The US Court of Appeals for the Second Circuit Monday affirmed two consolidated cases upholding New York rent stabilization laws. In both cases, 74 Pinehurst LLC v. State of New York and Community Housing Improvement Program v. City of New York, landlords of various properties in New York sued, alleging that the state’s rent stabilization law violates the Takings Clause and the Due Process Clause of the US Constitution.

The Takings Clause of the Fifth Amendment states, “private property shall not be taken for public use, without just compensation,” and the Due Process Clause of the Fourteenth Amendment states, “nor shall any State deprive any person of life, liberty, or property, without due process of law.” The lower court dismissed the lawsuits because the plaintiffs did not state claims that have a remedy, a requirement for civil lawsuits under Federal Rules of Civil Procedure 12(b)(6).

The Second Circuit explained that the plaintiffs did not allege enough facts to constitute a physical taking because the property owners are not forced to place their properties into the regulated housing market and cited precedent that the government has the power to force a landlord to rent to tenants the landlord may not like. The due process claims fail for similar reasons, where the court stated that because the plaintiffs do not have a valid takings claim, they cannot use the broader due process claim to substitute a failed takings claim. Rather, the court must apply the constitutional provision that most closely relates to the claim at issue.

The most recent amendment to the rent stabilization law at issue in these consolidated cases is New York’s Housing Stability and Tenant Protection Act of 2019. This law was passed in response to the ongoing housing shortage in New York and placed limits on how much landlords can raise the rent for major capital and individual apartment improvements; it also prohibits landlords from raising rents above the allowable amount if one of their units is vacant.