As reported by The Real Deal, the Second Circuit recently heard oral arguments on the constitutionality of rent stabilization in New York. Rent stabilization has long been a hot-button issue. Proponents argue the need to protect affordable housing while property owners argue that rent stabilization limits the diversity of their properties' use.

Ultimately, the issue is one of constitutionality to be decided on by a judge. Two separate lawsuits have now presented oral arguments to the Second Circuit Appeals Court, and landlords and tenants alike wait to hear the outcome.

The Constitutional Arguments at Issue

In both lawsuits, the landlords argue the Rent Stabilization Act of 2019 (the Act) violates two constitutional amendments. These amendments are:

1. The Takings Clause under the Fifth Amendment
2. The Due Process Clause under the Fourteenth Amendment

The Takings Clause prohibits the government from taking without just compensation. The landlords have asserted the Act amounts to a government taking because property owners are now limited in the use of their property.

The Due Process Clause mandates that the government allow due process of law before taking “life, liberty, or property” from someone. Under their Due Process Clause argument, the landlords claim the Act fails to encourage affordable housing because it functioned to remove a calculation that would consider a tenant's increased income.

Ultimately, the lawsuits hinge on the question of whether NYC and NY state have effectively limited the use of an owner's property to such an extent that the real estate has only one narrow purpose: stabilized housing.

What to Expect

If the landlords win their arguments, the cases will go back to trial, and we'll continue to wait on more clarification through the court. Many experts believe the landlords will lose the cases, and thus the Act will remain unchanged unless the landlords can take the issue to the United States Supreme Court. Either way, both sides will continue to look for successful ways to implement their goals through lawsuits or legislation.

Contact a New York Real Estate Attorney Today

When you need experienced legal assistance in matters concerning NYC real estate, call Melvin Monachan, Attorney at Law, at (347) 389-1682 or contact us online.