U.S. Supreme Court Declines to Consider Challenge to Rent Stabilization Laws

On Oct. 2, the U.S. Supreme Court declined to grant a writ of certiorari, a legal order in which a high court reviews a lower court’s decision, to a case challenging the constitutionality of New York’s rent stabilization laws. The lawsuit was initially filed by the Community Housing Improvement Program and Rent Stabilization Association in 2019, shortly after the state passed the Housing Stability and Tenant Protection Act of 2019 (HSTPA).

The context: The HSTPA nearly eliminated an owner’s ability to increase rents on vacant apartments and ultimately remove them from rent regulation. Prior to the HSTPA, owners could increase the rent by 20 percent on vacant apartments and hike prices based on the cost of renovations. Owners could then charge market rents once monthly rents reached a certain threshold.

In this lawsuit, the challengers had argued that the regulations amounted to an unconstitutional government taking of private property. However, a pair of decision that came down in February by the U.S. Court of Appeals for the Second Circuit rejected this argument, leading to the final appeal to the nation’s highest court, which has previously, and unanimously, upheld rent stabilization laws.

Although the Supreme Court has said that government regulation of private property can be “so onerous that its effect is tantamount to a direct appropriation or ouster,” in 1992, the court unanimously upheld rent regulations in a ruling about a mobile home park California. The justices reasoned that regulation of the terms of a lease did not amount to the sort of complete government takeover of property that is barred by the Takings Clause.

What’s next: The Supreme Court’s recent decision to not grant a writ of certiorari does not permanently dismiss the chance for the court to rule on legal challenges to rent stabilization laws. Two other sets of landlords are also trying to appeal similar cases to the U.S. Supreme Court, and the Court has not yet weighed in on their applications.

74 Pinehurst LLC asked the Supreme Court to hear its case in May. The petitioners in this case own small apartment buildings and have no parent company. It’s a separate complaint to the CHIP and RSA petition, but both cases were rejected by the Second Circuit in the same opinion in February.

The other petition to the court, filed in May, is by 335-7 LLC. This petition again argues the Rent Stabilization Law violates the Constitution’s Takings Clause. The petitioners in that case describe themselves as “the owners of small and midsize apartment buildings in New York City.” Both remaining cases were relisted by the court for discussion on Oct. 6, and an order could come on Oct. 10.