Here's the latest in a case we've been following, which asks whether a local ordinance which allowed non-paying tenants to remain in the lessor's property is a physical taking, or merely the regulation of the lessor/lessee relationship under the Yee theory, which posits that once an owner voluntarily rents property to a tenant, the government then allowing that tenant to remain rent free isn't facilitating an unauthorized physical occupation, but rather is merely a regulation of the existing lessor/lessee relationship. In short, you let 'em in property owner, so suck it up.
The property owner has now filed this cert petition challenging that rationale.
As we've noted previously, some courts' reliance on Yee in this and similar situations is a misreading of that decision. Besides that, these courts essentially upend the longstanding common law of property governing the owner/tenant relationship, and the contractual nature of that relationship whereby the owner mostly surrenders the right to exclude to a tenant, but only on certain conditions usually related to time (the term of the tenancy), and the tenant paying rent. Contrary to these courts' rationale, the voluntary nature of this relationship is a two-way street. If these conditions, voluntarily agreed to by the tenant, are violated, the tenant's right to exclude ends and the lessor's reverter kicks in. Eviction moratoria and rent control regulations that permit tenants to remain despite violation of these contractual provisions upend the common law.
Here's the Question Presented:
In March 2020, the City of Los Angeles adopted one of the most onerous eviction moratoria in the country, stripping property owners like Petitioners of their right to exclude nonpaying tenants. The City pressed private property into public service, foisting the cost of its coronavirus response onto housing providers to avoid expensive and less expedient—but constitutional—means to help those in need. In doing so, the City in effect imposed and transferred to defaulting tenants an exclusive easement in the private property of others without paying for it. By August 2021, when Petitioners sued the City seeking just compensation for that physical taking, back rents owed by their unremovable tenants had ballooned to over $20 million. The moratorium concluded in 2024.
Relying on a mobile home rent control case from this Court, Yee v. City of Escondido, the Ninth Circuit affirmed dismissal of Petitioners’ complaint because they “voluntarily opened” their properties to tenants in the first instance and thus could never state a physical takings claim against the City’s law, drastic as it was. The Federal and Eighth Circuits disagree. In Darby Development Co. v. United States and Heights Apartments, LLC v. Walz, both courts held Yee inapposite and validated identical claims because moratoria like the City’s deprive owners of the right to exclude akin to Cedar Point Nursery v. Hassid.
The question presented is:
Whether an eviction moratorium depriving property owners of the fundamental right to exclude nonpaying tenants effects a physical taking.
This is a festering issue in the lower courts, as the petition points out.
Stay tuned.
Petition for a Writ of Certiorari, GHP Management Corp. v. City of Los Angeles, No. 24-___ (U.S. Oct. 16,...
