During the pandemic, cities, states, and the federal government rushed to stop landlords from evicting tenants, even for nonpayment of rent. These efforts varied in severity, with some—like Washington State—barring evictions under almost all circumstances for well over a year. The many legal challenges to these eviction bans mostly fell flat. Last month, the Supreme Court declined to hear one such case challenging the Washington State eviction ban as an unconstitutional taking. With the pandemic behind us, the Supreme Court may have thought the issue was water under the bridge. But the regulatory appetite for restricting evictions is only growing. And bad precedent from COVID-era eviction bans will continue to insulate overzealous regulators from constitutional challenges until the Supreme Court takes up the issue.
Laws restricting landlords’ control over their property have sprung up across the country in recent years. In Seattle, for example, landlords must survive a regulatory labyrinth simply to oust a tenant who fails to pay rent. The city bars eviction during the winter (December through March), and, for parents of school-age children and school district employees, it bars eviction during the school year. During the rest of the year, landlords still must demonstrate to the city’s satisfaction that they have a “just cause” for evicting a tenant, a regulatory requirement now spreading around the country.
More and more cities and states are not only stripping landlords of the right to evict—they are also stripping them of the right to choose their tenants at the outset. Many governments are adopting regulations that forbid landlords from denying tenancy to someone because of their criminal background, for instance. Seattle has adopted an ordinance that requires landlords to let tenants invite their pick of roommates or family members to reside at the rental property, whether the landlord likes it or not. Another Seattle original, called the first-in-time ordinance, requires landlords to rent to the first person who applies for a unit, so long as they check out on paper.
These laws squeeze landlords at both ends—they limit landlord control over who comes and whether they go. In short, they infringe upon the constitutional right which the Supreme Court has repeatedly referred to as the cornerstone of private property: “the right to exclude others.” As the high Court put it recently, the right to exclude is “one of the most essential sticks in the bundle of rights that are commonly characterized as property.” In fact, this “stick” in the property bundle is so fundamental that it is the only stick that governments cannot take away without causing a per se taking that requires compensation. Unless you are a landlord.
Why are landlords getting the short end of this essential stick? Why have the Takings Clause challenges to COVID eviction bans and similar laws that prevent landlords from excluding unwanted tenants failed so often?
The Takings Clause requires that the government compensate property owners when it takes their property, by actual appropriation or by overregulation. Under takings case law, if the government authorizes an uninvited third party to come onto your land, then the government has committed a per se taking. But some courts have used a 1992 Supreme Court takings case called Yee v. City of Escondido to carve out an exception for rental housing.
Yee involved a Takings Clause challenge to a rent-control ordinance. The ordinance limited how much rent mobile-home-park owners could charge for the space beneath tenant mobile homes. The plaintiffs argued that this violated their right to exclude because it granted tenants a right to occupy the property at a below-market rent that the property owners would not otherwise put up with. The Supreme Court held that the right to exclude was the wrong approach because the rent-control law regulated the use of the land, not the right to invite or remove tenants of the landlord’s choosing.
Then the Yee Court uttered a line whose distorted echo has vexed landlords in the decades since: “Because they voluntarily open their property to occupation by others, petitioners cannot assert a per se right to compensation based on their inability to exclude particular individuals.” Many courts, state and federal, have read this sentence to mean that the per se test that usually applies when a regulation authorizes third parties to intrude upon property does not apply at all once a landlord has invited a tenant to occupy their property.
But Yee’s modest holding did not sweep away landlords’ property rights. In a footnote, the Court emphasized that it was not addressing a situation where a law limits a landlord’s ability “to select their incoming tenants.” It was just holding that capping rent “does not compel a landowner to suffer the physical occupation of his property.” Indeed, the Court, perhaps anticipating the aggressive mischaracterizations to come, insisted that it would be a “different case” if the law “compel[led] a landowner over objection to rent his property or to refrain in perpetuity from terminating a tenancy.” The Court, moreover, has reiterated, both before and after Yee, that “a landlord’s ability to rent his property may not be conditioned on his forfeiting the right to compensation for a physical occupation.” Yet all the courts that have addressed the issue, save the Eighth Circuit, have expanded Yee into a total exception to the per se takings test for landlords.
This misreading of Yee not only conflicts with takings case law, but it also defies longstanding common law property principles. The common law has long held that a property owner can withdraw consent to occupy his property. William Blackstone, in his Commentaries on the Laws of England, says that lessees who “hold over and continue in possession of the land or tenements [] are now adjudged to be trespassers,” just as much as an intruder who did not enjoy consent in the first place.
This principle is central to the business model of the rental market—landlords cannot operate if they cannot rely on eviction to enforce the terms of a lease. Both parties agree on the terms and conditions under which the tenant can continue to possess the property. When the tenant violates or exceeds those terms, the existence of prior consent does not somehow reduce the landlord’s right to exclude them. If anything, the trespass is even clearer than a situation where a trespasser and property owner had no prior relationship, because the scope of the consent is embodied in an express legal instrument.
The Supreme Court recently rejected an opportunity to address landlords’ right to exclude in Gonzales v. Inslee, a Takings Clause challenge to Washington State’s eviction ban. The Court’s denial of that petition last month will allow the precedent that spread during the pandemic to continue to infect takings law.
The Supreme Court has at least hinted that it does not share lower courts’ reading of Yee. In Alabama Association of Realtors v. Department of Health and Human Services, the Court addressed whether the Centers for Disease Control and Prevention enjoyed statutory authority to adopt a rule limiting evictions, but the Court also offered this nugget: “[P]reventing [landlords] from evicting tenants who breach their leases intrudes on one of the most fundamental elements of ownership—the right to exclude.” Thus, if the Court takes up the question of whether landlords give up the right to exclude whenever they welcome a new tenant, they are not likely to accept lower courts’ creative retelling of Yee.
The Court’s denial of the petition in Gonzales is a missed opportunity to address a problem that will only grow as laws limiting a landlord’s right to exclude spread. The pandemic may be over, but the precedent shielding such laws lingers. Only the Supreme Court holds the vaccine. It should snatch up its next chance to hold that property owners do not abandon their property rights when they open the door to renters.
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