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Property Rights

Court Rules That Seattle Law Banning Landlords From Screening 'Qualified' Tenants Is a Taking

The state court ruling also concluded the taking violates the state constitution because it is for a forbidden "private use," rather than a public one.



Yesterday, a Washington state court struck down a Seattle law that requires landlords to accept all "qualified" tenants on a first-come-first-serve basis. Once the landlord set minimum qualifications that all tenants must meet, he or she is forbidden to discriminate between them on any basis, or to reject the next tenant in line, so long as the unit in question is vacant. Judge Suzanne Parisien ruled that the law violates the Washington state constitution because it takes property without compensation, and also effects a taking for an unconstitutional "private use." The purpose of the law is to combat "implicit bias" by landlords. For reasons I discussed here, it is likely to harm potential tenants more than it benefits them.

The court ruled that "choosing a tenant is fundamental attribute of property ownership," like the right to sell property, and therefore the state cannot take this right away, without having to pay "just compensation," as required by the Takings Clause of the state constitution. Although "landlords are permitted to set their own criteria," the court concluded that the right to set such "preliminary, general rental criteria, does not substitute for the discretion to choose a specific tenant." In effect, landlords are forced to take specific tenants, even if they might not want them, thereby being saddled with an unwanted physical occupation of their land.

In addition, Judge Parisien concluded that the Seattle law violates Article I, Section 16 of the state constitution, which forbids state and local governments from taking property for "private use." In this case, the property right taken is not used for a public project, but instead goes to a private party, the next "qualified" tenant in line.

Both of these issues would likely have come out differently if litigated under current Supreme Court precedent interpreting the Takings Clause of Fifth Amendment to the federal Constitution. The Supreme Court is generally reluctant to rule that a regulation of property qualifies as a taking unless it results in a permanent physical occupation of the condemned property, or wipes out all economically valuable uses of the land. The Fifth Amendment indicates that takings must be for a "public use," which is similar to the Washington Constitution's bar on takings for a "private use." In cases such as Kelo v. City of New London (2005), the Supreme Court has ruled that virtually anything that might create some sort of "public benefit" qualifies as a public use, even if the new owner of the condemned property is a private party, and even if the government fails to prove that the supposed public benefits are actually likely to materialize. I criticized Kelo in my book, The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain. The decision is highly controversial and may well eventually be overruled or limited. Bu so far it remains on the books.

Washington, however, is one of many states that have interpreted their state constitutions as providing stronger protection for property rights than the federal Supreme Court's interpretation of the Fifth Amendment. As Judge Parisien notes, Article I, Section 16 "offers greater protection to private property owners than its federal counterpart," and has been interpreted by the Washington Supreme Court as "an absolute prohibition against taking property for private use" (though that still permits takings that transer property to private entities that have a legal duty to serve the entire public, such as public utilities).

Yesterday's decision also ruled in favor of the property owners on two other issues, concluding that the Seattle law violates Due Process Clause of the state constitution, and that its restrictions on landlord advertising violate the right to freedom of speech (also under the state constitution, rather than the federal one). The ruling is likely to be appealed, and the case could eventually end up in the state supreme court.

The Pacific Legal Foundation—the public interest law firm representing the property owners challenging the law, has a page devoted to the case, which has additional information about it.

UPDATE: One important issue that Judge Parisien's opinion does not address is how this case differs from ordinary anti-discrimination laws, such as those that bar landlords from discriminating on the basis of the tenants' race, sex, or religion. The latter are not considered takings, even though they too restrict the landlord's right to choose a tenant. To my mind, the key difference is this: conventional antidiscrimination law does not require landlords to accept any particular tenant. The property owner is free to reject an applicant for any reason not specifically forbidden by law, or indeed for no reason at all. By contrast, the Seattle law requires landlords to take the next "qualified" tenant in line, so long as the property in question is vacant. It thereby restricts property rights far more than conventional antidiscrimination law does. Unlike traditional antidiscrimination law, the Seattle law actually imposes specific unwanted tenants on landowners, and therefore forces them to accept physical occupation of their property by tenants whose presence they reject. Forcing owners to accept unwanted physical occupation by strangers is far more clearly a taking than merely foreclosing a few possible reasons for rejection of tenants, though admittedly a sweeping enough antidiscrimination law could potentially amount to the same thing (e.g.—if it forbade all or nearly all potential reasons for rejecting a tenant). In the extreme case, an ultra-broad antidiscrimination law might have to be struck down on the same basis of the Seattle law in this case. But very few if any conventional antidiscrimination laws go that far, or even come close to it.