Rent Control Challenged as an Illegal 'Taking of Property' a lawsuit designed to overturn the New York's new rent control law.
In July, a group of landlords and landlord associations filed the suit [pdf], 1 naming the City of New York and the Rent Guidelines Board as defendants. It’s a long complaint, well over 100 pages, and it attacks the rent stabilization laws from a number of angles. The arguments are aimed at the rent stabilization program as a whole, rather than just the expansions that were recently approved by the legislature. The laws violate due process, they argue. And, they say, by so severely restricting their use of the apartments, the laws amount to a “taking” of landlords’ property under the 5th Amendment.
The takings argument turns on two concepts. One is that the laws are so onerous that they amount to a “physical taking” of private property by the government — like eminent domain but without any compensation. The other is that they add up to an “uncompensated regulatory taking,” because restricting the amount of rent that landlords can charge lowers the value of the property.
- 1. Property owners have had mixed results with takings claims related to rent control in other jurisdictions. In California, Rob Coldren has made a 40-year career representing owners of mobile home parks, sometimes challenging local rent control laws. In one case, an owner sued the City of Goleta in Santa Barbara County over a law that capped rent increases on land in its mobile home park. An identical law had been in place at the county level when the owner bought the property, but the owner sued when the City of Goleta incorporated and adopted the same law at the local level. The case ping-ponged through the court system; initially the owners, who were represented by Coldren, lost at district court, and then won in the 9th Circuit Court of Appeals, but later the 9th Circuit reheard the case and affirmed the district court’s decision.
In its second decision, the 9th Circuit wrote, “The district court observed that the [owners] ‘got exactly what they bargained for when they purchased the Park — a mobile-home park subject to a detailed rent-control ordinance.’”
Coldren still believes the owners were right that rent control law is a taking of property, especially in many mobile park cases.