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“A serious constitutional challenge to rent-control and stabilization laws may finally be in the works.”

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.

Read the whole story here. I noted Harmon’s case last month and discussed the constitutionality of rent control in this column.

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  • ||

    What, this landlord needs more money for tophats and monocles ?

  • ||

    This season's new livery is in, the domestic staff must be dressed proper.

  • ||

    Given the current interpretation of the commerce clause, I wonder if the SCOTUS would allow that anyone actually owns anything.

  • ||

    Oh man, imagine the gnashing of teeth if the SCOTUS does the right thing (which it won't).

  • ||

    Why didn't this happen, oh say, fifty years ago?

  • ||

    Indeed, surely rent control has been subject to constitutional challenges before.

    What makes this one different?

  • ||

    The Second Circuit recognized that the Harmons would be entitled to just compensation when their property is subject to a "permanent physical occupation."

    How is a lease that is automatically extended by law, even unto your descendants, not a permanent physical occupation?

  • ||

    Well eventually all the descendants will die.

  • ||

    No. I am familiar with a Grandchild taking over an apartment on the upper east side.

  • ||

    I don't think you realize how far I meant by "eventually."

  • ||

    Earth will be uninhabitable in a billion years or so...

  • ||

    And then the owner can get it back and charge market rates.

  • ||

    Orions are better tenants anyway.

  • ||

    Its a gambol, but it just may work.

  • ||

    hee hee hee

  • ||

    Only in the forest or plain

  • ||

    As a BIG PROGRESSIVE, LIBERAL, PINKO, whatever...I will only support the elimination of Rent Control if we agree to build more public housing.

    In NYC, rent control is abused in Manhattan. Upper-middle class to very Rich People maintain rent-controlled apartments.

    In the Ghettos of NYC (Bronx, Harlem, parts of Brooklyn/Queens), rent control is an odd issue. The free market works great. The landlords do nothing to maintain the place, only poor people live their, they can only charge market prices.

  • ||

    shorter strawman: Taking property is only bad if its handed to rich people

  • ||

    No doubt. NYC has a major homeless problem and acres of vacant lots. Here in Columbus we have rental companies competing against each other, offering free month's rent, touting the facilities, etc., in short, trying to earn business. What a concept.

  • ||

    Back in college I remember a place that would pay your first 2 months rent and give you $500 cash if you would just sign a 2 year lease. Nice, new appartments at a decent price too. Only catch was that campus buses didn't go out that far...

  • ||

    ""and acres of vacant lots.""

    That's pretty funny. If only it were true, eminent domain wouldn't be a big issue here.

  • ||

    6% of city land is vacant, according to nyc.gov.

  • ||

    Yeah, that's pretty funny.

  • ||

    I think it's a great time for this issue to hit the SCOTUS. In the wake of Occupy, this might cause the literal explosion of high-strung progressives' heads.

  • ||

    Only if it's a "big" ruling. We might get one of those timid narrow rulings which pleases nobody except the prevailing party.

  • ||

    The "people that live in low-crime neighborhoods own more guns than people that live in high crime neighborhoods" reminds me of another argument: "Kids that sit near the TV will need glasses...when the truth is that the kid is sitting near the TV because he needs glasses". The typical white legal gun owner tends not to commit street crimes and lives in low crime neighborhoods. I welcome the same guy to come live in Newark, NJ...with his gun. Let's see how much safer Newark gets.

    Libertarians want to support foreclosures so that the losers can go rent. The fact of the matter is, it is very hard to rent with a foreclosure on your credit report. This is where the Libertarian Shrugs his shoulders and says people should take personal responsibilities. Fine.

    It is pretty clear to me that Ultra-Orthodox Libertarians value economic liberty than they do freedom. Because loose gun laws will only welcome a more militarized society. Especially when it comes to apprehending people.

    To change the world from what it is today (for good or for bad, resulting from the New Deal/Great Society) will be a tremendous shock to our society.

    Let me know when you Ultra-Orthodox Libertarians plan to abruptly change everything so I can take my kids and my money and leave. I'll come back 1/2 of all of the people killed each other and perhaps you change your minds.

  • ||

    Don't let the door hit you in your arrogant ignorant fat ass on the way out!

  • ||

    We plan to do it tomorrow. Best get packing.

  • ||

    It is pretty clear to me that Ultra-Orthodox Libertarians value economic liberty than they do freedom.

    Economic liberty is a subset of freedome. What makes you think it isn't?

  • ||

    freedom, too.

  • ||

    #OCCUPYDOMES!

  • BakedPenguin||

    Two people enter the freedome. One comes out.

  • ||

    LOL

  • ||

    Do we get to look up Tina Turner's skirt?

  • BakedPenguin||

    It's freedome. So of course you do.

  • ||

    I like the freedome concept. In encompasses everything that is part of freedom; freedom to own guns, freedom to kick the deadbeats at below market rents out on the streets, freedom to gambol across fruited plain...

    The freedome, a beautiful biosphere of freedom.

  • ||

    I'm an ideas man!

  • ||

    Libertarians value economic liberty (more) than they do freedom.

    they are synonymous but most idiots can't see that.

  • ||

    If I owned a rent controlled apt and wanted the tenants out, could I 'modify' the apt to make it undesirable so they move? Say, brick over the windows, add or remove walls?

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    As I understand it, no. Your ass would be hauled into court so fast that you'd leave your shorts behind.

    If you think rent controls are bad in NYC, Paris is even worse: They've had them for generations. Due to massive inflation, the rents are ridiculously low (I heard of one central Paris apartment that rented for 10 francs/month - about 2 Euros.) The landlords are not only required to maintain the apartments and upgrade them, they can't even give them away to the government.

  • ||

    That can't be right. All the landlords would be bankrupt by now. The progressives are usually much better about making regulations that are onerous enough to suck some of the life out of the economy, but not onerous enough to kill it completely...

  • ||

    I imagine there's a system that pays off parisian landlords with public money to maintain this illusion.

  • ||

    At that point, don't you just create a shell company and bail out of the whole enterprise? Or is there a tacit government back door payment that keeps these places lucrative?

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    I'm pretty sure the rent control follows the tenant, not the owner, so creating a shell company with the same asset likely won't help. And the place is almost impossible to sell to an arms-length buyer, too, because of the controlled rent.

    The government essentially destroys most of the value and forces the current owner to bear the loss.

  • ||

    I was speaking to the inability to sell and requirement of maintenance. If I were being bankrupted by a blood sucking asset that I couldn't get rid of, I'd put as many legal barriers between me and the asset and bail, hoping the government will be tied up in court trying to prove ownership while I build a new life somewhere else.

  • ||

    Unfortunately, the money you'd use to do that was spent taking care of that rent-controlled apartment building.

    I see what you mean.

  • ||

    Unfortunately, the money you'd use to do that was spent taking care of that rent-controlled apartment building.

    I see. Its the kobayashi maru of property ownership.

  • ||

    Correct answer was to nuke it from orbit.

  • ||

    The Rent Control Board can be reprogrammed with a nice thick envelope.

  • ||

    Maybe I'll have a lot of candles lit when I go out for a croissant.

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    My cousin just managed to get a pair of "tenants" out of his house after they had lived their for 8 months having paid only $200 total. The house was inherited from his father-in-law, and just before he died he said they could stay there for 2 weeks for $200. They then refused to leave or pay more money. They also never paid electricity and fought their eviction in court. Once they finally got kicked out (by the sheriff 3 minutes before he was going to arrest them) they tore out all the pipes and left the building literally full of garbage.

    TLDR: Laws which extend "leases" past the original end date are unjust.

  • ||

    Did they not commit a criminal offense? Can they be arrested and then later sued for damages?

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    It's all civil. Any damage to a rental unit is a civil matter.

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    Cue left-wing shriekers to shriek that all the poor people will be thrown out into the snow. Never mind the economic reality of how housing gets built; ignoring economic reality is so much easier.

  • ||

    Too late. See Strawman above, although I am uncertain whether he is actually stating his position or spoofing it.

    Poe's law seems to be at work in this case.

  • ||

    Can anyone named "Strawman" have an argument taken seriously?

  • ||

    Who gives a shit about morality, contracts, and the workings of economies? WE MUST THINK OF THE CHILDREN, ESPECIALLY THE BLACK AND HISPANIC CHILDREN, AND EVEN MORE SO IF THEY'RE GAY OR GET REALLY SHITTY GRADES, BEFORE WE THINK OF THOSE REPUBLITHUG CONCERNS!

  • ||

    Forget not the transgendered.

  • ||

    What about male lesbians such as myself? H8r!!

  • ||

    The media informs me that the most valuable children are little photogenic white girls.

  • ||

    Hahaha!

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    The end of the world is here and everyone will die!!

    The New York Times reports that minorities and photogenic white girls to be hurt the most!!

  • ||

    With the exception of Children, I'm everything else you mentioned.

  • ||

    When you decide to purchase property with the aim of renting it out, you are, or should be, on notice of, rent control laws. Although not a perfect analogy, it's akin to buying property that is subject to a public easement. In essence the government has already impaired the property value before you bought it.

    Epstein would have a better case if the law being challenged were new rent control laws, which is perhaps what the case is about, but which I'm too lazy to look up.

  • ||

    So when the rent controls were first put into place, owners should have been compensated for all loss of NPV, then right?

  • ||

    Let's see, at 3% inflation for all eternity....

  • ||

    You have a point in the due diligence aspect, assuming that you were going to offer a property in a market where there were extant rent controls. (I am willing to bet, though, that the rules are constantly being changed so that properties once not subject to rent controls are suddenly made so.)

    OTOH, the existence of such controls is a good way to discourage people from bringing new properties to the rental market, isn't it?

  • ||

    ""OTOH, the existence of such controls is a good way to discourage people from bringing new properties to the rental market, isn't it?""

    I don't think new properties fall under rent control laws.

    NYC doesn't seem to have any problem building new properties. Construction has been huge in the last 20 years.

    Not aruging for rent con/stab laws but the amount of new living places that have popped up in the 20 years throws a wrench in the idea that those laws are inhibiting construction of dwellings. All it seems to inhibit is landlords pockets. I can understand them being upset.

    Whatever happens in court, rent con/stab laws are being "phased out" anyway and almost no apartments will be under those laws in another 20 years.

    A landlord can completely renavate an apartment and then charge market rate. That's what was being done in my old building. I think 3 apts out of 16 are still under con/stab control now. It was 16 of 16 ten years ago.

  • ||

    If NYC is not imposing rent controls on new properties, they are showing more sense than I expected.

    But I wouldn't be surprised if every attempt to 'renovate out from under' were fought tooth and nail by those who had an interest in doing so.

  • ||

    Daniel, what about the people who inherit rent-controlled property which costs them more in maintenance than they can charge in rent? Such properties are hard to sell because of the rent controls.

    See also Auric Democles @ 4:23 above.

  • ||

    Even in that case, rent control is a distortion of the market, even if its a known distortion. Landlords should be able to buy their way out of rent control (so they pay the difference between free market value and distorted value) and eventually remove the distortion. Those that wish to continue with rent control then, tacitly admit the market value of their apartments are less.

  • ||

    Lost_In_Translation -- Rent control may be a bad idea, and it might be good policy to be able to buy your way out of rent control, but the issue is whether a rent control law that has been in place before you decided to buy something constitutes a "taking". I don't believe that it does.

    Tonio: You'd have a better point if the previous owner from whom the property is inherited had rent control laws imposed after acquiring the property, although, in practice I suspect this is pretty rare. Also, taking the argument to the extreme, anyone who inherits property in an area that has rent control laws would be entitled to compensation merely by taking in a tenant or perhaps even claiming that he would have taken in a tenant but decided not to because of rent control laws.

  • ||

    but the issue is whether a rent control law that has been in place before you decided to buy something constitutes a "taking". I don't believe that it does.

    You do not understand real property or the common laws that protect it.

    It is the land that has the right not the owner. I know it sounds weird and it may raise some hairs on the back of your neck...anyway the result is that the rights do not disappear simply because it has new owner.

    If it was a taking from the old owner then it is a taking from the new owner.

    It makes sense if you think about it...in essence when you sell property you are selling all your rights to that land...if you have the right to defend your land against a taking then the new owner should get that same right when she buys it.

    Anyway your legal confusion is a non-problem.

  • ||

    What is really interesting is if the supreme court finds in favor of the land owners in this case it could potentially turn all land use regulations into takings.

    For this reason i do not think the supreme court will find in favor of the land owner.

  • ||

    The "land" has the right? That's a new one.

    And you don't have any rights to property that has been "taken" before you decided to buy it. For instance, someone who decided to buy a property that has already had its fair market value reduced to nil because of regulatory taking, cannot buy that property after the fact and expect to be compensated by the taxpayer.

    Moreover, in practice the reduced amount of rent you can collect by virtue of rent control is worked into the purchase price. So I can buy a property at a reduced price that takes into account rent control regulations and then turn around and argue that my property has been taken and get the spread between the purchase price and fair market value from the government? I think not.

  • ||

    Occupy Apartments!

  • ||

    So if I have $100 in my wallet and a guy points a gun at me demands $99, I can't call the cops because he didn't rob me of 100% of the value I had?

  • ||

    Off topic:

    Yo, FUCK Jeff Miron. I was listening to this today while I was eating my lunch. Fuck off Kochtopus Cosmotarians.

    http://hereandnow.wbur.org/201.....ibertarian

  • BakedPenguin||

    "Grow a brain, you Miron"

  • BakedPenguin||

    Crap. It was "Get" a brain.

  • ||

    I must admit, I think a lot of the alleged quotes in that article may be paraphrasing of more cogent and salient points made by Miron.

    As for the initial claim, I agree with him that I think Paul isn't the calm, thoughtful and rational face of libertarianism I'd hope for (Rand however might be). He is a bit kooky, and its his delivery on the foreign policy substance, and not the substance itself IMO, that deters him from gaining among rank and file GOP.

  • ||

    Rand Paul has said that he is not a libertarian and has also asked that people not call him that.

  • ||

    Quacks like a duck...

  • ||

    Nah. He intentionally misrepresented Paul's positions. Specifically on free trade and economics. There was nothing paraphrased in the actual interview which was aired. It was Miron's own words.

    But I'd be willing to give him the benefit of the doubt if he said those things to try to get into Robin's pants.

  • ||

    Yo, FUCK Jeff Miron. I was listening to this today while I was eating my lunch. Fuck off Kochtopus Cosmotarians.

    It is really fun how the opinions of one person can be held against the whole group...unless you are a Yokeltarian, then we have to parse everything Gary North says lest we be accused of being anti-Christian bigots.

    How about this: Fuck you, "Whipple"

  • ||

    Well, pardon me. Not all Kochtopus Cosmoterians are assholes, just Miron. But if the shoe fits...

  • ||

    And he was introduced as a "Senior Fellow at the Cato Institute". So, he was apparently speaking for Cato.

  • ||

    I don't see what's wrong with rent control. It helps people stay in a home. What's more important a struggling single mom's right to put a roof over her children's head or the right of a wealthy landlord to keep stealing her money for a basic necessity?

    There's a rational solution to this problem but for some reason people freak out about a simple central agency that sets fair rents throughout the nation.

  • ||

    It helps people stay in a home.

    It also causes people to build a lot fewer homes that others can stay in, lest their property be commandeered for such sob-story tenants.

  • ||

    Pro Lib,

    Is that you?

  • ||

    Pro Lib prefers moon homes.

  • ||

    This is correct. And homey don't play that sockpuppetry game. Get enough nonsense from real life.

  • ||

    Before we go that far, let's just quarter the homeless or under-housed in spare rooms in, oh say, your house!

  • ||

    a struggling single mom's right to put a roof over her children's head

    Right? I'd say that's the "struggling single mom's" responsibility, not right.

    the right of a wealthy landlord to keep stealing her money for a basic necessity

    Yeah, those horrible landlords! Where do they get off, owning property 'n' stuff that they don't give "struggling single moms" for free?

    Oh, and STFU and pay your rent, it's the 4th of the month already.

  • ||

    For that matter, why don't we have universal housing? Architects are sworn to ensure the public health, safety and welfare are protected so of course each person in America deserves a custom designed home to their liking.

  • BakedPenguin||

  • ||

    And it totally fucks the poor. If you know that once you rent your apartment to someone you can effectively never evict them, are you going to take a chance and rent to anyone with anything less than a perfect credit score and rental history?

  • ||

    Nope. Many of the people I know have already given up and sold their residential rental properties. It can take 6 months to evict a tenant. You need about 50 units to turn a profit, realistically. I would never rent a residential property. I would let it rot, first.

  • ||

    Well New York is still standing after decades of rent control.

    It obviously does not destroy cities...still what john said...it fucks the poor and is also very inefficient and complete waste of resources that produces no benefits.

  • ||

    It is one thing to say "no apartment on the 4200 block of 54th Street shall charge more than X per month in rent". But it is quite another thing to say that an owner must rent to a particular person in perpetuity lease or no. That isn't really rent control. It is something beyond that since it is not just controlling rent it is controlling occupancy. That is clearly forced occupation. Suppose I own an apartment and my down and out daughter and her son come home to live. By this rule I can never give the apartment to my daughter because I have effectively promised it perpetuity to a lesser by renting it out.

  • ||

    ""deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." ""

    Considering what flies for "just compensation" with ED laws, and that Kelo largely left it up to the states, it might be ruled constitutional.

  • ||

    I guess one's income is not considered private property. Or is the government claiming that people get just compensation for their tax takings?

  • ||

    Money is not private property...or real property.

    The only real property is land.

    At least in the legal sense of takings.

    Also the government has always taxed land before and after the constitution was written....if it has no problem taxing land which is real property why would it have a problem with taxing income?

    Anyway the constitution allows for taxes so even if you were right you would still be fucked...the constitution has a taxing clause.

  • ||

    It has a takings clause too. I'm curious about the just compensation that one should receive in return for their taken property (taxes).

  • ||

    In New York, if it is less than five families and the owner lives in one of the units...you can always sell the building. Over five families, rent control is passed on. It depends on act/passive landlord status.

  • ||

    There are three members of the Yee v. City of Escondido court still serving on the bench -- Scalia, Thomas, and Kennedy. In Yee, they all voted to uphold the city's rent control regulation. What evidence is there that they are going to change their minds on the question now?

  • ||

    Damned 3/9 majorities...

  • ||

    I'm a landlord. To all that say, "you bought into the system, you get what you deserved", one of my properties has had it's property taxes go up 164% in the last four years while my regulated increases have gone up maybe 11%(if I'm being generous) in the same period. If you don't believe me, you can view property tax bills for any property on the NYC finance site. Go check a couple of them out. Higher taxes = lower bottom line = less property value = not a TAKING of property?

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