or maintenance does not result in the "total destruction" of the property.

Motley sought to overturn the board’s decision, filing an action in lieu of prerogative writs in Ocean County Superior Court.

Assignment Judge Vincent Grasso ruled on Feb. 8, 2012, that the work could go forward but the structural dimensions had to remain the same and the loft could not be expanded or have a bathroom added.

Grasso held that Motley did not act unreasonably once he learned of the building’s poor condition and that the sounder policy was to allow debilitated nonconforming structures to be renovated as long as there was no increase in nonconformity.

He relied on Krul v. Bd. of Adjustment, 126 N.J. Super. 150 (App. Div. 1973), which held that a commercial building that was completely destroyed by fire could be replaced even though it was nonconforming.

The appeals court on Monday distinguished Krul on the ground that it involved destruction of a building that was a part of a complex used as "an integrated whole." In contrast, Motley’s house was a stand-alone residence whose use was independent of the other house on the property.

The appeals court also referred to the "well settled law of our state that disfavors the continuation of nonconforming uses and structures" because they undermine land use planning.

The judges agreed with the board that removing the walls down to the foundation and footings "exceeds any reasonable notion of a mere partial demolition."

They said they appreciated Grasso’s concern that the limits on reconstruction could have harsh results for innocent homeowners but added that was for the Legislature to address.

They also pointed out that Motley allowed the leaks that caused the damage. He was the "root cause" of his own loss by ignoring the permit limits and failing to consult with officials when he realized more extensive work was needed, they said.

Gregory Hock of D’Arcy, Johnson, Day, in Egg Harbor, who represents Seaside Park, says the opinion gives land-use boards guidance on an issue that "will be front and center" during the process of rebuilding the shore.

Motley’s lawyer, E. Allen MacDuffie Jr. of Lavallette, did not return a call.