Landlord groups claim rent laws ‘violate the US Constitution’ in lawsuit

One month after state lawmakers passed a package of landmark bills to strengthen the state’s rent laws and protect New York tenants, landlord groups filed a federal lawsuit to stop their implementation, the Real Deal first reported.

The federal complaint was filed by landlord groups and property owners, including the Rent Stabilization Association (RSA) and Community Housing Improvement Program (CHIP), against the city of New York, the Rent Guidelines Board (RGB)—naming each of its members—as well as Ruthanne Visnauskas, the commissioner of New York State Division of Housing and Community Renewal.

“This action challenges the constitutionality of the New York Rent Stabilization Laws that govern nearly one million apartments in New York City,” the complaint reads. “These laws, together with the actions of the City Council making the law applicable in New York City and the decisions of the New York City Rent Guidelines Board setting permissible rent increases, violate the United States Constitution.”

Specifically, the 125-page complaint—filed in the United States District Court, Eastern District of New York—alleges that the rent stabilization laws, even before the recent amendments, are “arbitrary and irrational in violation of the Fourteenth Amendment’s Due Process Clause” and that they, among other things, “effect a physical taking of property in violation of the Constitution’s Takings Clause.”

The lawsuit claims that prior to the recent changes, the rent stabilization laws already violated provisions of the Constitution and that those violations became “more apparent” with the recent changes. The complaint also alleges that rent stabilization laws deprive owners of their rights to “use, possess, dispose of, and exclude others from their property.”

Some rent law changes specifically challenged in the complaint include the elimination of eviction plans, which now require purchase agreements from 51 percent of tenants to be able to convert a building into a cooperative or condominium; the elimination of luxury and high-income decontrol; and new limitations to raise rents through major capital improvements (MCIs), and individual apartment improvements (IAI).

Additionally, the lawsuit criticizes the RGB’s recent rent increases, alleging that they are minor and below what is required for “property owners’s operating costs,” and that the new rent laws eliminated other methods used by landlords to be able to increase rent beyond what the RGB dictates.

“These laws have been exacerbating New York City’s affordable housing crisis for decades by making market-rate apartments more expensive for the millions of New Yorkers who don’t live in or can’t find rent-stabilized apartments and it allows wealthy New Yorkers to benefit unfairly from rent stabilization while penalizing low and middle-income New Yorkers,” RSA president Joseph Strasburg said in a statement.

“The law is not constitutional and punishes hard working tenants and small landlords alike. Allowing it to continue to harm New York is no longer acceptable,” he added.

It took decades for New York to pass bold legislation to protect tenants, but with the state’s rent laws expiring recently and new progressive leaders in the State legislature, the reforms moved forward and were approved by Gov. Andrew Cuomo last month. Housing activists who cheered the passage of those reforms moved quickly to condemn the lawsuit.

“We see this meritless lawsuit for what it is, a last ditch effort to retain the disproportionate power these landlords held that allowed them to harass, displace, and unduly profit off of the most vulnerable tenants in New York,” Judith Goldiner, attorney-in-charge of the Civil Law Reform Unit at the Legal Aid Society, said in a statement.

“This lawsuit—an ironic symbol that underscores the fact that landlords’ profits are exorbitant if they are willing to waste their money on frivolous litigation such as this—is an affront to our communities and we will continue to push forward and fight for our clients and all low-income tenants,” she added.