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WBK Industry News - State Regulatory Developments

Washington State Supreme Court Clarifies Regulatory Takings in Dispute over Ordinance Requiring Landlords to Rent to First Qualified Applicant

The Washington State Supreme Court recently ruled that a city ordinance which required landlords to rent properties to the first qualified applicant does not constitute a regulatory taking.

Seattle passed an ordinance which requires a landlord, among other things, to provide prospective tenants with the criteria and screening requirements the landlord will use to evaluate prospective tenants, and to rent the property to the first applicant who meets the criteria.  Several landlords sued to invalidate the ordinance, claiming that it constituted a regulatory taking.  The Washington State Constitution, like the U.S. Constitution, prohibits the State from taking private property without paying just compensation.  Regulatory takings generally refer to instances where the government does not actually take ownership of the property, but places such onerous restriction on the use of the property that they are effectively stripping the owner of their rights in the property.

Prior decisions by the State Supreme Court had suggested that it would interpret the takings clause in the Washington State Constitution more broadly than the takings clause in the U.S. Constitution.  However, the Court clarified that it intended to interpret them as having the same scope.

Accordingly, the State Supreme Court held, as is the case under federal law, that a per se regulatory taking would occur under the State Constitution only when (i) a regulation requires an owner to suffer a permanent physical invasion of the property; or (ii) a regulation completely deprives an owner of all economically beneficial use of the property.  For any other type of alleged regulatory taking, the court would conduct a case-by-case analysis which considered various factors (such as economic impact, interference with investment-backed expectations, and the character of the government action).

Under this rubric, the State Supreme Court held that the ordinance does not constitute a per se regulatory taking.  It does not require any property owners to suffer any permanent physical invasion of their properties, nor does it deprive them of every economically beneficial use of their property.  The plaintiffs had not argued that the other case-by-case, multi-factor analysis should apply, and the State Supreme Court therefore did not analyze the ordinance under those principles.