Thursday, February 16, 2012

George Will: Rent Control is Unconstitutional

"Most tenants in rent-controlled units can renew their leases forever. Tenants can bequeath their rent-controlled apartments — they have, essentially, a property right to their landlord’s property — to their children, or to a friend who lives with them for two years . This is not satire; it is the virtue of caring, as understood by liberal government.

Rent control is unconstitutional because it is an egregious and uncompensated physical occupation of property. The Constitution says that private property shall not 'be taken for public use, without just compensation.'"

~George Will's latest column

20 Comments:

At 2/16/2012 7:14 PM, Blogger kleht said...

I have lived and rented in San Francisco for almost 50 years. Rent control has been in effect since the late 1970's. Rent control certainly does help the tenant, as opposed to the landlord. However, landlords are aware of the requirements before they rent out, or at least they should.

However, landlords do have protections and single family homes, for the most part. are are not fully covered by rent control.

I've never been aware of a tenant having the right to,in effect, "bequeath their rent-controlled apartments to their children". If any city would have restrictions such as this, SF is it.

The 14 situations where a SF tenant can be evicted is as follows:

JUST CAUSES

Non-payment of rent.

Violation of a lawful obligation under the lease, i.e. habitual late payment of rent.

Tenant is creating a nuisance and disturbing other tenants or damaging property.

Landlord or a family member intends to move into the unit.

Landlord plans to perform capital improvements which require the tenant to temporarily vacate the unit.

The unit is being used for illegal purposes.

Tenant refuses to renew a rental agreement that is materially the same. (Note that tenants are not obligated to sign an agreement that is materially different than the one they currently have, no matter how old the original agreement is.)

Tenant refuses the landlord access to the rental unit, as required by state or local law.

Landlord seeks to sell the unit in accordance with the condominium conversion rules under the SF Subdivision Ordinance.

Unapproved subtenant is the only remaining tenant.

Landlord plans to take the building off the market for 10 years.

Landlord seeks to substantially rehabilitate or completely rebuild the unit.

Landlord plans to demolish or remove permanently the unit from the rental market. (This is often used for illegal units.)

Landlord needs to temporarily evict the tenant in order to get rid of lead paint.

I, personally, don't really like rent control. I suspect that rent control is a part of the reason SF is such an expensive city to live in. But to call rent control unconstitutional?

Tell that to some of the elderly people who have to rent, about that.

 
At 2/16/2012 8:21 PM, Blogger Benjamin said...

Rent control is bad law. So is preventing farmers in North Dakota from hauling trailers onto their property to accommodate renters.

Some laws benefit existing landlords, other laws benefit existing tenants. Both laws are bad.

 
At 2/16/2012 11:25 PM, Blogger jcarroll1948 said...

Environmentalist deprive land owners of the use of their property, all done without compensation. Unconstitutional; absolutely. Will anything be done about it? No.

 
At 2/17/2012 1:33 AM, Blogger Ron H. said...

kleht: "Tell that to some of the elderly people who have to rent, about that."

Do they have to live in SF?

 
At 2/17/2012 7:58 AM, Blogger Joe said...

I would be very surprised if the Supreme Court took this case. I am under the impression that the constitutionality of rent control laws under the 5th and 14th amendments is reasonably well settled. Additionally for the takings clause to come into effect, the government would have to be taking the entire property, not simply a portion of the revenue. (Pennell v. City of San Jose, 485 U.S. 1 (1988))
Not to say that the conservative bloc of the court couldn't be swayed to act by some strong policy arguments, I personally won't be holding my breath.

 
At 2/17/2012 9:24 AM, Blogger Methinks said...

Oh, have we a constitution still? How quaint!

 
At 2/17/2012 9:45 AM, Blogger bix1951 said...

I have thought that the general idea of due process might apply to knock out rent control where it shocks the conscience as it does when rent is less than half of the market value.
There are plenty of reasonable arguments for the unconstitutionality of rent control.
It just needs judges who are willing to rule that way.
Settled law has been reversed many times by the high court so we should not give up this quest for fairness

 
At 2/17/2012 10:41 AM, Blogger morganovich said...

i think they will use the loophole of "public use" and say that it is the private use of the renter, not government use.

rent control is a terrible law and i can think of other ways to go after it from a constitutional standpoint.

freedom of contract.

freedom of association. (if, after a contract ends you no longer want to associate with a tenant, that's your call)

etc.

 
At 2/17/2012 10:47 AM, Blogger morganovich said...

kleht-

i lived in SF for 15 years and had a number of friends and 2 girlfriends in property management.

condos are not rent controlled, not single family homes.

however, you can absolutely leave an apartment to your child so long as they have resided there and are doing so when you die or even if you just move.

in sf, you do not need to be on a lease to be a valid tenant. all they have to do is take a check from you at some point. people try to do things like this all the time. a son claims he is paying his mom's rent to help her, then, she moves, he takes the place and voila, he's a legal tenant, covered by rent control, and you can do nothing about it.

SF tenant law is totally nuts.

i would never want to be a landlord there. non payment of rent is allegedly a reason for eviction, but try it. you're lucky to get it done in 9 months. and if they can come up with some reason for it (you need to fix the radiator or the dishwasher) well, you can easily lose.

 
At 2/17/2012 2:56 PM, Blogger sethstorm said...


SF tenant law is totally nuts.

The landlords must have been quite bad to require such robust protections.

 
At 2/17/2012 3:17 PM, Blogger juandos said...

"Tell that to some of the elderly people who have to rent, about that"...

Since when are the elderly (anyone else for that matter) given a pass on the law of supply and demand?

When the government infers obviously...

 
At 2/17/2012 3:18 PM, Blogger morganovich said...

"The landlords must have been quite bad to require such robust protections."

no seth, just a minority subjected to the tyranny of majority rule and whose rights were trampled so that the majority could benefit itself.

your argument is like saying "those kurds must have been really bad guys to be treated so badly in iraq".

 
At 2/17/2012 4:30 PM, Blogger sethstorm said...


no seth, just a minority subjected to the tyranny of majority rule and whose rights were trampled so that the majority could benefit itself.

You just made my argument that much more robust by arguing against freedom by giving a disproportionate amount to the landlords while denying it to the renters.

(Yes, I've seen good renters and bad.)

 
At 2/17/2012 6:08 PM, Blogger Che is dead said...

"no seth, just a minority subjected to the tyranny of majority rule and whose rights were trampled so that the majority could benefit itself." -- morganovich

That is absolutely correct. The so called "tenants rights" advocates have managed to enact such abusive rules that many landlords would rather their property sit vacant than to surrender control of it to renters:

In San Francisco, one of the toughest places in the country to find a place to live, more than 31,000 housing units — one of every 12 — now sit vacant, according to recently released census data. That’s the highest vacancy rate in the region, and a 70 percent increase from a decade ago. ...

Koniuk, who himself lives in suburban Belmont, gave a half-interest in the building to his older son in 2007 so he could evict a tenant and move in himself. But under San Francisco’s extraordinarily pro-tenant housing laws, landlords can do this only once per building.

So while Koniuk desperately wants to move his younger son into the building’s other four-bedroom apartment, he cannot. He is exploring legal options. Robert Murphy, who has lived there for 30 years without a lease, remains, paying $525.82 a month.

Last spring, Koniuk offered Murphy $45,000 to move out. Murphy’s lawyer demanded $70,000, a sum Koniuk says he does not have. Meanwhile, the city’s Rent Board notified Koniuk that he was allowed to increase Murphy’s monthly rent this year by $2.63. -- Bay Citizen

 
At 2/17/2012 6:12 PM, Blogger Che is dead said...

You see, it turns out the Fair Housing Council of Orange County is a very special entity; there’s only a few dozen like it in the country. The council is a nonprofit charged with enforcing fair housing laws — that is, the laws that prevent landlords from discriminating against blacks or Jews or gays.

Our research indicates that these nonprofits aren’t well funded, but they do have a way to make money: they’ve been granted special legal powers to seek money from the very people they accuse of discrimination. As one attorney told us, there’s nothing to stop these agencies from effectively blackmailing landlords.

“They hold all the cards,” Bader said.

At the hearing in Los Angeles, Bader found himself before a couple of fair employment staffers. The council wasn’t even represented. The bureaucrats told Bader they had investigated and found that Bader does not discriminate… BUT the ads were still a problem.

The complaint would be dropped — if Bader paid the Orange County council $4,000 and agreed to five years of classes at $250 a class.

Bader said no — the state itself said he didn’t discriminate! But that didn’t seem to matter. Before he knew it, the state turned around and sued him for discrimination, on behalf of the council, and sought “unlimited” damages. -- OC Register

His non-discrimination ultimately cost him $44,000.

 
At 2/17/2012 6:30 PM, Blogger Che is dead said...

This comment has been removed by the author.

 
At 2/17/2012 6:32 PM, Blogger Che is dead said...

Think that rent control laws don't cost you anything because you don't live in New York or San Francisco? Think again:

Deprived of any chance of evicting tenants, the only thing the landlord can do is reduce services. So another layer of law is necessary saying that if landlords don't provide heat or make repairs, the tenant doesn't have to pay rent. Now the tenant has an interest in seeing things fall apart. One of the most common confrontations involved a rent-controlled tenant refusing admission to the repairman sent to fix the leaky sink. In the end, the tenant can just create his own violations -- a missing smoke alarm, graffiti in the halls. "Paying rent in New York is really optional," one landlord after another told me. "It's lucky more people don't know the law."

The stories from this netherworld sometimes sounded like chronicles from the Spanish Inquisition. One Chinese woman, whose property-owning family had been murdered by the Communists, had been running an apartment house in Harlem. After one tenant refused to pay rent for two years, she finally got an order of eviction. The tenant responded by firebombing her office. She took him to criminal court. The judge looked at the case and said, "This isn't a criminal case, it's a housing matter." Back they went to housing court. The housing judge overturned the eviction. For firebombing her office, the tenant got to keep his apartment. "I think I'm going back to China," she told me. "Over there they just kill you and get it over with. Here they torture you first."

[...]

Apparently misled by an overconfident legal staff, Tishman Speyer bought out Met Life for $5.4 billion and dutifully began trying to enforce luxury decontrol and evict illegal subletters. By 2009 they had shoehorned 4,000 of the 11,000 units out of rent regulations. In reporting this protracted struggle, the New York Times discovered one tenant who had amassed a valuable art collection with the savings from his below-market rent.

Then in October it all came to an end. The New York State Court of Appeals, the state's highest court, ruled that the whole decontrol effort was illegal. Back in 1993, Met Life had accepted a property tax exemption in exchange for making major renovations. Although the law is ambiguous, the Court ruled the exemption precluded the owner from taking apartments out of rent regulations. In a typical outcome, Tishman was told to refund $200 million in "illegally collected rents." At that point, Tishman threw in the towel. The biggest real estate deal in history became the biggest real estate default in history.

So the role of being exploited will fall to the mortgage holders -- among them, CALPERS (the California pension plan), the Florida state pension plan and the Church of England. But the biggest stakeholders are Fannie Mae and Freddie Mac, who are in for $2 billion. -- The American Spectator

I'm sure that "sethstorm" will be able to explain how everyone had it coming.

 
At 2/17/2012 6:40 PM, Blogger Che is dead said...

Rent control laws are all about protecting the little guy, right?

(Reuters) - Actress Faye Dunaway plans to fight a lawsuit aiming to evict her from her rent-controlled apartment in New York, her attorney said on Thursday.

Dunaway's landlord filed a complaint on August 2 seeking to evict her from the apartment on East 78th Street, alleging it is not her primary residence ...

Dunaway first signed a lease for the one-bedroom apartment in 1994, and her rent is $1,048.72 a month. In court papers, Henry Moses of 7 of 8 Realty Co. claimed Dunaway maintains a home in West Hollywood, California, where she is registered to vote and has a driver's license. -- Reuters

I hope that someone is checking to see that she has been paying income taxes in New York.

 
At 2/17/2012 7:28 PM, Blogger sethstorm said...

Che is dead (6:08 PM):
Now that's a loophole that needs to be closed so the vacancy rate can legitimately be lowered with renters.

I hope that the tenant isn't going to be forced out by landlord sabotage.

 
At 2/18/2012 10:40 AM, Blogger VangelV said...

The fact that this is being debated shows just how much economic liberty has been taken away by the progressives that dominate American politics.

 

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