NAHB-Supported Landlords Lose Rent Control Court Decision in New York

The Second Circuit Court of Appeals on Feb. 6 handed down a loss to rent control opponents in New York City. A group of landlords, supported by NAHB, brought suit alleging the city’s rent stabilization law is an unconstitutional taking under the Fifth Amendment both “on its face” and “as applied.” Neither of these arguments were successful.

“Facial” challenges are some of the most difficult to prove because the litigant must show there is no situation in which the rent stabilization law would be constitutional. The appellate court looked to the “well settled case law” affording municipalities great discretion in handling landlord-tenant relationships and found that the landlords failed to allege that rent control was unconstitutional in all circumstances.

Although “as applied” challenges are easier to prove, the court of appeals failed to find a physical invasion of the landlords’ property, a requirement necessary to demonstrate a taking. Despite the landlords’ novel arguments to the contrary, the court was not persuaded and again looked to historical case law upholding rent control.

The landlords will look to the U.S. Supreme Court for relief, as its current composition is ripe for a potential change in the jurisprudence.