Supreme Court rejects last two rent law challenges

Landlord hopes dashed again by high court

Supreme Court Rejects Rent Law Cases
Dino Panagoulias and Superior Management's Adam Nagin (Dutch Kills Civic Association, LinkedIn, Getty)

For landlords challenging New York’s rent law, the second and third times were not the charm. 

The Supreme Court on Tuesday rejected two more petitions to review the state’s rent stabilization law, a decision that comes more than four months after the court declined to consider a challenge brought by the Rent Stabilization Association and Community Housing Improvement Program.

This decision, however, may leave the door open for a future case.

“The petitioners’ complaints primarily contain generalized allegations about their circumstances and injuries,” Justice Clarence Thomas wrote in the court’s denial. “But, to evaluate their as-applied challenges, we must consider whether specific New York City regulations prevent petitioners from evicting actual tenants for particular reasons.”

In this challenge, they do not, Thomas explained.

But he added, “However, in an appropriate future case, we should grant certiorari to address this important question.”

After the Supreme Court snubbed the RSA and CHIP case, the court repeatedly conferenced the remaining cases, giving some hope that the challenges would be picked up. Tuesday’s decision is yet another blow to landlords, as owners of rental multifamily properties increasingly struggle to pay off debt and in some cases face foreclosure.

One of the cases rejected by the court Tuesday was filed by the Panagoulias family, which bought a 10-unit building in Long Island City after immigrating to New York from Greece in 1974. Their suit claimed that changes to the rent law in 2019 transfers “core property rights” to their tenants.

The family’s complaint alleges the value of their rent-stabilized buildings and others dropped 20 percent to 40 percent because of the 2019 legislation. The petition argues the new requirements that tenants and their successor must be offered lease renewals in most cases “strips owners of their right to exclude others from their property and prevents them from living in their own apartments.”

Under the law, owners are relegated “to caretakers of housing conscripted into the service of an off-budget public-assistance program,” the petition claims.

The second case, brought by a group of landlords that include the Nagin family’s Superior Management, also contends that the state’s 2019 rent law violates the U.S. Constitution’s takings clause.

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The landlords filed the lawsuit citing “an accelerating decline in revenues, an inability to recoup expenses, and an indefinite inability to exit” rent stabilization, according to the petition.

The Second Circuit had dismissed the landlords’ confiscatory takings claims — allegations that the owners are forced to rent apartments at a rate that bars a “just and reasonable return.” The owners appealed to the high court, calling the ruling “cavalier.”

But the Supreme Court usually only takes up 75 cases out of the 1,500 or so that land on its doorstep each year. Still, owners of rent stabilization had been cautiously optimistic, given the court’s conservative turn thanks to President Donald Trump’s three appointments.

The two cases took a narrower approach than RSA and CHIP’s petition. Some viewed the Supreme Court’s decision not to reject the Panagoulias and Nagin cases when it nixed the initial one as a sign that one or both of the families’ cases would be taken up by the court, despite the ostensible 2 percent chance.

The Legal Aid Society praised the court’s rejection of all three cases, noting that Tuesday’s decision “puts an end to these cases attacking the legal protections depended upon by a million New York households amid an ongoing housing crisis.”  

After the landlord groups’ lawsuit died, Jay Martin, CHIP’s executive director, said his organization will shift its focus to getting legislative relief from the rent law. But lawmakers have not shown much appetite for rolling back any of the 2019 changes, which severely limited rent increases for stabilized apartments and owners’ ability to remove units from regulation. In a joint statement, RSA and CHIP said the court’s rejection of two more challenges underscores that the “future of rent-stabilized buildings is in the hands of the state government.”

CHIP has pushed for a measure that would allow landlords to reset rents for stabilized apartments after they have been continuously occupied for 10 or more years.

Gov. Kathy Hochul’s comments on Tuesday may not bode well for that measure. She said she was “relieved” by the court’s rejection of the three rent law challenges.

“As governor, I will continue doing everything in my power to ensure these laws are protected,” she said in a statement.

Asked if that means Hochul would veto bills that change rent laws, a spokesperson clarified that “the governor will review legislation if it passes in both houses of the legislature.”

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