In an opinion today, Chief Judge McMahon upheld a New York executive order that allowed tenants to apply their security deposits towards rent and that temporarily suspended evictions.
She ruled that the executive order did not violate the U.S. Constitution’s Takings Clause because landlords necessarily have entered into a heavily regulated area of the economy, and because the executive order was consistent with the type of ordinary ebb and flow of that regulation — as opposed to an impermissible destruction of landlords’ property investment:
Prior to the Order, millions of tenants in this state avoided ever-increasing rents, as well as the threat of immediate eviction, thanks to rules limiting a landlord’s ability to extract the maximum value from their properties. Plaintiffs knew that they operated as landlords under those rules. The Order’s temporary adjustment of those rules, which does nothing more than defer the ability of the landlord to collect (or obtain a judgment for) the full amount of the rent the tenant freely agreed to pay, does not disrupt the landlords’ investment-backed expectations.
She also rejected the plaintiffs argument under the Contracts Clause, finding that, for example, the temporary suspension of rent did not eliminate the landlords’ ultimate contract rights:
The eviction moratorium does not eliminate the suite of contractual remedies available to the Plaintiffs; it merely postpones the date on which landlords may commence summary proceedings against their tenants. The tenants are still bound to their contracts, and the landlord may obtain a judgment for unpaid rent if the tenants fail to honor their obligations. Furthermore, on August 20, this Court is sure that Plaintiffs and others similarly situated will exercise their rights to commence eviction proceedings to make up for lost time.
H/T: Adam Klasfed