Second Circuit Upholds the Constitutionality of the Rent Stabilization Law (RSL)

by | Feb 7, 2023 | Industry Updates

In widely-expected decisions issued on February 6, the U.S. Court of Appeals for the Second Circuit upheld the constitutionality of the Rent Stabilization Law (RSL) as amended by the Housing Stability and Tenant Protection Act of 2019 (HSTPA).

Surprisingly, the decisions do not seriously grapple with the substance of the plaintiffs’ arguments and, overall, are somewhat cursory. For example, while the Court pointed repeatedly to the lack of success of prior constitutional challenges to the RSL and rent control more generally, the Court mostly ignored the specific aspects of the RSL/HSTPA that prompted these challenges and were not implicated or raised in prior cases.

The general assumption (although unconfirmed) is that the plaintiffs in one or both cases will seek review from the US Supreme Court. We believe that the chances of the Supreme Court accepting the case for review are far greater than the historical 4% chance of success on such petitions, for at least the following reasons:

  • The court’s current ideological makeup;
  • The court’s keen interest in property rights cases in recent years (such as Knick, Pakdel and Cedar Point, all of which came out in property owners’ favor);
  • The court’s high-profile demonstrations that they will not hesitate to overturn precedent they believe is incorrect; and
  • Rent control initiatives arising across the country make the subject of these cases a live issue; the court may not only want to address the plaintiffs’ cases but also lay down more general guidelines concerning the permissibility (or lack thereof) of rent control programs.

Click here to read the CHIP/RSA decision. Click here to read the 74 Pinehurst decision.