Weehawken Bans Short-Term Rentals…Fifth Amendment Challenge Coming?
Although home-sharing platforms have exploded in popularity over the past decade, becoming an acceptable way for individuals to earn supplemental income from their properties, several cities along the Hudson River have banned owners from leasing out their properties on a short-term basis citing quality-of-life concerns. In March and August 2022, we blogged about Jersey City’s regulation banning short-term rentals and the ensuing lawsuit that followed. Those blogs can be found here and here. That case went up to the Third Circuit United States Court of Appeals, and the panel held that the “Penn Central” factors weighed against the plaintiffs and the regulation was upheld, as it was found that it did not rise to the level of an unconstitutional taking.
Fast forward to December 2022, the Township of Weehawken has officially enacted a ban on short-term leases as part of an effort to control rowdy guests and parties from hindering the quality of life for its residents. During the December 21st council meeting, Weehawken officials adopted an ordinance aimed at curtailing the growth of properties that are listed on short-term rental sites. Specifically, the ordinance prohibits renting out any property in the township for less than 30 consecutive days. Like Jersey City, Weehawken previously allowed short-term rentals if the hosts at the property maintained a permit that had to be periodically renewed. Weehawken’s efforts have been the subject of coverage by local media:
If the Jersey City lawsuit is any indication, a prospective property owner seeking to challenge Weehawken’s ban on Fifth Amendment grounds would have a difficult time demonstrating that the regulation amounted to a “taking” in accordance with Supreme Court precedent. While an owner’s use and enjoyment of its property and right to lease its property are protected by the Fifth Amendment, the standards set forth in Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992) and Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124 (1978) have proven to be extremely high hurdles for property owners. To demonstrate a taking pursuant to Lucas, an owner is required to demonstrate that the regulation denies all economical use of the property. Likewise, under Penn Central’s balancing standard, an owner would have to allege specific facts (i.e., a precise diminution in value) that outweighs the power of the state to regulate the public interest.
Practitioners should be familiar with the broad gamut of Supreme Court caselaw on the nuanced and ever-evolving topic of regulatory takings. If you are confronted with a governmental taking and need guidance regarding the proper procedure to follow, please contact McKirdy, Riskin, Olson & DellaPelle, P.C. to speak with an experienced eminent domain attorney.