Voucher Protections Struck Down, NYC in Limbo

A New York state appeals court struck down a law barring landlords from discriminating against tenants who use federal housing vouchers — but city and state officials, along with landlord and tenant attorneys, are split on whether the ruling applies in the five boroughs.

The decision has opened a legal can of worms, leaving New York City landlords and voucher-reliant tenants in limbo as officials weigh whether it overrides a separate city law that prohibits discrimination against voucher holders, and what the ruling means for the municipally-funded CityFHEPS voucher program.

In 2019, former Gov. Andrew Cuomo and the State Legislature passed a bill as part of the state budget that made it illegal for landlords to discriminate against would-be renters based on lawful sources of income, including federal, state and city housing vouchers. The change sought to make it easier for low-income renters to find apartments.

Landlords who refused faced lawsuits and penalties by the state Division of Human Rights and the attorney general’s office. Exactly that happened in 2023 when Letita James’ office sued Ithaca landlord Jason Fine for violating the state law by refusing to accept Section 8 vouchers. Fine argued on appeal that the law is unconstitutional because it forces him to participate in Section 8, which he claims violates his Fourth Amendment rights because it mandates that he open up his properties and business records to housing officials without a warrant.

On March 5, a five-judge panel in the third department of Albany’s Appellate Division unanimously sided with Fine, finding that the state law prohibiting source-of-income discrimination against Section 8 voucher holders is unconstitutional. If it stands, the bombshell ruling could affect at least 19 other states with similar laws in place.

In New York City, however, a local source-of-income discrimination law is on the books, enacted by the City Council in 2008. A spokesperson for James’ office, Halimah Elmariah, claimed that the ruling “does not directly impact NYC since it has its own law.”

Multiple attorneys told The Real Deal that since the third department represents Albany, they interpret the attorney general’s office’s input to mean that the ruling doesn’t necessarily apply to New York City because the five boroughs are covered by the Appellate Division’s first and second departments.

Leila Bozorg, the city’s deputy mayor for housing and planning, has a different interpretation.

“It theoretically has an impact on local law, yes,” said Bozorg during a Monday forum on affordable housing policy. “We were surprised to see this. I’m definitely concerned about it.”

Bozorg added that the Mamdani administration is evaluating the ruling and the city’s next steps.

Since its 1974 inception, Section 8 has offered landlords government-guaranteed income, ensuring consistent payments. But some landlords complain that the program’s property inspections and record requirements are invasive.

The court case, Bozorg said, speaks to the “massive challenges” the city faces to compel landlords to accept vouchers, even with source-of-income discrimination laws in place, and that the ruling will only “compound those issues.”

Indeed, landlord advocates say the ruling applies to New York City property owners. Real estate attorney Adam Leitman Bailey, who has defended building owners from source-of-income discrimination claims, said that the Albany court decision, at least for now, enables landlords statewide to reject Section 8 if they don’t want to participate in the program.

“A state court in New York applies to New York City as well,” said Bailey. “If New York City is seceding from the state, no one has told me yet.”

Diane Houk, a fair housing attorney with Emery Celli Brinckerhoff Abady Ward and Maazel, stressed that the ruling does not give landlords in New York City “a green light to have broadly discriminatory policies” against voucher holders because the ruling is specific to Section 8.

The ruling applies only to landlords, she added, so brokers and salespeople are still on the hook to comply with the state’s discrimination law regarding Section 8, even if landlords are not.

“It will be in flux because I don’t think this is the final ruling,” said Houk, who served as a senior trial attorney in the U.S. Department of Justice’s Housing and Civil Enforcement Section. “There is not a single word in the state human rights law that violates any landlord’s constitutional rights. This court just made a very serious error, and that’s why we have appeals.”

Such a reversal could happen in the state’s Court of Appeals. James’ office is currently mulling an appeal. In the meantime, the uncertainty is bad news for city landlords and tenants alike.

Crucially, the ruling only applies to Section 8 and not other state or city voucher programs.

That means two tenants could apply to the same apartment and a New York City landlord could legally reject a prospective tenant over a Section 8 voucher, but it would be illegal for the owner to do the same to someone with a CityFHEPS voucher, according to Samuel Stein, a housing policy analyst at the nonprofit Community Service Society. Houk concurred with this assessment.

This is because the court’s decision zeroed in on Section 8’s requirement that landlords participate in a Housing Assistance Payment, or HAP, contract with the federal government. The court found that the specific provision of the program is in violation of landlords’ constitutional rights because it requires them to share broad access to their properties and records.

CityFHEPS, however, doesn’t utilize HAP contracts. Inspections are still required through the city voucher program, just not through the provision that the court ruled is unconstitutional.

It’s unclear how city and state officials will navigate the issue. The New York City Commission on Human Rights and New York State Division of Human Rights, which oversee the source-of-income discrimination laws, said they are reviewing the ruling and assessing its impact.

The situation could be remedied if the U.S. Department of Housing and Urban Development, which oversees Section 8, steps in and revises its requirements for the program to eliminate the constitutional concerns. Housing attorneys said they’re skeptical that the Trump administration would strengthen the program with new rule-making. HUD declined to comment on the situation.

“Ultimately this program helps landlords, and the president certainly knows that as a landlord who’s accepted countless of these vouchers himself,” said Stein. “I do think it’s possible a change could happen, and if it needs to, the advocacy will be there to make it happen.”