Is New York’s Community Opportunity to Purchase Act Illegal?

The New York City Council is preparing to end the year by adopting the Community Opportunity to Purchase Act. COPA would represent an unprecedented use of the body’s legislative power to bestow an “interest” in private property on a favored class of not-for-profits. It would enable those organizations to bid on and purchase certain multifamily dwellings before an owner is permitted to offer his property for sale to the general public.

While the bill has sparked significant opposition on policy grounds, it also raises profound legal questions about the extent of the city council’s authority, and its ability to intrude on fundamental private-property rights.

“Interest” is an ancient legal term of art. In property law, only the owner of land may bestow on another party various forms of “interest” in the owner’s land. For example, he may sell the land outright, granting a buyer “fee ownership” interest. He may lease his property to another, bestowing an interest under a lease to a tenant. He may grant his neighbor an easement, an interest that allows that neighbor to traverse the owner’s land.

An owner may also grant another a “right of first refusal.” In that situation, the owner agrees to offer to sell his property to the other person before the owner offers the property to any other potential buyer.

Like all conveyances of property interests, a right of first refusal arises out of a contract between parties. A contract, of course, is a voluntary agreement between parties who have reached terms. COPA would destroy these essential legal principles. The bill would grant qualified entities a “right of first offer to purchase,” meaning a right to bid on certain multi-family dwellings (four or more units) “before the property becomes available for sale in the public market.”

Whenever the owner of a “covered property” wishes to sell it, the owner would be required to inform the city prior to placing the property on the market. The owner would then be subject to a 25-day window during which only qualified not-for-profits would have the right to submit a “statement of interest” in acquiring the property. Where a qualified entity submits such a statement, the owner would be required to provide the not-for-profit an 80-day window in which to make an offer. During this time, the owner would be prohibited from selling to any other party.

If a not-for-profit makes an offer, the owner can reject it. However, even if he does, COPA would grant a right of first refusal to the not-for-profit. Consequently, any time the owner elects to sell to a third party, he would have to offer the not-for-profit the chance to match any offer he receives, with a requirement to sell to it if the not-for-profit matches.

The bill, therefore, entails an extraordinary claim of municipal power. COPA would give the city, which does not own the properties it covers, the prerogative of a private owner, letting it bestow a property interest on a select group of entities that the city deems worthy of holding such rights. In effect, the bill would force the owners of every covered property to enter involuntarily into contracts with entities to whom the city has transferred the most fundamental element of a property owner’s “bundle of rights”—the right to freely dispose of his land.

The city council has no such authority. The “police power”—a municipality’s general power to regulate the “health, safety and welfare” of the community—is broad, but not unlimited. “The broad police power of the State to regulate the use of private property is not unlimited,” the New York State Court of Appeals has said. “Every enactment under the police power must be reasonable.”

Moreover, the police power is a power to regulate, and COPA is not a regulatory measure. It does not mandate physical safety measures or require that owners maintain property in a sanitary condition. It is not analogous to the zoning power. Rather, it creates a sort of “master contract” that, without the consent of any private party, grants an interest in land to one group while restricting the fundamental ownership rights of another.

Private property is a foundational legal pillar on which our society stands. As Supreme Court Chief Justice John Roberts wrote for the Court in 2021, “the Founders recognized that the protection of private property is indispensable to the promotion of individual freedom. As John Adams tersely put it, ‘[p]roperty must be secured, or liberty cannot exist.’”

COPA is a bizarre and unprecedented attempt to make the city co-owner of every covered property. It would, under the guise of housing regulation, undermine the basic legal framework that guarantees the right of an owner of private property freely to sell his land. Its enactment would constitute an illegal, unconstitutional, and dangerous usurpation of a fundamental right. The city council must reject it.

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