In a highly anticipated federal lawsuit filed late Monday night, landlord groups challenge New York’s newly minted rent law based on alleged illegal taking of private property and violation of due process rights.
The Rent Stabilization Association and the Community Housing Improvement Program, along with seven individual landlords, filed a lawsuit in the U.S. District Court, Eastern District of New York, alleging that the rent law approved last month violates the U.S. Constitution’s Fifth Amendment, which includes a clause that bars taking of private property without “just compensation,” and the Fourteenth Amendment’s due process clause. The complaint argues that changes to the rent law deprive “property owners of their core rights to exclude others from their property and to possess, use, and dispose of their property,” because — among other things — owners can’t refuse to renew leases “except in very narrow circumstances.” According to the lawsuit, revisions to rules governing the conversion of rental buildings into condominiums — specifically changes to non-eviction plans — also represent unlawful taking.
The complaint also alleges that the rent law violates the Fourteenth Amendment’s due process clause because the law is “arbitrary and irrational.” In fact, the lawsuit claims even before the June 2019 amendments were made, the rent stabilization law violated the Constitution.
“State and City representatives have advanced a variety of claimed justifications for the [rent stabilization law], including that it helps provide affordable housing for persons of limited means, that it is needed to maintain socio-economic and racial diversity in the city, and that it will help abate a ‘housing crisis’ that otherwise exists in New York City,” the lawsuit states. “The RSL has applied in New York City continuously for 50 years, and the evidence is overwhelming that the RSL is not rationally related to achieving any of those objectives.”
The 125-page complaint names the city, the city’s Rent Guidelines Board, the board’s members and the state Homes and Community Renewal Commissioner RuthAnne Visnauskas as defendants. The lawsuit seeks to prohibit the enforcement and application of the rent law.
After the rent law was signed by Gov. Andrew Cuomo on June 14, there was a scramble by many in the industry to locate a chink in the armor to allow for the overturn of the radical expansion of tenant rights.
“There’s a tremendous urge in the industry for anyone who has a lawyer and money to file lawsuits,” CHIP’s Jay Martin said earlier this month. But preparations for a legal challenge have been underway behind the scenes for the past 18 months, the former strategic director of the Independent Democratic Caucus added.
One week after the rent law was signed, the U.S. Supreme Court case “Knick v. Township of Scott, Pennsylvania” may have given constitutional law firm Mayer Brown’s Andrew Pincus just the opening it needed to pounce. In a five-four decision, the case found that the government violates the Fifth Amendment when it takes property without paying for it and held that a property owner can make such a claim in federal court without first pursuing a state action.
To a room of landlords looking for answers on the new rent law last week, Dan Altman of Belkin Burden Wenig & Goldman said that a legal challenge could be a long and drawn-out process.
“A lawsuit is going to take one or two years. Be patient and keep reading,” Altman said.
Tenant advocates said that the likelihood of a successful legal challenge is slim at best. Sen. Julia Salazar said that the lawsuit is a “cynical attempt” by landlords to shirk their legal responsibility, and she added that the recent legislation was passed to help tenants who struggle to afford rent while landlord profits continue to rise.
“It’s telling that the real estate lobby is choosing to spend their enormous resources on this lawsuit while they’re crying that their members can’t afford to maintain their buildings,” Salazar said.
Changes to the rent law include restrictions on how landlords increase rent on stabilized apartments. The new law eliminated vacancy decontrol and bonuses, made rent increases through Major Capital Improvements and Individual Apartment Improvements temporary and paved the way for potential expansion of rent stabilization into other parts of the state.