Purchasers of New Jersey Real Estate Fall Victim to Statute of Limitations Despite Tolling Agreement

After arranging the sale of a vacant lot and falsely telling the buyers that they had permission from the state to build on it, a group of realtors was spared liability because the plaintiffs waited too long to reinstate their claims. In a recent decision by the New Jersey Appellate Division, the plaintiffs were barred by a six-year statute of limitations on contract claims and could not reinstate their claim eight years after the matter was originally sent to mediation––even though the mediation consent order agreed to waive all statute of limitations defenses made in the complaint.

The plaintiffs, Albert and Donna Blanchard bought a vacant lot in West Wildwood. Their realtors, Weichert, told them that the property had been granted permission from the State to have a single-family house built on it. In fact, however, it was an adjacent lot that had permission to be built on, and not the lot that Albert and Donna were looking to purchase. It was only after purchasing the lot that Albert and Donna realized the mistake. In addition to suing Weichert for gross negligence, Albert and Donna sued the sellers of the lot, Edward and Joann Critchfield, as well as their realtor Oceanside Realty, arguing that they knew the lot was not suitable for building based on prior attempts at receiving permission to build.

After the plaintiffs brought suit, the trial court sent the case to mediation.  The parties agreed to a consent order on October 1, 2009, whereby defendants waived their statute of limitations defenses and the plaintiffs agreed to attempt to obtain permission to build and would dismiss the claim with prejudice if successful. On August 13, 2010, the plaintiffs filed for permission to build.

On March 26, 2018––almost eight years later––plaintiffs moved to reinstate their complaint pursuant to the consent order. The court, however, denied their motion, reasoning that the right to reinstate was granted exclusively from the consent order, and was thus subject to New Jersey’s six-year statute of limitations for contracts. Holding that the right to reinstate accrued nine months after the consent order went into effect, the judge found that the plaintiffs waited eight years and six months to reinstate their claim, well past the statute of limitations. The trial judge also held that the plaintiff’s motion to reinstate would be blocked by the equitable doctrine of “laches” because the plaintiffs did not detail any good faith effort to obtain permission to build during those eight years.

The Appellate Division affirmed the trial judge’s ruling, holding that the right to reinstate was a creation of the consent order­­––itself a contract––and thus subject to the statute of limitations for contracts. The parties’ agreement to waive the statute of limitations only applied to plaintiffs’ original claim, and not to anything arising from the consent agreement itself. As far as the court was concerned regarding laches, the plaintiffs’ general explanation that they were seeking permission to build during the eight years before filing to reinstate, without more detail, was not satisfactory.

If you are facing a statute of limitations issue, or have been forced into mediation but want to preserve the ability to refile your claim, feel free to contact Ward, Shindle & Hall for legal advice.