The Supreme Court will consider on Nov. 1 whether to hear a challenge to New York’s sweeping rent control law, which gives a building’s tenants veto power over condominium conversions.

The Supreme Court announced on Oct. 28 that it will consider the petition in G-Max Management Inc. v. State of New York during its private conference at the end of this week.

According to building owners petitioning the Supreme Court, 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 violates 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.

As Justice Clarence Thomas noted in Pinehurst LLC v. New York, which the Supreme Court refused to hear earlier this year, the constitutionality of laws like the act is “an important and pressing question” that has split federal courts of appeals and ought to be dealt with in “an appropriate future case,” according to the petition filed in April.

Although the court has recently turned away other petitions challenging the constitutionality of rent control systems, “this case is based on a substantially different record, targeting only a specific set of amendments to New York’s regulatory regime, and thus provides an ideal vehicle for this Court’s review.”

Petitioners Jane Ordway and Dexter Guerrieri are the owners of an eight-unit apartment building in Brooklyn. The remaining petitioners are small businesses, each of which owns a small to mid-size apartment complex in Yonkers or New York City.

The petitioners say the act infringes on their property rights.

After spending money repairing their building, Ordway and Guerrieri wanted to take possession of two units for themselves after a tenant’s lease expired. A tenant in one of the affected units, “a successful businessman and professional athlete,” refused to leave when the lease ran out.

Ordway and Guerrieri took legal steps to reclaim the units in September 2018 but the act took effect 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.”

The petitioners say they are having difficulty turning even “a marginal profit” on their investment.

The petitioners sued in federal district court, claiming that the act amounted to 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 got into the rental market voluntarily, and that the act did not take away their ability to evict tenants in limited circumstances.

The court noted that even with the restrictions imposed by the act 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 act was created 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 repeatedly to the petitioners’ attorney, Randy Mastro of King and Spalding in New York City, and New York Solicitor General Barbara Dale Underwood but did not receive any replies by publication time.

The case comes as rent control is on the Nov. 5 ballot in California and New Jersey.

A ballot initiative in California would allow local governments to expand existing rent control laws or enact new laws. Voters in Hoboken, New Jersey, will decide if landlords may raise rents in exchange for a payment to a local affordable housing trust fund.

This article by Matthew Vadum appeared Oct. 31, 2024, in The Epoch Times.