Supreme Court Declines To Hear Rent Control Case

The Supreme Court has declined to hear a case from New York state that had the potential to upend rent control laws not only in that state but nationwide. The case was a challenge to New York's Housing Stability and Tenant Protection Act of 2019.

The plaintiffs, the Community Housing Improvement Program and the Rent Stabilization Association, two New York-based landlord groups, challenged the 2019 law in hopes of having it voided, but they also challenged the entire framework of rent control in the state and elsewhere, asserting that it amounts to an unconstitutional taking of property.

“Since the time of our filing in July of 2019 foreclosures have accelerated and the law’s punitive effects have dramatically worsened. While we were hopeful a broad facial challenge would have delivered the most relief to the most owners as quickly as possible, we remain convinced that the law is irrational and vulnerable to more specific challenges,” CHIP Executive Director Jay Martin said in a statement Monday morning. “One way or another this law must go down, its current form is destroying New York's housing.”

CHIP said it will continue to lobby for housing reforms in the upcoming legislative session, including advocating for a pathway for vacant rent-stabilized apartments in need of significant repairs to be brought back on the market. 

“Our organization is laser focused on improving housing in New York City. Our preferred way of doing that is through legislative action that will reform the housing system in a way that is sustainable,” Martin said in the statement. “However if lawmakers continue to defund housing and attack the rights of owners to earn a living providing homes through policy, we will be left with no choice but to continue challenges at all levels of the judicial system.”

Other real estate organizations, including the National Multifamily Housing Council, filed amicus briefs in support of the challenge as it has made its way to the high court.

“The decision doesn't change the fact that we have education to do to really push back on a lot of the misinformation around rent control,” NMHC President Sharon Wilson Géno told Bisnow Monday.

“There are a lot of people that have been told that somehow rent control is going to help their housing situation, and not only will it not help the vast majority of renters — particularly those a load of modest means — research tells us that the primary beneficiaries of rent control are upper income and white, which is an interesting statistic,” Géno said.

“It hurts the very people that can't even get into the rental market,” Géno said. "We don't talk about them enough.”

“There really is a tidal wave of onerous rental housing regulation across the nation either being enacted or being considered and really underlining the need for guidance from the Supreme Court,” Andrew Pincus, lead counsel for the plaintiffs, said at a Federalist Society event in August, as reported by Politico.

As the case has wound its way through lower courts, the plaintiffs have lost, with the district court rejecting the constitutional claims, granting New York City and the state’s motions to dismiss. The 2nd Circuit Court of Appeals affirmed that ruling.

On the whole, lower courts cited longstanding precedent regarding a state's right to regulate the relationship between landlords and tenants.

“The caselaw is exceptionally clear that legislatures enjoy broad authority to regulate land use without running afoul of the Fifth Amendment's bar on physical takings,” the 2nd Circuit opinion says.

Still, the plaintiffs were apparently hoping for a sympathetic ear from the Supreme Court.

“If there has ever been a chance at getting the Supreme Court to take a serious look at the constitutionality of regulation as it exists in New York, this is certainly the court that you could have some hope might take an interest,” Deborah Riegel, a member attorney at Rosenberg & Estis, told Bisnow in July.

Among other provisions, the 2019 New York law at issue restricts application fees for rentals, limits late fees, tightens the timeline for security deposit returns and forbids demanding advance rent payments or security deposits of more than one month's rent.

The law also seals records of evictions that were the result of foreclosures and forbids landlords from rejecting prospective tenants because of a court case with a previous landlord or evicting a tenant simply because he or she has complained about conditions.

Landlords must also give at least 30 days' notice before a lease termination or a rent increase of 5% or more.

New York’s rent stabilization law, which was established well before the 2019 act, governs units in multifamily buildings with six units or more built before 1974. The law sets limits on rent increases and says that landlords usually must renew a tenant's lease.

This isn't the first time a landlord-tenant law has been challenged in court with the aim of tossing an entire system of regulation. In 2008, the constitutionality of New York's rent stabilization law was challenged. In 2012, the high court declined to hear the case, allowing the law to stand.

UPDATE, OCT. 2, 11:23 A.M. ET: This story has been updated to include comments from NMHC President Sharon Wilson Géno.