Landlords challenge demands for records under NY rent control law

MANHATTAN (CN) — A New York landlord group urged a federal appeals panel on Tuesday morning to find unconstitutional recent amendments to New York’s Emergency Tenant Protection Act that allows any municipality in the Empire State to declare a housing emergency under certain circumstances and opt in to the state’s emergency rent stabilization program, which triggers a rental vacancy study that the landlords claim subjects them to warrantless administrative searches.

In March 2024, the group of Hudson Valley-based property owners brought an action against the state of New York, the New York State Division of Housing and Community Renewal, the village of Nyack, and the city of Poughkeepsie, seeking a declaratory judgment holding that portions of the rent control law that imposes a $500 penalty if they didn’t provide extensive rental records were facially unconstitutional in violation of the Fourth and 14th Amendments.

New York’s rent control law regulates more than 1 million apartments in the state, including nearly half the rental stock in New York City. The Emergency Tenant Protection Act is designed to address a housing emergency where there is a less than 5% apartment vacancy rate in a given municipality; if the vacancy study finds that there is a less than 5% vacancy rate, the municipality can then declare an emergency and enact a local law adopting the emergency rent stabilization measures, including regulated rent and mandatory lease renewals.

Non-responses to the rental study are presumed to have zero vacancies under the Emergency Tenant Protection Act.

The landlords claim the amendments to the Emergency Tenant Protection Act requiring them to turn over three years’ worth of business records to municipal governments subject landlords to warrantless administrative searches, are unnecessarily overreaching, and ask for information unrelated to determining current vacancies.

“Therefore, summarily deeming a few non-responding landlords as having [zero] vacancies or even deeming one non-responding landlord as such can subject an entire community to an extremely consequential regulatory watershed,” they wrote in an appeals brief.

The three-judge panel — composed of U.S. Circuit Judges Joseph Bianco, Pierre N. Leval, and John Walker — signaled during oral arguments that it may be inclined to side with the lower judge in the Northern District of New York who ruled against the landlord group, finding that if they believe that the vacancy rate triggering the emergency control measure was incorrectly calculated, the landlords had an opportunity for a post-deprivation hearing and were also free to challenge such a calculation in an Article 78 proceeding.

“Under Article 78, you can challenge something that’s arbitrary, unreasonable — you can even challenge the constitutionality as applied,” Bianco quickly noted at the start of oral arguments. “All those potential challenges are available, and I don’t even think you have to wait for the fine; I think you could bring Article 78 as soon as the demand for records is made.”

“You can argue it’s unreasonable: the records being sought; it’s beyond the scope that would be necessary for them to regulate under the statute,” the Trump appointee said. “There’s all sorts of arguments that could be made — what other procedure do you want?”Leval, a Bill Clinton appointee, concurred with the availability of an Article 78 remedy for provisions the landlords deem unconstitutional: “As soon as they ask for records, you can go into court.”

The state of New York meanwhile urged the panel to affirm the lower court’s dismissal of the constitutionality claims for lack of standing.

“The facial constitutionality of this legislative scheme is especially apparent in light of plaintiffs-appellants’ lack of any significant privacy interest in the records and the statutory protections that limit the potential encroachment on any Fourth Amendment rights that may exist,” the New York State Office of the Attorney General wrote in an appellee filing.

The appeal panel did not immediately rule on the appeal on Tuesday morning.

The Fourth Amendment requires law enforcement to have probable cause and particularity when searching for suspects. The landlords argue the statute offends the Fourth Amendment because it authorizes warrantless administrative searches without any opportunity for pre-compliance review.

The Second Circuit panel expressed hesitance on Tuesday at the landlord’s comparison to the Supreme Court’s holding in City of Los Angeles v. Patel , in which Los Angeles hoteliers prevailed over a city ordinance requiring them to keep guest records for 90 days under the Fourth Amendment as an unlawful invasion of their private business records.

“It’s a very different case, Patel ,” Leval said. “It wasn’t a closely regulated industry. It was just motels generally, and the Supreme Court agreed with the lower court and the district court there it could be used to just harass motel owners.”

Leval said New York’s Emergency Tenant Protection Act was different because rental housing is a closely regulated industry and a matter of public interest. “They’re not going in and searching on to premises; they’re asking you to produce them,” he said. “And apparently the administration of this procedure is quite loose, so you’d have plenty time to react by going to court.”

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