I Support Section 8. I Also Support This Lawsuit.

A Sacramento property management company (which also happens to be a former consulting client of mine) has filed a lawsuit in California to invalidate the state’s regulations that require landlords and property managers to accept Section 8 housing choice vouchers. Nothing makes me happier than seeing someone stand up to the anti-landlord totalitarians in California, so I’m obviously going to cover this case.

That said, this week I’m traveling out to Austin to speak twice at the IMN SFR/BTR Conference, so the articles this week will be a little shorter than usual. Trying to get them hammered out before catching a flight! But I will continue to follow this case in future articles to keep you updated also.

Disclaimer: As always, I am not an attorney, I’m definitely not your attorney, and you should always seek competent legal counsel prior to making any legal decisions.

The case in question is Tower Bridge Property Management and Thomas Manning v. Kevin Kish (Kish is the state official overseeing this regulation). Tom Manning owns Tower Bridge Property Management in a suburb of Sacramento, CA. He runs an incredibly efficient operation (one of the best staff-to-doors ratios I’ve seen, in fact). At the time of the lawsuit being filed, they managed approximately 300 rental properties. But the property in question in this lawsuit is actually Manning’s own property, a duplex. That’s important, because it ensures that he has legal standing in the case and the defense won’t be able to argue that a property manager doesn’t have standing to bring such a case on behalf of a landlord client.

Manning signed a HAP (Housing Assistance Payments) Agreement with the local HUD housing authority in June of 2021. That lease was still active at the time of filing. As is always the case with Section 8, he had to submit to an inspection by HUD or a third-party inspection provider at the time the property was leased, and also periodically since then. Signing the HAP Agreement is also a mandatory part of renting to Section 8 tenants, even though the Agreement specifically modifies various standard provisions of your own lease agreement.

The case rests on two main legal arguments. First, it makes a Fourth Amendment claim. For those who have forgotten their high school civics classes, here’s the Fourth Amendment:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

We typically think of the Fourth in terms of things like criminal searches, or vehicle inspections at traffic stops. But as the case rightly points out, mandatory inspections by the government or their contractor when you’re leasing out your house clearly falls under the same protection. Hell, the amendment literally uses the word “houses,” plural. Not just your main residence. This same argument has been made successfully in other jurisdictions in reference to rental licensing inspections, and as you’ll remember from my prior article, it was made in a very similar case in New York over the same Section 8 issue. That case was won at the lower court level already by the landlord with a unanimous decision by the court, but the Attorney General has appealed it to the New York Court of Appeals, so we’ll still have to wait to see the ultimate outcome there.1

It’s important to note that the Fourth Amendment argument isn’t attacking the Section 8 mandate itself. Instead, it attacks the inspection terms of the HAP Agreement. In the New York case, the lower court stated in its ruling that the whole problem could be eliminated if HUD just removed the inspection requirement from the HAP Agreement. So, the same would likely hold true here. While that was just the opinion of the lower court, I have no reason to believe that a higher level court wouldn’t view it the same way. A Fourth Amendment claim only works if there’s actually a Fourth Amendment violation. Of course, if HUD cured that violation, someone could still come back and argue a Takings Clause theory2, but that’s likely a weaker argument, especially in a place like the 9th Circuit in California.

But the case goes on to make another argument on the basis of preemption. And for our readers, this is actually the more important argument, because he makes this argument “facially”, which means a ruling in his favor would not just apply to him, but to all landlords and property managers in California. This argument centers on the idea that Congress created the Section 8 program, and they specifically made it a voluntary program. Under the doctrine of preemption, rooted in the Supremacy Clause in Article VI of the Constitution, a federal law overrides a conflicting state or local law. And because the courts view preemption to be implied in most Congressional actions, even if the bill doesn’t specifically state that it preempts state and local laws, this should mean that a program that Congress setup as voluntary should remain voluntary despite the desires of state and local communities.

To be clear, nothing has changed yet. If you’re in California or other jurisdictions where lawmakers have made “source of income” a protected class, then you still have to accept Section 8. And even if this lawsuit or others would be successful down the line, it doesn’t completely invalidate protection for all sources of income. It would only apply to the Section 8 program, since the arguments made all rest on the specific requirements contained within the Section 8 HAP Agreement. So, you still wouldn’t be able to deny someone who gets all of their income from disability or social security, for example. Although I don’t know too many landlords or property managers concerned about that. This is all really about the draconian requirements of the Housing Choice Voucher Program.

I’ve always argued in this publication and elsewhere that I’m not opposed to the Section 8 program. In fact, I’m a proponent of the idea of it. As regular readers know, I’m an outlier in the property management community in that I tend to lean left-of-center politically. So I’m all about social safety nets and trying to use government assistance to lift people out of poverty.

But as is all too often the case with government bureaucrats, it’s never enough for them to just accomplish the core objective. While the goal is to get people housing who can’t otherwise afford it, the bureaucrats just have to go further and give you some legal document dozens of pages long that you have to sign that completely invalidates large portions of your lease and forces you to comply with unreasonable searches. As a Democrat, I really wish I could get my party to understand that they’d hold majorities in both chambers from now until eternity if they’d just stop overreaching. Most people support helping poor people. They don’t support Orwellian government control of private property.

So despite being a Section 8 supporter in theory, I’m also a strong advocate of this litigation and what Tom is trying to accomplish here. Kudos to him and to the Pacific Legal Foundation for representing him free of charge. On behalf of landlords and property managers everywhere, we salute you.

I’ll be sure to update you on this case as it proceeds through the courts, but be forewarned, these cases are rarely decided quickly.

I’ll be speaking at the upcoming Property Meld MX Summit in just three weeks! I have attended this event every single year since it started, and I look forward to it every year. This event is perfect not only for your maintenance team, but also for Broker/Owners. Mike Rowe of “Dirty Jobs” fame is the keynote speaker, so a great get there. And you get the added benefit of getting the see the beauty of South Dakota! If you’ve never been, it’s worth attending just for that. The Black Hills are a beautiful part of America, and you can see attractions like Mount Rushmore and Deadwood.

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Have you heard the great news? NARPM is finally returning to Vegas for the National Convention this year in October! I’ve been complaining about it ever since the Broker/Owner conference left Vegas years ago, so I’m thrilled to see us go back. This year we’ll be at the Mandalay Bay Resort & Casino, and I have it on good authority that we’ve secured a big name for a celebrity keynote. In addition, I’ll be presenting again at a NARPM National event for the first time in a few years! Property Meld CEO Ray Hespen and I will be talking about maintenance and using data to make outcomes predictable. This should be a fantastic conference, so don’t miss it. And don’t forget to book your rooms at the resort when you book your registration! The room block is limited, and people are always disappointed when trying to book rooms last minute.

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