Writing in The Wall Street Journal, New York University law professor Richard Epstein weighs in on Harmon v. Kimmel, the big rent control case that the Supreme Court may decide to take up this term:
In broad and emphatic language, the Fifth Amendment to the Constitution provides that "no person shall be . . . deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." Rent control collides with the last prohibition, the "takings clause."
All versions of rent-control laws share a single dominant characteristic: They allow a tenant to remain in possession of property after the expiration of a lease at below-market rents. New York even gives the tenant a statutory right to pass on the right to occupy the premises at a controlled rent to family members who have lived with them for two or more years. The tenants in Mr. Harmon's complaint pay rent equal to about 60% of market value.
The Second Circuit recognized that the Harmons would be entitled to just compensation when their property is subject to a "permanent physical occupation." But following the Supreme Court decision in Yee v. City of Escondido (1993), the court insisted that "government regulation of the rental relationship does not constitute a physical taking." That comes as a real surprise to the Harmons when they hear footsteps each night above their bedroom.