Under the Fifth and Fourteenth Amendments, states cannot take private property for public use without providing just compensation. A group of rental property owners in Washington State sued, arguing that the moratorium amounted to an uncompensated taking. Each of the owners rented out property covered by the moratorium, and each lost the right to control their own property as a result of the order.
But the Supreme Court of Washington rejected the owners’ takings claims, based on its interpretation of the Supreme Court case Yee v. City of Escondido (1992). According to the Supreme Court of Washington, Yee held that the government can change the terms and duration of a tenant’s lease without compensating a landlord, so long as the landlord originally opened the property to the tenant voluntarily.
Now the owners are asking the Supreme Court to take their case, and Cato has filed an amicus brief supporting their petition.
In our brief, we explain that the Supreme Court of Washington completely misinterpreted Yee, which merely stated that an ordinance setting a maximum rent did not amount to a physical taking. The owners in Yee were not trying to evict any of their tenants. And unlike Washington State’s order, the ordinance at issue in Yee allowed the owners to evict tenants for many reasons, including nonpayment of rent, violation of the law, expiration of the lease, or an owner’s wish to change the use of the property.
As our brief recounts, the Supreme Court of Washington’s misinterpretation of Yee has serious practical consequences. State and local governments enacted numerous eviction moratoriums during the pandemic. These moratoriums allowed tenants to continue occupying rental properties regardless of missed payments, bad behavior, or the owner’s desire to change the use of the property. And general rent control laws similarly restricting evictions have proliferated in recent years.
Such laws and ordinances have reduced property values and caused many small‐time landlords to struggle to meet their bills. The rental housing industry is worth $3.4 trillion and employs 17.5 million jobs, so these added costs weigh down an already struggling economy.
This financial impact on landlords has caused a reduction in available rental housing, perversely increasing rents for tenants and leading to the gentrification of cities. It has also caused landlords to neglect necessary maintenance, harming the quality of housing that tenants receive. Given that more than a third of housing units are occupied by renters, a huge proportion of the population suffers when rents increase and the quality of rental housing decreases.
Property rights are essential to economic prosperity, and the right to exclude is the sine qua non of property ownership. The Supreme Court ought to take this case, reverse the Supreme Court of Washington, and reiterate that the government cannot infringe on property owners’ right to exclude without paying just compensation.
