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PROPERTY RIGHTS.
Term Paper ID:19191
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Court rulings & regulations dealing with private property, rent control, economic vs. non-economic rights, mobile homes, case studies, evictions, life estates, more.... More...
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Paper Abstract:
Court rulings & regulations dealing with private property, rent control, economic vs. non-economic rights, mobile homes, case studies, evictions, life estates, more.
Paper Introduction:
PROPERTY RIGHTS
The protection of private property rights is guaranteed by the Fifth Amendment to the United States Constitution: "No person shall be . . . deprived of . . . property, without due process of law; nor shall private property be taken for public use, without just compensation."1 The Fifth Amendment is made applicable to the states by the due process clause of the Fourteenth Amendment. Article I, section 19 of the California Constitution similarly provides that compensation is required when property is "taken or damaged."2
Since the demise of the Lochner3 era, property rights have received considerably less constitutional protection than have personal liberty rights, such as freedom of speech and free exercise of religion, which receive preferential treatment
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This stress on the importance of the "right to exclude" isnoteworthy because the Court could have reached the same result solely byreference to the infringement of the plaintiff's economic interests.Instead, the Court's approach appeared to apply more stringent scrutiny tothe regulation's infringement of non-economic property rights.9 This case is important not only because the Court emphasized theimportance of non-economic property rights, but also because it used theword "fundamental" in that context. However, if it is apparentfrom the face of the provisions that their effect will necessarily be tolower rents more than could reasonably be considered to be required for themeasure's stated purpose, they are unconstitutionally confiscatory."63 In Yee, it is the combined effect of the application of the ordinanceand the state statute which amounts to a compensable "taking" within theFifth and Fourteenth Amendments to the United States Constitution, andarticle I, section 19 of the California. Note, Are landlords being taken by the good cause eviction requirement?, 62 S. Thatrenewed lease is an interest in property, just like the original lease.Its transfer deprives the landlord of the immediate right to possessionthat was reserved in the original conveyance. 1765 (1949). These cases may have a direct bearing onlandlords' rights to evict tenants. 61157 Cal. at 1 71. 3 483 U.S. Rptr. It isonly when the takings side and the benefit side of the government actionare blurred together that the familiar distinction between physicalinvasion and mere regulation looks plausible.36 The gap between market and regulated rents also has an effect uponboth the long-term operation of the rental housing supply, and upon theoperation of the political process. Rev. 925 (1989) (authored by Karl Manheim).----------------------- 9 Rptr. Ct. 48Id. 3d 72, 191 Cal. 27Note, Rent control and the theory of efficient regulation, 54Brooklyn L. Rev. 1 67 (1987).1 . Freilich, Benjamin M. Cal. Ct. The courts have been more likely to find a taking ifthe application of the regulation results in a taking of the plaintiff'sproperty. 11 7, 94 L. As we read theSupreme Court's pronouncements, this oversteps the boundaries of mereregulation and shades into permanent occupation of the property for whichcompensation is due.56 In 198 , the City of Carpinteria enacted an ordinance controlling theamount of rent a mobile home park owner could charge a tenant for occupancyof a space. Rev. 321 (1988) (authored by Laura L. Moreover, the landlord'sresidual rights in the property are largely at the mercy of his tenants; heloses practically all right to decide who occupies the property, and onwhat terms. 67916 F.2d 5 8 (9th Cir. If they aredenied the right to cash out, tenants can enjoy the benefits of rent-control only so long as they remain tenants, not beyond. 55Id. 2Id. If a tenant moves, the tenant alone decides who will be hissuccessor by selecting the buyer for his rental unit; the landlord has nomeaningful say as to who will live on the property, now or in the future.52 The California Civil Code ?798.73 provides that the "management shallnot require the removal of a mobile home from the park in the event of itssale to a third party during the term of the homeowner's rental agreement."Tenants typically sell their homes to buyers who then succeed them astenants of the mobile home park.53 Property rights in a physical thing have been described as the rights"to possess, use and dispose of it." Interference with the property owner'srights clearly constitutes a taking. But on several occasions it has refused to hear challenges toeviction laws.29 Suggesting a new order, some recent cases have found landuse regulations unconstitutional. L. For example, thecontract will specify duration, renewal options, assignability, and theduties on each side. Economists refer to mobile homes and mobile home park spacesas complementary goods. These taxes would mirror the effects of morefamiliar rent control statutes to different degrees, but surely no onewould have expected these taxes to be struck down as surreptitioustakings.38 The rent control statute enabled park tenants, who owned the mobilehomes, to sell their homes and locations and enjoy the capitalized value ofthe regulated rents.39 The state intervention that transforms private leases by regulatingrents and evictions amounts to a taking for a public purpose, thereforetriggering the just compensation requirement of eminent domain.4 An expansive view of physical occupancy was demonstrated in Seawallv. 4Note, The constitutionality of rent control restrictions on propertyowners' dominion interests, 1 Harv. A lease is oneof the limited estates that can be carved out of the fee simple, and it isan ordinary property interest. Ct. Royster and Rory SnowArrow Fausett).11. 849, 857 (1988), aff'd, 42Cal. 849, 857 (1988), aff'd, 42 Cal. However, opinions in casesoutside the rent control context indicate that the courts in Gregory andHall are not alone in upholding the importance of the owner's right tocontrol the use of her property. At one level, these two features seem to distinguishrent control from the paradigmatic taking of land for use as a publicschool, where the state both keeps the property and pays the compensationitself.19 Most recent challenges to rent control schemes have not focused onthe economic impact of rent ceilings. The coerced renewal of alease under the rent control statutes is hardly voluntary, but it is mostsurely a transfer from landlord to tenant. Heldt). 62Yee v. L. The court explained that: the ordinance "appropriate[d] an owner's right to sell his property to persons of his choice" and "thus extinguish[ed] a fundamental attribute of ownership,' in violation of federal and state constitutions."22 In Hall v. 2d 332 (1979). 876 (1991).2. Epstein). Lipsker and Robecca L. 29Id. The Court held that the government's action wasan unconstitutional taking, stating that the "right to exclude," souniversally held to be a fundamental element of the property right, fallswithin the category of interests that the Government cannot take withoutcompensation. at 1279. at 1 2. 56Id. In the world without rent control, the partiesregulate some of these questions by express agreement; others are regulatedby the set of default provisions created by the law. 16 Id. Peppard v. Rev. 741 (1988) (authored by Richard A. 36Id. City of Escondido, 224 Cal. Epstein).15. The critical question is whether such a transfer can bejustified by a rational governmental purpose, i.e., are the controlledrents fair and reasonable. When combined with theCalifornia Mobile home Residency Law, which provides that a park owner iscompelled to accept as a new tenant a person who purchases a mobile homefrom an existing tenant, this constitutes a taking of the mobile home spaceand does not allow the mobile home park operators a reasonable return ontheir investment. L. Second, the courts in Hall, Gregory, and several cases outsidethe rent control context have stressed the importance of not only the rightto exclude, but also the right to sell and transfer and the right tocontrol generally. In the Casella v. The new emphasis on non-economic property rights was apparent in the1979 case Kaiser Aetna v. v.City of Oceanside61, the court concluded the ordinance there was rationallybased. at 1 1. 22 Note, The constitutionality of rent control restrictions onproperty owners' dominion interests, 1 Harv. L. Similarly, in Ross v. L. The voluntary lease is atransfer of property from landlord to tenant. . 164, 1 S. A rent control statute is in part aform of price control, and like all price controls, it results in asystematic gap between the large quantity of goods demanded (because theprice is low) and the small quantity of goods supplied (for the samereason). City of Morgan Hill, 23 Cal. Rptr. 24Id. The Court nonetheless awarded compensation for thetaking because the government had physically occupied the premises anddisplaced the owners.47 An estate for life is an estate which cannot last longer than thelife of some person and is not terminable at any fixed time or at the willof the conveyor. 383, 62 L. 45Id. The state does not retain possession of the leaseholdterm for its own use through rent control, but directs by ordinance thatthe tenant use it for his own enjoyment. Coupled with other recent cases,these developments may signal a change in judicial acceptance of evictioncontrols. 551 (1991).Law Reviews7. Rev. at 1 69. L. City of San Jose, 1 8 S. Santa Barbara which held a mobile home rent controlordinance to be a taking by using similar reasoning.42 The Hall court placed great importance on the tenants' ability tosell because the ordinance operated in a way that changed the fundamentalrelationship between the parties. In recent terms, theCourt affirmed decisions of the California Supreme Court upholding rentcontrol. The effect of the ordinance was to givethe landlord and tenant "complementary estates in the same land." Thelandlord lost a fundamental aspect of ownership--the right to control whowould occupy the unit and on what terms. 59Id. 633, 699 (1989) (authored by Robert H. The Court has yet to hold that the "right to exclude," orany other property right, is a fundamental right, referring to it insteadas a fundamental element or component of the generalized property right.Nevertheless, in view of the importance the Court appears to be placing onthe rights of property owners generally, its repeated use of a word thatcarries such powerful connotations may indicate a renewed willingness toincrease the protection given property rights.1 MOBILE HOMES Mobile homes have unique problems with respect to rent controlordinances. The subject has remained controversial,however, as housing shortages have persisted well into the post-war periodand as more and more cities have adopted rent control ordinances.5 This growing judicial scrutiny of rent control schemes parallels abroader trend in constitutional law towards heightened protection of whatsome commentators have called "dominion interests": property interestspremised on the right to control the use of one's property.6 When evaluating a takings claim, courts consider several factors,including the economic impact of the regulation, the interference withreasonable investment-backed expectations, and the character of theregulation, in particular whether it "can be characterized as a physicalinvasion by government."7 It is usually easier for the courts to find ataking when the property has been physically invaded by the government.The courts are likely not to find a taking when it is a regulatory taking.A regulation must achieve a legitimate governmental purpose, and the courtsusually defer to the legislation as to whether or not the regulationaccomplishes that. at 752-753. Lipsker and Robecca L. City of Santa Barbara, 833 F.2d 127 (9th Cir.) 1987.3. 3d, 274 Cal. 4ONote, Commentary on rent control and the theory of efficientregulation, 54 Brooklyn L. City of Rocklin, 938 F.2d 951, 958 (9thCir.) 1991. 38,Note, Just compensation and just politics, 22 Conn. Whenever a restriction of a right orinterest is deemed "fundamental," such restriction generally receivesheightened scrutiny. Rev. 1 67 (1987). App. Itappears that these three cases can be reconciled by the absence or presenceof these variables. at 1 2. 82 (N.D. Rev. at 93 . Note, Rent control and the theory of efficient regulation,54 Brooklyn L. City of San Jose, 1 8 S. City of Carpinteria, 278 Cal. Thus, there is a "taking ofprivate property."18 Rent control statutes differ from the ordinary takings of propertyfor two reasons. Florida Power Corp.,31 the Courtquestioned, but did not decide, whether a utility pole owner could berequired "over objection, to enter into, renew, or refrain fromterminating" pole attachment leases. 64Id. United States.8 In Kaiser Aetna, the governmentclaimed a right of public access to a private marina constructed by theplaintiff, a right which would have diminished substantially the value ofthe plaintiff's property. 44Id. 69Note, The constitutionality of rent control restrictions onproperty owners' dominion interests, 1 Harv. 25Id. For example, if a governmental restriction of free speech rights issupported by a compelling interest, a person whose speech has beenrestricted has no cause of action against the government. L. For example, in Kimball Laundry Co. 46338 U.S. The court citedthe decision in Hall v. 47 (1983). In Gregory v.City of San Juan Capistrano,21 a California appellate court invalidated acity ordinance giving the residents of a mobile home park first right ofrefusal to purchase the park. Rev. at 1 73. For instance, physical occupationeffectively destroys each of these rights because the owner has no right topossess the occupied space himself, and has no power to exclude theoccupier from possession and use of the space. at 1277. Ed. at 338. UnitedStates,46 the government took a lease for years but did not have the rightto sell this interest. 1 Id. 143 (199 ) (authored by John E. 23Id. The Supreme Court is moreconcerned with the fact that permanent, physical occupations destroy thefundamental rights associated with property ownership, namely, the rights"to possess, use, and dispose of it."45 Second, takings have been found despite the fact that the takeninterest was not alienable. 68Sierra Lake Reserve v. Ct. Several plaintiff/property owners in Californiacourts have omitted the allegation that the inadequacy of rental paymentsconstitutes a taking, perhaps because they believed that receipt of rentalpayments, even though inadequate, would defeat their argument that a leaseof unlimited duration was a taking if they were compensated. Rptr. City of Escondido, 224 Cal. 8444 U.S. App. Rptr. 5Id. City of Rocklin, 938 F.2d 951, (9th Cir.) 1991.6. City of Santa Barbara, 833 F.2d at 1273. 3d 365, 721 P.2d 1111, 228 Cal. City of Santa Barbara, the Court of Appeals for the NinthCircuit reviewed a rent control ordinance that limited rents in mobile homeparks, restricted the park owner's ability to evict tenants or to requirethem to remove their mobile homes from the park upon sale, and, in effect,gave the tenant a lease of unlimited duration. L. Ct. 6 Id. Casella v. City of San Jose, leaves manyquestions unresolved, virtually guaranteeing future litigation.34 The statute in Hall is a manifest constitutional travesty. 35Note, Rent control and the theory of efficient regulation, 54Brooklyn L. The California Supreme Court noted the requirement that rent controlsmust provide landlords a "just and reasonable return on their property" wasmade in reference to a facial challenge to a regulation and concerned thelegitimate exercise of local police power in enacting the regulation andnot as a constitutional standard for the application of the regulation.65On the other hand, the California Court of Appeals held that a "reasonablereturn on fair market value" standard is not constitutionally required fora rent control ordinance. Ct. Rptr. 18Id. The New York Court of Appealsfound that the ordinance effectively compels surrender of the right toexclusive possession, and thereby constitutes, on its face, a compensablephysical taking of private property for a public purpose. City of Carpinteria, 278 Cal. Beforethe imposition of the ordinance, the market value of the landlord'sinterest reflected the potential appreciation in the value of the plotafter expiration of the lease. Rev. 1223, 1125 (1989) (authored by W. New York, 198 U.S. Rptr. Rent increases may then be allowed upon a change inownership of the apartment unit, upon the completion of certain necessaryimprovements, upon some formula that reflects the increasing costs ofmaintenance and repair, upon some general rule that is tied to the consumerprice index or any other neutral yardstick, or even upon proof of tenant orlandlord hardship.15 In determining whether a taking has actually occurred, the eminent domain clause raises three questions explicitly, and a fourth by necessary implication: first, has private property been taken; second, has that taking been for public use; third, has just compensation been provided for the property so taken; and last, is that taking justified under the police power. As long as it can or may continuethroughout a life, it is a life estate.48 A life estate can be created subject to special limitations orconditions imposed upon the tenant. 33655 F. 39Id. Instead,plaintiffs have focused on non-economic property rights. 37Id. Tenants are notimmortal; nor are they immune to the normal familial and economic pressuresthat occasion vacancies even in rent controlled housing. Yet by the same token, the "reasonable" rate of return in rentcontrol cases is designed not to provide full compensation to the landlord,even when the full package of side benefits is taken into account. It is undisputed that economic controls onthe mobile home housing market allow tenant mobile home owners to reap aneconomic benefit as a result of rent control.13RENT CONTROL Rent control statutes come in all types, shapes and sizes, but everyrent control statute has only one raison d'etre--to insure that thelandlord's rent is kept below the fair market rental of the property.14 Insome instances the law pegs the allowable rent to historic rents for theunit at some base time. Note, Taxation innovations: enhanced sales tax incentive programs, 22 Urb. 2ONote, The constitutionality of rent control restrictions onproperty owners' dominion interests, 1 Harv. In the absence of such a contention, we assume the rents provided for by the ordinance are fair. City of Santa Barbara dealt with a rent-control ordinancewhich gave tenants the right to "leases of unlimited duration." Applied tomobile home parks, the ordinance required that park space leases beterminable at will by the tenants, but only for cause by the park operator. Ct. Note, Control of the reservation environment: tribal primacy, federal delegation, and the limits of state intrusion, 64 Wash.L.Rev. Dennis Reating).9. In Oceanside Mobilehome Park Owners' Assn. Rev. 321, 336 (1988) (authored by Laura L.Westray). In the typical casethey do so by compelling the landlord, usually in the context of a leaserenewal, to convey an additional term of years for the benefit of thetenant, at a price determined by the state, typically through a specificadministrative board or housing court established for the purpose. Following the Supreme Court's lead, most stateand lower federal courts have sustained rent and eviction control laws.28 Now, after a forty-year quiescence, the Supreme Court has partiallyreentered the fray, although its several pronouncements have left thewaters unsettled for the future of eviction laws. DennisReating). 3141, 97 L. 633 (1989) (authored by Robert H. 1, 69 S. Thus, rent controlordinances must do more than simply allow plaintiff to pass through certaincosts; they must ensure that plaintiff will receive a reasonable return onthose expenditures.68 Damages were available under the civil rights laws only when thegovernment violates a constitutional right, not when it merely restrictsthe exercise of that right through a legitimate exercise of governmentalpower. 581 (1989) (authored by Judith V. Cal. Gates67 statedthat every dollar the landlord puts into the property by way of capitalimprovements constitutes an investment in the property for which a "fairand reasonable" return must be allowed. The lease differs from the fee simple inthat it is always created by grant or devise, and never acquired by initialor adverse possession. In Hall v. City of Morgan Hill, there was no inference of aleasehold in perpetuity, as there was in Hall v. 7Id. at 789. The term carries particularly strong historicalconnotations in the context of property rights, where it is reminiscent ofthe Lochner era. Supreme Court held that compensation is requiredfor losses incurred while an invalid regulation was in effect, where thelaw prior to that time only allowed for invalidation of the ordinance.7 In light of the Supreme Court's holding that damages are recoverablefor an invalid regulation, that a right to property is a fundamental right,and the trend toward finding that non-economic rights to propertyovershadow economic ones, rent control ordinances with respect to mobilehome park operators constituting a taking are unconstitutional. Kieler and Kevin C. Rptr. Ed. 551, 553 (1991). at 1 8 . 3d, 274 Cal. 45, 25 S. 26Pennell v. at 1 79. Thisassures that the complementary good effect will be substantially limited tothose mobile homes currently occupying rent-controlled spaces.12 An inevitable part of the unique relationship between a mobile homepark owner and his or her tenant is that the park owner has an equityinterest in the park land; the tenant in his or her coach, therebyresulting in a divided ownership. at 136 . The court found there was no taking based on thefollowing reasoning: The owners have never attempted to obtain Escondido's approval for what they consider to be a "fair" rent. City of New York.41 There, plaintiffs challenged a New York Cityordinance which established a five year moratorium on conversion ordemolition of single room occupancy units and compelled rehabilitation andrental of all units at controlled rates. The tenant, on the other hand,gained an important interest in the property.43 By contrast, however, rent control ordinances without this alienationability did not alter the fundamental landlord and tenant relationship.The court noted that "if [tenants] are denied the right to cash out,tenants can enjoy the benefits of rent control only so long as they remaintenants, not beyond."44 This "right to sell" distinction that the court makes is troublingfor several reasons. This was not considered to be a controllingfactor. Hayes and Paul D. He may chose to occupy it himself; or to allow a friend orrelative to stay there; or to keep it vacant; or make improvements in thehope of raising the rent to the extent allowed by law; or to rent it to anew tenant, presumably making the selection on the basis of factors thatwill maximize his total return from the property. J. at 318. Renters of mobile home parks own themost costly part of their housing, which they have voluntarily placed onthe property of another party. L.J. When regulations of property arechallenged under the due process clause, courts generally defer tolegislatures, finding such regulations invalid uses of the police poweronly if they are not rationally related to a legitimate public purpose.4 The Supreme Court first upheld rent control decades ago as atemporary, emergency response to the housing shortages and rent increasesthat followed the two world wars. The court found that theordinance could constitute a taking because it caused "the landlord [to]lose forever a fundamental aspect of fee simple ownership: the right tocontrol who will occupy his property and on what terms"23 The decisions in Gregory and Hall are unique in that they held rentcontrol regulations unconstitutional because of the interference with theabstract right to control, without inquiring into what specific non-economic interests the regulations frustrated. There is no mention of the police power at all in the Constitution. After the ordinance, the landlord was ineffect demoted to a secured creditor whose rate of return, while variable,was strictly limited by the percentage increases allowable under theordinance. 3d 43, 28 Cal. The ordinance was amended and modified many times, but itsprovision as to the maximum rent chargeable remained basically unchanged.57 The maximum allowable rent allowed under the ordinance is to becalculated annually, and is to be the sum of the rent in effect on July 1,1979, increased by 75% of the ratio of change in the Consumer Price Index.In addition, the ordinance provides that a park owner may apply foradditional rent increases in order to ensure that it receives a just andreasonable return on its investment.58 There are certain variables that affect whether a rent controlordinance is determined to be a "taking." In the City of Carpinteria, therewas no vacancy decontrol. at 1276. Rptr. Thesecases differ from challenges to rent ceilings in that the rights assertedare not purely economic, but instead include the right to use and possess,the right to dispose, and the right to exclude.2 There has been a trend toward heightened protection of particular non-economic property rights, evidenced by two California cases. L. 1987). The tenant, for his part,must make difficult choices: if he wants the benefits of the rent controlordinance, he must stay put. 47 Note, Are landlords being taken by the good cause evictionrequirement?, 62 S. The leasehold interest is therefore born of thecontract and conveyance that gives shape to its terms. 3148 U.S. 49Id. App. 9Note, The constitutionality of rent control restrictions on propertyowners' dominion interests, 1 Harv. Rev. 285 (199 ) (authored by Saul Levmore).12. 195 (1988) (authored by Ross B. TheSupreme Court's denial of certiorari in Hall, coupled with its failure toaddress the eviction law in Pennell v. 3d 887, 2 4 Cal. 57Peppard v. at 1353. 3d 43, 28 Cal. 52Id. The essence of a life estate is that it is an indefiniteperiod which may last for life. 825, 1 7 S. 199 ). Rev. at 774. Rev. 925, 929 (1989) (authored by Karl Manheim). App. Accordingly, a life estate may existdespite the fact that the tenant must pay rent.49 Hall v. 937(19 5), which stated the analysis for determining whether a regulation wasunconstitutional: There must be a nexus between legitimate governmentalpurposes and chosen legislative means. Untilrecently, the Court has been disinclined to reconsider the validity oftenant protection measures. Rev. at 785. All deprivations of property rights should be subject to thesame standards of scrutiny. First, the Hall court, focusing on theinfringement of the right to exclude, expanded the concept of "physicalinvasion" to include a regulation indistinguishable from other evictioncontrols. The rent, like theprice in a contract of sale, is one term which is almost always set byagreement, without which an executory contract for a future lease is tooindefinite to be enforced. at 741. On the critical question of compensation,small takings may bring with them collateral benefits that leave thelandowner better off than before, so that explicit cash compensation is notrequired. 51Hall v. In Yee v. Assuming a constant supply,this in turn will result in an increase in the price of popcorn poppers.The "complementary good" effect is basic to a free market economy.11 It is thus inevitable that where government acts to reduce (or atleast limit increases in) the rental prices charged for mobile home spaces,the price of mobile homes will increase. Challenges to regulations shouldbe considered in light of the facts and circumstances of each case, notjust the statute or ordinance in a vacuum.64 The manner in which anordinance interacts with other laws, i.e., its application, may render thatordinance unconstitutional. City ofBerkeley,33 a district court ruled that a commercial rent control law thatprecluded eviction for owner occupancy violated the takings clause. If he wants to leave, he must give up a goodthing.55 In short, under a rent control scheme where the tenant is not allowedto monetize his rights, benefits and burdens are shifted somewhat betweenlandlord and tenant, but neither gets the full bundle of sticks. Supp. 1 (1991).4. PROPERTY RIGHTS The protection of private property rights is guaranteed by the FifthAmendment to the United States Constitution: "No person shall be . 58Id. 63Id. City of Escondido, plaintiffs' complaints never allegethe Escondido ordinance is irrational because it denies them fair andreasonable rents. Consistent with their police power,local governments may adopt rent control ordinances where an unregulatedmarket for rental housing allows landlords to charge excessive rents.59 California courts have held that rent control legislation will beheld to be constitutionally valid as a proper exercise of the police powersso long as it is reasonably calculated to eliminate excessive rents and atthe same time provide landlords with a just and reasonable return on theirproperty.6 No one can dispute that Escondido's rent control ordinance, effects atransfer of value from landlords to tenants. BibliographyCases1. 17Id. Ed. Rev. at 337. City of Rocklin, 938 F.2d at 955. at 754. v. Johnson).13. If they are, there is no "taking." The fact that used mobile homes in Escondido are selling for more than they have in the past is irrelevant.62 The California Supreme Court has explained that rent controlordinances "are within the police power if they are reasonably calculatedto eliminate excessive rents and at the same time provide landlords with ajust and reasonable return on their property. Note, Tenant eviction protection and the takings clause, 1989 Wis. v. . 2d 282 (1987). 6Id. Freilich, Benjamin M. Ed. App. Westray).8. This is particularly true where,as in California, other statutes generally compel a park owner to acceptthe purchaser of an existing tenant's mobile home as a new tenant. They also have broad implications for review of economicregulation generally.32 At least two lower courts have anticipated anemerging activism in this area. 19Id. 13Casella v. at 812. 66Peppard v. City of Carpinteria, 278 Cal. The fact that the landowner may be receiving rental payments forhis property may impact adversely on whether a lease of unlimited durationis found to be a taking. Sierra Lake Reserve v. Note, Commentary on rent control and the theory of efficient regulation, 54 Brooklyn L. 42Note, Reagan's legacy: A conservative majority rules on civilrights, civil liberties and state and local government issues, 21 Urb.Law. 32Note, Tenant eviction protection and the takings clause, 1989 Wis.L. City of Morgan Hill, 28 Cal. Article I, section 19 of the California Constitutionsimilarly provides that compensation is required when property is "taken ordamaged."2 Since the demise of the Lochner3 era, property rights have receivedconsiderably less constitutional protection than have personal libertyrights, such as freedom of speech and free exercise of religion, whichreceive preferential treatment through strict judicial scrutiny ofrestrictive governmental actions. Rev. at 1 78. Rather, property owners havechallenged related restrictions on their ability to evict tenants, torecover possession of residential units, to convert such units intocondominiums, or otherwise to control the use of their property. . 245, 1 7 S. Santa Barbara, the NinthCircuit held that eviction provisions in a mobile home rent control laweffected a taking of park owners' property. Law. 54Id. Similarly, inthe takings context, the Constitution authorizes the government to restrictdominion interests in furtherance of a public interest, as long as thegovernment pays just compensation for the economic value of the property.Limits on dominion interests alone should not, therefore, triggerheightened scrutiny of the government action by presumptively constitutinga taking.69 In 1987, the U.S. Cal. Rev. at 93 . Rev. at 1 83. First, the finding of a taking should not depend onthe alienability of the interest taken. Note, Reagan's legacy: A conservative majority rules on civil rights, civil liberties and state and local government issues, 21 Urb. 28Note, Tenant eviction protection and the takings clause, 1989 Wis.L. City of Morgan Hill, 23 Cal. .deprived of . 11 Yee v. 7 Sierra Lake Reserve v. A localland use regulation is a regulatory taking only if it does notsubstantially advance legitimate state interests or denies an ownereconomically viable use of this land. Without regulation, the price would rise, the demand would ease,and the supply would increase until the market was back in equilibrium.37 Another way to see this point is to note that, instead of rentcontrol, the government might have enacted a tax on rents, much like thereare hotel room taxes, or on rent increases, or on one of these bases butwith a transition rule exempting rents paid by tenants on the premises atthe time of the enactment. Cal. 43Note, Are landlords being taken by the good cause evictionrequirement?, 62 S. 1273. Unlike apartments, mobile homes are usually sold by the tenants, and thebuyers then succeed the sellers as tenants of the mobile home park.5 Theseleases must provide certain key terms: They must be terminable by thetenants at will, but by the mobile home operator only for cause, narrowlydefined by the ordinance; rent increases are strictly limited; and disputesabout rent or lease terms are made subject to binding arbitration.51 Ineffect, the ordinance directs the landlord to give tenants a lease, arecognized estate in land, lasting indefinitely. Yee v. Law. at 1359. L. For most leasesthese contract terms take on considerable weight. Rptr.876, 878 (1991). property, without due process of law; nor shall privateproperty be taken for public use, without just compensation."1 The FifthAmendment is made applicable to the states by the due process clause of theFourteenth Amendment. Note, Just compensation and just politics, 22 Conn. City of Escondido, 224 Cal. 3d at 1354. 1434, 93 L. 4174 N.Y.S.2d 542, 74 N.Y.2d 92, 542 N.E.2d 1 59 (1989). L. In FCC v. Hall's ordinance constituted a leasehold inperpetuity, which the 9th Circuit found to constitute a taking. Between tenants, thelandlord can thus assert important prerogatives as property owner and makesignificant decisions as to the property's use. Endnotes 1Casella v. Breaking even is not enough; thelaw must provide for a profit on one's investment. 195, 232 (1988) (authored by Ross B. Bycontrast, as the Santa Barbara ordinance is alleged to operate, landlordsare left with the right to collect reduced rents while tenants havepractically all other rights in the property they occupy. Their approach is also firmly rooted inthe Supreme Court's repeated references to the fundamental nature of theright to exclude.24 These California courts have, however, extended the Supreme Court'sholdings in two important ways. Pennell v. 726 (1986). The permanent physicaloccupation of property forever denies the owner any power to control theuse of the property. Rev. 285,3 (199 ) (authored by Saul Levmore). 21 142 Cal. Godec).16. 549, 49 L. 2d 677 (1987). Note, The constitutionality of rent control restrictions on property owners' dominion interests, 1 Harv. There is also a dispute as to whether the rent control ordinancesconstitute a regulatory taking or a permanent physical occupation. City of Santa Barbara. Rev. 1223 (1989) (authored by W. 14 Note, Rent control and the theory of efficient regulation, 54Brooklyn L. at 128 . CaliforniaCoastal Commission,3 the Court emphasized a property owner's "right toexclude others" in finding that a beach access requirement constituted ataking of coastal property. 15Id. It must be read into the text by implication-- without simultaneously reading out the explicit protections against uncompensated takings contained in the Constitution.16Starting with the first question, any fee simple absolute in possession canbe divided into its constituent parts by grant or devise. Similarly, the state does not payany compensation at all, but instead directs the tenant to pay some setrent to the landlord. For instance, in Nollan v. L. Ed. 3Lochner v. Collectively, these cases signal an emerging right toexercise dominion.25 Justice Rehnquist stated that rent control, at least as a generalmatter, was unquestionably constitutional because its "asserted purpose" of "prevent[ing] excessive and unreasonable rent increases" caused by the "growing shortage of and increasing demand for housing in the City of San Jose" is a "legitimate exercise of appellees' police powers."26 The very conditions that rent control creates--shortages--is used to constitutionally justify the practice.27 When rent and eviction legislation appeared during World War II, theSupreme Court had become highly deferential in economic and land useregulation cases, and had little difficulty in sustaining the laws. 5ONote, Regulatory takings: a contract approach, XVI Fordham Urb. 3d 365, 721 P.2d 1111, 228 Cal. at 882. Note, Regulatory takings: a contract approach, XVI Fordham Urb. It is of no consequence how uncertain theduration of the estate may be. 239 (1984). Johnson). Rptr. The permanent occupation of the space by a strangerstrips the property of value, since any purchaser would also be unable tomake any use of the property.54 That tenants normally cannot sell their rights in rent controlledproperty provides important safeguards for landlords. For example, a decrease in the price of popcorn will cause anincrease in the demand for popcorn poppers. App. When the premisesbecome vacant, the landlord is able to reassert a measure of control overthe property. 726 (1986).5. The difference in value between the former equity and thepresent security interests determines the amount of compensation otherwiseowing.35 The root conceptual difficulty lies with the Supreme Court'sinsistence that certain incidents of ownership, that is, mere use anddisposition, are in some way intrinsically less deserving of protectionthan others. The duration of the lease is also a term thatis virtually always subject to specific negotiations.17 Rent control statutes operate to take part of the landlord's interestin his reversion and to transfer it to the tenant. Theabsence of vacancy decontrol or a lease of interminable duration is notdeterminative. App. 65Id. at 756. 12Id. Heldt).14. 53Id. Because they are used together, there is a directand necessarily inverse relationship between the prices for complementarygoods. The Constitution requires only that rent controlordinances permit landlords to obtain a "just and reasonable" return ontheir investment.66 The 9th Circuit in Guaranty National Insurance Co. 34Note, Tenant eviction protection and the takings clause, 1989 Wis.L. L. Rptr. The Escondido Rent ControlOrdinance enacted in 1988 provided for a rollback of rents for mobile homespaces to those existing on January 1, 1986. Hall v. Rev. 741, 758 (1988) (authored by Richard A. Kielerand Kevin C.
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