In 2021, Chicago enacted the Keep Chicago Renting ordinance, which requires those who purchase rental properties through foreclosure to (1) negotiate in good faith with existing tenants for a new rental agreement for at least one year, and (2) if the tenant does not sign a new lease, pay the moving tenant a $10,600 relocation assistance fee.
In 2024, BBLI Edison bought a foreclosed property in Chicago with over 220 existing tenants. At least five of those tenants declined new leases, and requested payment of the statutory relocation assistance fee. Rather than comply, BBLI Edison sued the City of Chicago in federal court, arguing that enforcement of the law would violate the Takings Clause. The district court disagreed and dismissed the case, and, yesterday, the Seventh Circuit affirmed.
While noting “trends in the Supreme Court’s recent takings cases,” the Seventh Circuit found itself bound by Supreme Court precedent establishing “statutes regulating the economic relations of landlords and tenants are not per se takings,” and thus that there was no physical taking. The court then rejected BBLI’s regulatory takings argument, finding each of the Penn Central factors weighed in favor of the law’s constitutionality, and BBLI’s unconstitutional conditions argument, explaining that doctrine was a “mismatch” with the situation at issue.
Given the panel’s suggestion that it was less-than-thrilled with the result, but felt its hands tied by existing precedent, a cert petition may be in the cards.
