Local regulations intended to crack down on the proliferation of “zombie houses” are facing court challenges in Southern New Jersey.
Seeking to combat blight as the number of vacant homes multiplies, some municipalities have enacted ordinances requiring owners of such properties to register with the town and to pay an annual fee. But suits pending in Gloucesterand Atlantic counties challenge the authority of municipalities to enact such regulations.
The Gloucester County suit challenges vacant house registration ordinances in Deptford, Glassboro, Monroe and Paulsboro on behalf of companies that invest in tax sale certificates. Those towns and a vendor that keeps records for the towns, Pro Champs of Melbourne, Florida, are named as defendants.
That suit was filed by four corporations that were subject to ordinances in those towns after investing in tax sale certificates and obtaining vacant properties through foreclosure. The municipalities lack authority to enact such laws because of the comprehensive nature of two state laws, the Abandoned Properties Act and the Tax Sale Law, the suit said. The plaintiffs seek an order declaring the ordinances illegal and barring their use to collect fees.
One of the plaintiffs, an entity called Empire TF6 Jersey Holdings, had to pay fees of $2,000 to Pro Champs when it sold a foreclosed house in Glassboro, the suit said. Another plaintiff, a company called Chickadee Investments, was hit with a bill for $1,800 when it sold a foreclosed property in Paulsboro, the suit claims.
“The ordinances are designed as a backdoor attempt to raise revenue for municipalities and the amount of the fees have no reasonable relationship to the cost of keeping a register of vacant property even if same were allowed by law,” the suit claims.
The suits cite legislation that was introduced in 2013, but not passed, allowing municipalities to require vacant homes to be registered and permitting towns to charge registration fees. In the absence of a state law, municipalities are acting outside their authority, the suits assert.
“We don’t believe they have the authority to do that,” said Keith Bonchi of Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi & Gill in Northfield, who represents the plaintiffs in the Gloucester County suit.
The Atlantic County suit was filed by another tax sale investment company, which does business as Tower DBW III 2013-3, against Atlantic City and Pro Champs. The suit seeks a declaration that the ordinance is unlawful and does not apply to tax sale investors. It says Atlantic City threatened to file quasi criminal charges against the plaintiff if it did not comply with the vacant property registration requirement, based on its status as holder of a tax lien certificate. But as such, the ordinance did not apply to the plaintiff, the suit claims.
“The municipality has only the rights granted to them by statute. If they don’t have the right granted to them, they can’t do it,” said Adam Greenberg of Honig & Greenberg in Cherry Hill, who represents the Atlantic City plaintiff. No answers have been filed in the Atlantic City case, which was filed in April. In the Gloucester County case, which was filed in June, Deptford and Glassboro have filed motions to dismiss.
Deptford’s lawyer, Timothy O’Donnell of Long Marmero & Associates in Woodbury, said his client has authority to enact the ordinance under its inherent police powers, and he added that the suit against his client is time-barred. Deptford passed its ordinance in 2015, and an ordinance challenge must be brought within 45 days after the law is passed, he said.
James Graziano of Archer & Greiner in Haddonfield, who represents Pro Champs, said that vacant houses are not just an urban problem, and they can draw criminals or serve as an attractive nuisance for children. He said Pro Champs provides a variety of services to municipalities relating to vacant properties, including researching ownership and conducting inspections. Graziano said the claims that municipalities lack authority to regulate vacant properties is “interesting” but he rejected the plaintiffs’ emphasis on the never-enacted legislation.
“Towns have basic police powers to keep their township safe. One of the things you do to keep a township safe is police vacant properties,” said Graziano.
Graziano said the defendants were in negotiations with tax sale investors about their assertion that the laws should not apply to them, and therefore he could not comment on that issue.