Judge: How can rent law justify free rent for a year?

Landlords challenging New York’s rent law got a ray of hope Tuesday when a federal judge questioned how it can allow tenants facing eviction to live rent-free for 12 months.

During a hearing by phone to discuss motions to dismiss the lawsuit filed last year by the Rent Stabilization Association and Community Housing Improvement Program, Judge Eric Komitee pointed to a provision of the state’s 2019 rent law that allows courts to delay evictions for up to a year.

“The law empowers judges to essentially order a year of free housing for a defendant when there is no valid contract,” Komitee said to city and state lawyers. “What support do you see in the case law for a provision like that?”

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Courts are permitted to delay evictions to prevent hardship or if tenants can demonstrate an inability to find other housing.

Komitee invited the plaintiffs and the defendants — which include city and state officials — to file separate briefs on the issue.

RSA and CHIP’s complaint alleges that the Housing Stability and Tenant Protection Act of 2019 violates the U.S. Constitution’s takings and due process clauses. Motions to dismiss the suit were filed by the state’s Division of Homes and Community Renewal, the de Blasio administration and tenant groups, claiming it does not make a case for voiding rent regulation as a whole. They pointed to previous court findings that rent regulation, as a concept, is constitutional.

“The physical taking claim is just misguided,” said assistant attorney general Michael Berg, who represents the state in the case. “That is not what is going on with New York’s rent stabilization law.”

Komitee questioned the landlords’ side as well, asking about the lawsuit’s varying projections on how the rent law would decrease the value of rental housing.

“When I try to ascertain from the complaint, ‘OK, what are the plaintiffs alleging here in terms of across-the-board diminution in value?’ The answer from the complaint seems to be, ‘We don’t know what we’re alleging. It could be 20 percent, it could be 50 percent.’”

He added, “It’s not a case where you can say, look, we can’t know what the diminution in value is until we get discovery from the defendants.”

Mayer Brown’s Andrew Pincus, arguing for the landlord groups, said his clients did not need to present all available data at the motion-to-dismiss phase of the case.

“I don’t think the complaint can be ruled insufficient because we haven’t met some threshold,” he said. “The 25 to 50 percent [decrease] is based on some studies that we did. But it’s certainly not the universe of available data.”

The lawsuit is one of at least four filed since June 2019 against the rent law. A complaint filed by a group of landlords, the Panagoulias family, is also being overseen by Komitee in Brooklyn federal court. That one seeks monetary damages and focuses on the impact of the law on particular property owners. A hearing is slated for Tuesday afternoon on the city and state’s motions to dismiss it.

Komittee noted that he may issue one decision on the two motions to dismiss but wouldn’t consolidate the cases.

Write to Kathryn Brenzel at kathryn@therealdeal.com