Law and Countervailing Tenant Power in the Real Estate State

PUBLISHED

John Whitlow (@zhionny74) is Associate Professor of Law at CUNY School of Law.

PUBLISHED

John Whitlow (@zhionny74) is Associate Professor of Law at CUNY School of Law.

This post continues a symposium on decommodifying urban property. Read the entire series here.

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In Constructing Countervailing Power: Law and Organizing in an Era of Political Inequality, Kate Andrias and Benjamin Sachs argue that combatting intensifying inequalities requires the creation of legal structures that facilitate deep and lasting power-building among poor and working-class people. This Post will ground Andrias and Sachs’ argument in the context of tenant organizing against financialized real estate, where a giant, fast-moving wall of capital crisscrosses the globe in search of heightened rates of return, landing in places characterized by histories of racialized austerity, disinvestment, and abandonment. The Post will explore how a legal framework for tenant collective bargaining can amplify the capacity of tenants to contend with the extractive practices of financialized landlords.

Since the neoliberal turn, real estate has become an increasingly vital store of investment. Geographical shifts in manufacturing have combined with relaxed capital controls, extreme wealth concentration, and the advent of complex financial instruments to reconfigure the capitalist political economy. In recent decades, residential real estate – particularly in formerly industrialized cities – has become a magnet for extractive economic ventures, with deterritorialized flows of capital decamping in gentrifying urban neighborhoods for the purpose of unlocking the value of “underperforming assets.” Since the latter are in fact people’s homes, this modality of accumulation has necessarily resulted in widespread displacement, as well as fierce resistance by tenants who – in the words of the geographer Desiree Fields – are cast as the unwilling subjects of housing’s financialization.

This double movement – of the intensifying financialization of real estate, on the one hand, and of heightened tenant organizing, on the other – unfolded in particularly intense ways in New York City in the 2000s. In this period, against the backdrop of the hollowing out of the protections of the City’s rent laws in the previous decade, private equity firms purchased 100,000 units of rent regulated housing, much of it in the neighborhoods of the City’s multiracial and immigrant working class. Almost immediately after the purchases, the tenants who lived in these apartments were subjected to an onslaught of harassment, baseless eviction lawsuits, the withholding of essential services, and legal and extralegal rent increases, all of which were intended to produce attrition and a higher yield for financialized landlords.

While some tenants left their homes because of these tactics, many more stayed and fought back. In one portfolio of buildings in western Queens owned by the private equity firm Vantage Properties, aggrieved tenants formed the Queens Vantage Tenant Council (QVTC) and – with the help of a small team of community lawyers – organized to win a series of victories, including a temporary halt to evictions. The QVTC’s organizing structure – operative across buildings owned by a single financialized landlord – was at odds with the legal categories carved out by New York’s corporate and housing laws, which conceal the identities of property owners and confine most tenant-initiated litigation to individual buildings, rather than a landlord’s entire portfolio. In practical terms, this meant that the QVTC’s successes, which included a sweeping settlement with the New York Attorney General’s Office, were exceedingly difficult to achieve and even more challenging to sustain.

In recent years in New York, new tenant formations have emerged at the neighborhood scale to fight against gentrification and displacement and to push for redistributive law reforms. While the impact of their organizing efforts has been substantial – e.g., in 2019 a coalition of tenant groups mobilized to strengthen the rent laws for the first time since the fiscal crisis of the mid-1970s – they also run up against the same legal limitations as the QVTC did more than a decade earlier; that is, their organizing is made more difficult by the near complete absence of meaningful legal supports and protections for tenant collective action, particularly as it relates to large, financialized property owners.

The aforementioned article by Andrias and Sachs takes on this problem by advocating for legal structures that facilitate the construction of countervailing power for non-wealthy people, including workers, tenants, debtors, and public benefits recipients. Andrias and Sachs argue that such a legal regime must, among other things: explicitly grant collective rights to create a “frame” that encourages organizing; provide a source of financial, informational, and other resources; provide means by which members’ lives are materially changed and create mechanisms for the exercise of real political and economic power; and offer protections for the right to protest and strike. The point of this kind of legal regime is to encourage the development of organizations of poor and working people that have the capacity to contend with the massive political and economic inequalities engendered by neoliberal capitalism.

In the housing context, a law to facilitate countervailing power must be geared toward encouraging tenant participation at the grassroots, building-by-building level, and it must be sufficiently robust so as to check the enormous power of corporate, financialized real estate. In Andrias and Sachs’ framework, such a law would ensure that tenants have a legal right to form tenant unions that are empowered to bargain collectively with landlords over issues like rent levels, evictions, building management, and repairs. The law would create an administrative body, comprised of tenant representatives, to monitor collective bargaining, and would penalize landlords who fail to comply. Participation in tenant unions would be as straightforward and democratic as possible. Further, tenant unions in individual buildings could be incorporated into a larger confederation of unions, based on either geography or common building ownership, which could challenge the practices of institutional actors who own large portfolios of properties.

In an age when residential real estate is increasingly owned by agglomerations of private, placeless, and financialized capital with the ability to set prices, this kind of legal structure is necessary to facilitate the construction of deep and enduring tenant power. Imagine a situation like the one encountered by the Vantage tenants whose building was bought by a private equity landlord intent on reaping a steep, quick profit through a combination of evictions, harassment, and rent increases. Under the proposed countervailing power legal regime, a new owner would be obligated to recognize a tenant union and would be required to either adhere to an existing collective bargaining agreement or come to the table to negotiate a new one, which would be monitored and enforced by an administrative body or in court. The landlord would have to disclose to the tenant union the other properties it owned and the names of its principals and lenders, as well as provide the union with its rent rolls. In other words, the law would create a tenant organizing framework aimed at obviating the extractive business practices that have been prevalent in New York City real estate over the past several decades. By fostering sustainable structures in which tenants come together and build power, it also contributes to a burgeoning movement for housing justice that has gained significant ground in recent years, from the advent of a right to counsel in eviction proceedings in New York City in 2017 to the 2019 renewal of the rent laws to the ongoing statewide push for good cause eviction.

In her book Invisible Hands, which details how business elites in the United States organized systematically to dismantle the New Deal, Kim Phillips-Fein tackles the question of how economic power gets translated into political power. This Post – and the article by Andrias and Sachs upon which it is based – addresses two related but distinct questions: how do people without economic resources build power for themselves, and what role can law play in that process? As the Italian poet and author Nanni Balestrini wrote in his novel The Unseen, the only weapon that workers and poor people possess in this world is the weapon of solidarity; from that starting point, the best use of the law in combatting the rapaciousness of financialized real estate lies in the creation of legal structures that support, nourish, and protect countervailing tenant power.

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