First filed
RSA and CHIP had their lawsuit locked and loaded when Gov. Andrew Cuomo signed off on the rent law in June 2019. They filed just two weeks later with an argument that would become the basis of suits to follow.
The rent law violates the U.S. Constitution’s Fifth and Fourteenth Amendments, their complaint argued. Specifically, a “takings clause” in the Fifth Amendment bars governments from seizing private property without compensating owners the RSA suit argues that rent regulation, which targets one group to pay for the benefit of others, amounts to just that.
By largely restricting owners from refusing new leases, the law also violates the Fourteenth Amendment’s due process clause, the suit alleges, because the government can’t hinder property owners from keeping people off their property. Another violation of due process, the case claims, is that the law is arbitrary and irrational.
Broker fees in the city are typically about 15 percent of the annual rent, which when combined with the first month of rent and a security deposit can mean tenants must come up with a five-figure sum just to move in. For instance the broker fee for a Manhattan apartment asking the borough’s median rent of nearly $3,100 would be about $5,580.
The real estate industry, which argued that such a ban was a “death knell” for agents and brokerages, filed for a temporary injunction and sought to overturn the guidance.
The core question of the case was whether or not lawmakers and the Housing Stability and Tenant Protection Act of 2019 intended to ban the tenant-pays practice.