Property Rights

How Strong Is the Legal Case Against Rent Control?

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Writing at Time magazine, Yale Law School lecturer Adam Cohen takes notice of New York City landlord James Harmon's legal challenge to the city's rent stabilization law. As Cohen sees it, rent control and rent stabilization are both perfectly constitutional, but he still worries that Harmon may attract five sympathetic votes from the Supreme Court. He writes:

The Supreme Court has repeatedly upheld rent control, going back to 1921. In 1988, in Pannell v. San Jose, it ruled 6-2 that San Jose's law did not violate the Constitution — in an opinion written by the very conservative then Chief Justice William Rehnquist. In 1992, in Yee v. City of Escondido, the court unanimously rejected a claim that a rent-control ordinance was an unconstitutional taking of property — just the issue Harmon is raising.

These rulings should settle the question. But rent-control opponents clearly think they have a chance, given how pro-corporation the court is today…. They argue that rent control unconstitutionally deprives landlords of the right to charge as much rent as they want. They like to point to extreme cases of people benefiting who do not need it — like the actress Faye Dunaway, who until recently had a $1,048.72-a-month one-bedroom on the Upper East Side of Manhattan

Cohen is wrong to suggest that the constitutional argument about rent control is simply about letting landlords charge "as much rent as they want." In fact, it's a question about the meaning of the Fifth Amendment's Takings Clause, which reads, "nor shall private property be taken for public use without just compensation." In 2010 the Supreme Court held that the Fifth Amendment's just compensation requirement is triggered "when a state regulation forces a property owner to submit to a permanent physical occupation." That's the issue in this case. Does the city's rent stabilization law amount to a permanent physical occupation of James Harmon's property?

There's strong evidence that it does. Not only do Harmon's rent stabilized tenants get to occupy their apartments for life and even get to name their own successors to the leases (family members must live two years in the apartment to qualify), New York law prevents Harmon from putting the property to any other lawful use. For one thing, his building is landmarked, which means he can't evict his tenants and tear the structure down. Also, his land is zoned residential, so even if the landmark law didn't apply, he would still be forbidden from starting over with a grocery store or some other land use. Finally, even if he wanted to demolish only the rent-stabilized apartments, he would still be required to pay his evicted tenants a $5,000 stipend and provide them with "an equivalent or superior housing accommodation at the same or lower regulated rent in a closely proximate area to the building." That last requirement is of course preposterous. As I noted in my recent column on the case, there are no rent stabilized one-bedroom apartments available for $1,000 a month at or near West 76th Street and Central Park West. Harmon would never be able to lawfully relocate those tenants. In short, the evidence says he is being forced "to submit to a permanent physical occupation of his property."

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  1. Rent Control article?
    It must be Tuesday.

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  2. “…letting landlords charge “as much rent as they want.” ”

    That simply isn’t true, even if it were the issue being decided.
    Landlords can *ask* as much rent as they want; they can only *charge* as much as the market says that property is worth.

    1. I think that someone who doesn’t understand the most BASIC principle of economics — something most 5-year-olds trying to sell lemonade seem to understand — should be fired from his position at Yale Law School. How much value could he really bring to the classroom?

      And “pro-corporate” is a pretty silly pejorative, too, given that no sane corporation would invest in the property in question.

      1. But if that lemonade stand were owned by a KKKORPORASHUN, they’d charge $50 a glass!

        1. It’s too bad it’s so tough to work Southern Poverty Law Center into altered words.

  3. But, but, if you got rid of rent control it would be really expensive to live in NYC, and it would be really crowded, and there would be construction everywhere, and……

  4. As much as I would like to see NYC rent control laws declared unconsitututional and overturned, if only for the hand-wringing and teeth-gnashing antics it would produce from hardcore lefties, I somehow doubt it is going to happen.

  5. That big earthquake in Mexico hit where lil’ Obama is.

    1. Coincidence? I THINK NOT!

  6. You know, there’s really a lot to be said for burning the building to the ground. A bare lot would be worth more than the building is, as it stands.

    Is it arson if you don’t make an insurance claim?

    1. Arson? Yes. Insurance fraud? No.

  7. Furthermore, what is Adam Cohen talking about when he says the Supreme Court favors corporations and that means that they’ll support re-broadening the 5th Amendment Takings Clause? What do corporations have to do with control?

    1. In Adam Cohen’s world, there are only two interests, “the people,” who are represented by “the government” (unless Republicans win elections), and “corporations.” Property rights, freedom of speech, freedom of association, etc, these things all benefit “the corporations.” Hence the power of the state must expand without limit in order to subvert “corporate power.”

      1. Seems like it.

    2. Ask Richard Allen Epstein from the Cato Institute, (founded by Charles Koch), and the Murdoch Rags. Both are clamoring to abolish Rent Control. You realize 30 or 40 families own 70% of the Controlled Units in NYC? You think the Banking Sector and the Real Estate Sector in NYC don’t Overlap? Then I’ve got an empire state building sized Lap Dance to Sell You.

      1. And your point is??????

        Seriously, are you trying to say that private property rights guaranteed in the 5A don’t apply because only 30 to 40 families own 70% of the controlled units in NYC?

        Can I ask you a serious question: Are you retarded?

  8. Hazlitt and Walter Williams pretty much proved that rent control fuels urban blight since landlords that can’t raise rent to meet rising property taxes will just cut back as much as possible on maintenance. In some cases landlords have even been known to burn their buildings down so they can walk away with the insurance money.

    1. Yes, that’s clearly what’s happened in NYC.

  9. The headline of the article asks the wrong question. Obviously rent-control is a form of government taking. The question is, will the Supreme Court care?

  10. I oppose rent control, partly on economic grounds, since it’s well-known to result in less affordable housing. But even if that weren’t the case and it actually did improve affordability, I’d still oppose rent control on the grounds that it’s a government intrusion into freedom of contract.

    That said, I find the the argument that it amounts to a “taking” as prohibited by the Fifth Amendment, to be a serious stretch.

    The text reads: “…Nor shall private property be taken for public use, without just compensation.”

    Any argument that James Harmon’s property was “taken” bears a strong resemblance to the argument that [insert activity] is “commerce”.

    1. In what way isnt it taken? He still owns the deed, but that isnt what makes property property. He can also sell it, but that isnt what makes property property.

      It is property only if both those conditions are met (well, deed isnt technically necessary) AND you can use[*] it as your conscience directs.

      Without the latter, your property has been taken from you.

      *inside force/fraud boilerplate here

      1. s/inside/insert/

      2. Is your property also “taken” when a zoning bylaw restricts what you can build on it? I’m not generally a supporter of zoning bylaws (since they’re usually destructive to property values), but the argument that they’re an unconstitutional “taking” is a stretch.

        Maybe in a perfect world the Constitution would prevent intrusive zoning and rent control… and I’d certainly be happier if it did… but based on an honest, plain reading of the text, I’d have to argue it doesn’t.

        What I won’t do is resort to a strained interpretation of the Constitution to justify prohibiting something I don’t like (in this case, rent control).

        Every time you stretch the definition of a word in the Constitution, you lose the authority to criticize your opponents for doing the same thing.

        1. What makes this unique is that it’s a combination of rent control + mandatory, hereditary, infinite lease. Rent control alone is (annoyingly so) Constitutional. The specific infinite lease mandate hasn’t been challenged.

        2. Is your property also “taken” when a zoning bylaw restricts what you can build on it?

          yes.

          1. Then I wish you luck demanding “just compensation” then next time a municipality enacts a zoning bylaw that restricts your property rights.

            I’d be thrilled if you won, but I wouldn’t wager real money on it.

            1. I never claimed it was a likely ruling, just that it is the correct one.

              1. I’d argue you’re confusing “correct” and “Constitutional”.

                1. No, not at all.

                  Correct under the constitution and any reasonable defintion of the word “property”.

      3. Only if he purchased it under different conditions, is it a taking. That is, if at the time he bought it, there was no rent control and none of this regulation of its “other use”, then enacting these regulations and limitations is a taking.

        Contrarily, if he purchased it knowing full well about those regulations and limitations, then the court abolishes rent control, it would amount to a huge “giving” by the government (i.e. the land value would probably skyrocket).

        All that said, I oppose rent control and I hope the court overturns it.

        1. I agree. And same with zoning. Its the change that is the taking.

          If the courts ruled that way, then:

          1. Rent control would end for any owners who owned when the laws went into effect.

          2. No new properties could go into rent control. Any leaving would be gone forever.

          That would slowly end rent control…although there would be a big change at the beginning.

          1. And then, ignoring the takings, there is still the 9th amendment freedom of contract.

            Which would end rent control right away.

    2. Ever read Takings?

      1. Your six-year-old reads Epstein? Might be time to look at early admissions.

    3. Owning real property or an immovable isn’t “commerce”. Real property isn’t moved from state to state nor is it in any kind of stream of commerce, since it can’t be moved from place to another.

      1. Oh, you must be one of those dinosaurs who think words have meanings.

    4. Toro, are you going with substance over form, here? That as long as de jure title remains in your name, no amount of de facto government control will amount to a taking?

      If you own a building, and the government orders you to operate it as a home for indigent pedophiles with AIDS, but doesn’t seize title, there hasn’t been a taking? Is that it?

      1. I’d agree that your example constitutes a “taking”. Even though title didn’t change hands, it sounds like a reasonable example of private property being taken (in this case involuntarily repurposed) for public use.

        I don’t believe that rent control meets the bar of “private property taken for public use”. It certainly reduces property value, but so do countless other zoning restrictions.

        1. but so do countless other zoning restrictions.

          All of which are takings.

        2. How is a lease, agreed to by two parties, with all aware, (or even unaware), of the regulatory constraints, a “Taking”? This is a fatuous or duplicitous misrepresentation of the term. It is not a taking as shown in Yee vs Escondido.

          Repetition of the Mantra, “Regulation is a Taking” does not make regulation a ‘Taking’.

          The Harmon argument is truly an Orwellian attempt to redefine an already very clearly defined Concept.

          1. sixthmusketeer|3.20.12 @ 8:41PM|#
            “How is a lease, agreed to by two parties, with all aware, (or even unaware), of the regulatory constraints, a “Taking”?’
            You just answered your own question.

    5. Taken would be the opposite of free to do what he wants with it.

      Having such limited control over his building would lean a lot closer to the ‘taken’ side then it would the free side.

      Can the government decide that you must rent your house’s spare rooms at a fixed rate in perpetuity and it NOT be considered a taking?

  11. From the post above, you really can’t get rid of rent control in NYC unless you get rid of a whole bunch of other restrictions that inhibit the construction of more residential housing. Or lots of people will be moving to Jersey.

    1. What’s your point?

    2. NY law is so skewed in the favor of the Renter than I’m surprised anyone owns rental property in that state. How is it worth the hassle?

      1. I gather that a lot of the rent stabilization laws were passed AFTER people purchased rental properties — and the laws are so onerous that they effectively prevent landlords from cutting their losses by selling the properties.

        1. Which would make the properties attractive to corporations with armies of lawyers and lobbyists who could work around rent control laws.

    3. “Or lots of people will be moving to Jersey.”

      Why? Do you think landlords will raise the price to the point no one rents the space?

      1. But, but, but, the artists will have to move to Jersey and then some banker or something will come rent the place!

        1. It’s not just about “artists.’

          There are a lot of low income workers who couldn’t afford market rates. Or maybe companies will have to start paying their employees enough to pay market rates, and then said companies will raise prices on goods and services, giving everybody something new to complain about.

    1. Oops. Bad link

      1. “Abolishing Rent Control, is a great way to Destroy Poor, Elderly and Middle Class People’s Lives, in the form of an Intentional, Class Based, Pogrom for Avaricious Purposes, Saturated with Cupidity”
        -anonymous sane person

        1. Sixthmusketeer|3.20.12 @ 8:44PM|#
          “Abolishing Rent Control, is a great way to Destroy Poor, Elderly and Middle Class People’s Lives, in the form of an Intentional, Class Based, Pogrom for Avaricious Purposes, Saturated with Cupidity”
          -anonymous sane person”‘

          Post by really stupid person.

  12. These rulings should settle the question.

    Sure, since 9 persons dressed in ridiculous black robes are clever enough to shape reality and nature(*)

    (*)A.K.A. Positivism.

    1. Dred Scott should have settled the question.

  13. Harmon would never be able to lawfully relocate those tenants.

    There’s always arson…

    1. Wouldn’t that rule out the “lawfully” part?

      1. Re: Auric Demonocles,

        Wouldn’t that rule out the “lawfully” part?

        Of course it does. I don’t mean “there’s always legal arson,” I mean “there’s always arson as long as you can make it look like an accident.”

        1. I dunno, NYC might well have some law saying he’s required to house them even if the building burns down.

  14. As Cohen sees it, rent control and rent stabilization are both perfectly constitutional[.]

    For anti-freedom busybodies and petty authoritarians, anything the government does is Constitutional in their minds… because in their minds, the Constitution is not worth the parchment on which it was written.

    1. You mean You?

  15. Part of the reason why rents are so ridiculously high in NYC is that supply is artificially restricted due to existing tenants NEVER LEAVING.

    I doubt average rents would go down after the abolition of rent control, but average rents for *vacant* apartments would certainly go down, and probably by a lot, making it easier for people to move into the city and/or move around.

  16. Professor Cohen has it right, in supporting Rent Control. The landlord favoring lawyer Professor Richard Allen Epstein is wrong.
    Prof Richard Allen Epstein is a polemicist for the CATO institute, which was co-founded by one of the Koch Brothers. He also favors the repeal of the Civil Right’s Act and other Anti Discrimination Laws. There’s no “Taking” when tenant and landlord entered into the lease under the auspices of the rules and regulations that bore on Residential Rentals at the signing, both willingly and voluntarily, with no coercion nor duress. If the SCOTUS majority strikes down a state or municipality’s prerogative to set reasonable regulation, it will fly in the face of Precedential Interpretation of what isn’t a ‘Taking’, “Yee vs Escondido”, and reveal them to be only in favor of State’s Rights and less federal intervention, only when it favors their Crony Class.

    1. “Prof Richard Allen Epstein is a polemicist for the CATO institute, which was co-founded by one of the Koch Brothers.”

      Well, I guess that settles it!

    2. There’s no “Taking” when tenant and landlord entered into the lease under the auspices of the rules and regulations that bore on Residential Rentals at the signing, both willingly and voluntarily, with no coercion nor duress.

      What the fuck does he think the rent control rules are?

      1. wtf do I think the rules are? a boon to the poor and middle class and the elderly and the infirm.
        they are not coercive nor do they represent duress. landlords can sell their equity and speculate in an area that doesn’t impact on basic necessities like shelter….if they have a problem with regulation. However You don’t see Landlord’s rushing for the exits nor qualifying for hardship exemptions…because they’re Prospering as things are.

        1. sixthmusketeer|3.20.12 @ 8:48PM|#
          “wtf do I think the rules are? a boon to the poor and middle class and the elderly and the infirm.”

          So you’re a brain-dead ignoramus? Good.

    3. Exactly how many logical fallacies can we spot in this one post?

      I think at least 7 purely logical ones.

      1. robc…in your post? that’d make about one fallacy for every three words.

  17. The original article has a few more gems:

    If it does, the court will hand landlords a huge victory and put many tenants in danger of losing their homes.

    So the tennants are in danger of losing property owned by somebody else, how does that one work exactly?

    Liz Krueger, a New York State senator, told the television station NY1, “the bottom line for New York City is absent the continuation of over a million units of affordable housing, we would have a homeless crisis beyond any of our comprehension.”

    So the only place these people could possibly live are within the confines of NYC?

    1. Apparently, Liz believes that all these people will get kicked out, creating over a million vacancies, which will be rented at the same price as if there weren’t over a million vacancies (supply? demand? what’s that?), and millions of people will move to New York to rent those apartments at artificial shortage prices.

      1. Krueger is right, they will get kicked out…and not be able to get a place nearby. so they will have to move and probably lose their job…and the landlords won’t care if they rent right away or not…they’ll bide their time and maybe sell the building to foreign investors? but rents surely won’t go down for more than a month or two. The aim of many landlords is to have yearly turnover so they can use residential property as extended stay hotels. In addition they really don’t have a problem with the few well to do class members benefitting from rent controls. Those are their friends. They are class brethren. They really just want to extirpate the poor and middle class so they don’t have to look victims of the “Free Market” religion in the eyes.

  18. Preemptively, as I feel I will be using them in the next 30 minutes, apply where appropriate:

    Fuck utilitarianism.
    Fuck off, slavers!
    Hail Eris!

  19. Even if Harmon prevails, I’m sure city councils, etc, will try to find novel ways around the ruling, just as they did post-Heller.

  20. put many tenants in danger of losing their homes.

    Fuck you; want permanent claim to your place of residence, buy the place.

    1. Instead why not grant renters an ownersip share. Says I to the Barracuda above.

      1. sixthmusketeer|3.20.12 @ 8:54PM|#
        “Instead why not grant renters an ownersip share.”

        Because they didn’t pay for it, doofus.

  21. Actually, I see the rent issue as just a part of why the city of NY doesn’t want to end rent control.

    The other part is that the “idiot left” (not that they are actually leftists) who live in these places would be forced out and replaced by wealthy earners, who wouldn’t put up with all of the city’s bs.

    So this is not only about the “rent” but also about shoring up a political block that keeps the PTB in place.

    1. One of the comments in the Time article speculated that this was all part of a massive right-wing conspiracy to make living in the inner cities unaffordable and dilute the Democratic vote by displacing millions of inner city residents.

      Which particular conspiracy theory a particular leftist will choose probably depends on how they approach the issue: whether race is more important than big government.

      1. Anti Big Government? That’s just another way of saying You want Businessmen policing themselves in a form of Corporate Rule.
        Your Republican Talking Points don’t fly when I catch them with a Swatter

        1. ^?
          Snark or stupidity?

  22. It would be a shame if an unfortunate conflagration struck that rent-controlled apartment building.

  23. I understand how imposing rent control on previously non-rent control properties would violate the takings clause, but how is this unlawful taking if there was already rent control when the property was purchased?

  24. Frankly, in the owner’s place I wouldn’t be challenging Rent Control. I would be challenging the real estate tax, on the grounds that I could hardly be said to own that property. As matters stand, with rent control and landmark status, the ‘owner’ is little more than a caretaker with permission to collect rent in lieu of salary.

  25. So why did he buy it?

  26. Rent control is can never be controlled by the law, because these things matter on the market everyone charge rent according to their market values.

    ______________
    Solicitors In Surrey

  27. As the article told here supreme court already gives his advice in 1988 but this is the time to review it up, now this will go into the court and court order what is right and what is not.

    http://www.askacriminalsolicitor.com/

  28. Rent control is become the major issue in the US right now last improvement happen long time ago now the case once again in the court.

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