The Supreme Court declined on Nov. 12 to take up a challenge to New York’s rent control law, which grants a building’s tenants veto power over condominium conversions.
The decision came in the form of an unsigned order regarding the petition filed in G-Max Management Inc. v. State of New York. The court did not provide reasons, which is its usual practice when turning down a case.
Justice Neil Gorsuch was the lone dissenter from the denial of the petition, voting to hear the case. He did not explain his vote.
Building owners said in their petition filed with the court on April 18 that New York’s Housing Stability and Tenant Protection Act of 2019 transformed “a temporary rent-regulation system into a permanent expropriation of vast swaths of private real estate, without just compensation, in the name of ‘affordable housing.’”
The act prevents owners of apartment buildings from retaking rental units for their personal use and bestows a collective veto right on tenants over condominium and co-op conversions there.
The building owners argue the law runs afoul of the Takings Clause of the Fifth Amendment to the U.S. Constitution, which states that private property cannot be taken for public use without just compensation.
Petitioners Jane Ordway and Dexter Guerrieri are the owners of an eight-unit apartment building in Brooklyn. The other petitioners are small businesses, each of which owns a small to mid-size apartment complex in Yonkers or New York City.
The petitioners argue the state statute infringes on their property rights.
After spending money repairing their building, Ordway and Guerrieri wanted to take possession of two units for themselves.
Ordway and Guerrieri took legal steps to reclaim the units in September 2018 but the act came into force in June 2019 and its “new restrictions forced an abrupt end to [their] previously lawful … efforts.”
“Because of the 2019 Act, Ms. Ordway and Mr. Guerrieri cannot recover their own property for their personal use,” according to the petition.
The petitioners say they are having trouble making even “a marginal profit” on their investment.
They sued in federal district court, claiming that the act amounted to a governmental taking of their property, but in September 2021 the court dismissed the legal complaint for failure to state a claim.
In other words, the court found that even if all the factual allegations in the complaint were true, the litigants would still not be entitled to judgment.
The U.S. Court of Appeals for the Second Circuit affirmed the decision in March of this year, finding the petitioners entered the rental market voluntarily, and that the act did not revoke their ability to evict tenants in limited circumstances.
The court noted that even with the restrictions imposed by the statute, the petitioners could still terminate a tenant’s lease for non-payment of rent, creating a nuisance, violating the terms of the lease, or performing illegal acts on the premises.
The petitioners failed to demonstrate “that they have attempted to use all available methods to either exit the rental market or evict tenants,” the court ruled.
In June, New York urged the Supreme Court to reject the petition.
Rent control “is a critical tool to combat the harms caused by rent profiteering in a tight housing market including homelessness and economic instability.”
The statute was enacted to bolster “tenant protections and curb property owners’ attempts to rapidly raise rents, harass tenants, force tenants out of regulated units, and remove regulated units” from the rent control system, the state said.
The act is constitutional because it permits “changes in use of property in numerous circumstances and allows for evictions based on nonpayment, illegal activity, and other misconduct.”
The Supreme Court has previously ruled that “regulations governing the landlord-tenant relationship are not physical takings.” The rent control system neither forces “property owners into the rental market nor prevents them from exiting,” the state said.
The Epoch Times reached out for comment to New York Solicitor General Barbara Dale Underwood and the petitioners’ attorney, Randy Mastro of King and Spalding in New York City, but did not receive any replies by publication time.
From The Epoch Times