Landlord groups have filed a lawsuit arguing that the new rent law is unconstitutional. They contend that subjecting units to government-mandated caps on rent increases violates the 14th Amendment’s due process clause and the takings clause of the Fifth Amendment. The Rent Stabilization Association and the Community Housing Improvement Program are leading the effort.
- Be Smart: The first notable constitutional challenge to rent controls came after Washington, D.C., and New York City adopted them following World War I. Since then, numerous suits have challenged regulations across the country, but the Supreme Court has ultimately upheld rent regulations.
- Why this time maybe different: A new conservative majority and the hope that recent rulings will buttress their case! The Supreme Court ruled last month that plaintiffs can sue in federal court as soon as state and local governments take property without just compensation. This reversed a precedent that made it difficult to file suits in federal courts over state laws.
- Realistic view: Reaching the Supreme Court could take years and chances are slim: The court accepts 100 to 150 of the more than 7,000 cases it is asked to review each year. In effect, the plaintiffs are hoping that the tighter laws passed in June bolsters their claims that the rent-stabilization system amounts to an unlawful taking of property.
- The legal flaw: “The problem with landlords in this context is they want to argue that they’ve lost control of their property, but they’ve really lost regulatory control. They can still use it for the purpose they purchased it. They can still get revenue.”