Home Not Alone – Part Deux

On February 23 the U.S. Supreme Court declined to hear the case of Ziman v. New York State, ending a regulatory saga so long-running that we’ve decided to dust off and re-use the headline.

In 1987 CEI took up the case of Jerrold and Ellen Ziman, a New York City couple who had bought a small Greenwich Village townhouse several years earlier, planning to restore it into a single-family for themselves and their two children. The house contained three rent-controlled tenants. It’s probably harder for a landlord to evict a rent-controlled tenant than it is for a camel to pass through the eye of a needle. Nonetheless, when the Zimans bought their house in 1984, New York law allowed “owner-occupancy evictions”—if the landlord wanted to personally occupy a unit, then the law, in a sort of nostalgic tip of the hat to the memory of private property rights, allowed him to do so.

But five months after the Zimans bought their home, the law was suddenly changed to bar owner-occupancy evictions if the tenants were elderly, disabled, or had lived in the property for over 20 years. The change took effect immediately. Even though the Zimans had already filed for eviction, the fact that their tenants qualified under the 20-year criterion was enough to kill their applications. The Zimans, who had never intended to be landlords, suddenly found themselves with unevictable tenants while their own family was crammed into two tiny vacant units in their building.

In desperation, the Zimans re-filed for eviction under another legal ground—that of financial hardship. Two state agency audits found that they met the hardship requirements, but then the agency disqualified them anyway. Its reasoning—despite their hardship, the Zimans were really motivated by owner occupancy, and that was forbidden under the new state law.

CEI succeeded in getting this ruling overturned in a case that went to the New York high court in 1990. Nonetheless, given the intricacies of enforcing an eviction certificate in New York City, it wasn’t until early 1992 that the Zimans got their last tenant to leave. By then, nearly eight years had passed since the time they first bought their house.

We then began a second case, arguing that New York’s change in owner-occupancy law violated Zimans’ due process rights and that their resulting ordeal, exacerbated by the state agency’s mishandling of their eviction applications, was a taking of property for which compensation was due under the Fifth Amendment.

These arguments failed in the New York state courts. With the U.S. Supreme Court’s denial of certiorari, the case has come to an end.

The Zimans at least have their house. In the course of representing them, we encountered quite a few folks who weren’t even that lucky. The prevailing view of government officials in New York is that there is no constitutional right to evict a tenant. Yet if you trace New York rent control law back to its origins, you find that it was premised on precisely the opposite notion—that rent control was legitimate precisely because it didn’t force a landlord to rent out his premises. Funny how these little details get lost over time.

The restricting of owner-occupancy evictions is but one of the more extreme results of this totally bankrupt regulatory regime. In terms of redeeming social value, if rent control were literature it would be pornography, pure and simple. Rather than create the affordable housing that it purports to attain, rent control destroys it. Its illogic is illustrated by the nearly unanimous contempt in which it is held by economists of all stripes. A 1984 poll of over 200 American economists, covering over a score of policies ranging from free trade to labor law, found that rent control’s counterproductiveness garnered the highest level of unanimity among those surveyed. The two economists who shared the 1974 Nobel Prize, Friedrich Hayek and Gunnar Myrdal, had little in common politically, but they saw eye to eye when it came to rent control’s idiocy.

All of this may count for little when it comes to the raw political power of landlords outnumbered by tenants, but you expect something better of the judiciary. Yet challenges to rent control have made little headway in the courts. In New York, rent control began with a post-World War II housing shortage. That “temporary emergency” has already passed its half-centennial. Will it continue, judicially unscathed, into the next millennium?

The Zimans aren’t holding their breath, but at least they have their home. For those of us who assume that buying a house means being able to live in it, here’s one less blessing to take for granted.

Sam Kazman ([email protected]) is CEI’s General Counsel.