Courting Opinions: A Deep Dive Into NAR’s Legal Advocacy Initiatives

Announcer (00:04): Welcome to the advocacy scoop, the podcast that takes you inside the advocacy work of the National Association of REALTORS® connecting 1.5 million members with their advocates in Washington for a front row seat to the fight for public policy that strengthens the ability of Americans to access property ownership.

Shannon McGahn (00:25): On this episode of the Advocacy Scoop, we're talking about going to the Supreme Court.

Patrick Newton (00:30): Well, it's hard. Well, hello everyone, and welcome back to the Advocacy Scoop podcast. I'm Patrick Newton NAR's, Director of Advocacy Communications, and this is episode five of our new podcast that takes you inside the advocacy work of the National Association of REALTORS®. And as always, I'm joined by my co-host and our fearless Chief Advocacy Officer, Shannon McGahn.

Shannon McGahn (00:48): Hello, Patrick, thrilled to be here with you and all of our listeners. And yes, we know there are listeners out here, we have been hearing from you. We are so excited. Please subscribe. So this will show up every time we get one of these new episodes. And thank you so much for all of the amazing feedback that we've been receiving since launching the advocacy Scoop podcast in May at the realtor at legislative meetings. I've been traveling all over the country and hearing from our members that this is exactly the type of content you are looking for. We want to ensure that you know what the advocacy team is up to in real time. So please keep the feedback coming and please hit subscribe.

Patrick Newton (01:25): Yeah, and we have some great episodes out there already. Our advocacy 1 0 1 and some other episodes about some of our biggest wins and some of our biggest fights across the industry. But this episode we're calling courting Opinions Dumped Like the Law and Order Dump Them. I'm really excited about this episode because this is sort of a legacy item for Shannon when she came here six or so years ago. Almost

Shannon McGahn (01:50): Six. Don't Age me

Patrick Newton (01:50): And ramped up our legal advocacy. And Shannon, you're comfortable using legal jargon in everyday life. I hear that's my first legally blown quote of the episode.

Shannon McGahn (02:01): The rules of property rights are simple and fine. Patrick Newton (02:03): Exactly, exactly. So you've heard about our legislative advocacy and you've heard about our policy and of course all of our grant programs, but legal is an important component of our advocacy. And this is something that Shannon expanded when she came on board. And so first of all, just tell us how it works. And when I'm talk about legal advocacy, I mean when we head to the courtroom to take on an issue, you don't just open the paper in the morning and be like, oh, well, that's an outrage, let's sue. There's a process to it. I mean, that's sort of how it is, but

Shannon McGahn (02:31): Sometimes other people will reach out to us and say, are you seeing that this is happening? And so yeah, when any federal, state, or local legislation or regulations are implemented that are impacting our policy goals or something that are impacting private property rights around the country, we have been increasingly tackling those issues through the courts and through our legal advocacy efforts. So this isn't just through advocacy. We have an amazing team here at NAR coordinating with the Legal Action Committee. The Amicus Brief Advisory Board may go step by step to see how we can help advance policy through litigation and not just legislation or the regulatory process. And then we also work with our state and local associations who are seeing these stories happening, hopefully not every day, but very often to identify what needs they have in overcoming these barriers to private property rights or their business efforts, their fair housing issues, anything that's coming up that we think needs to have a change of policy that might have to happen faster than legislation can allow, or that could be others out there violating the law.

(03:33): And we can speak out on behalf of our members and their customers. So, these efforts have not only resulted in new legal precedent that furthers NAR policy goals, but they also help us to build coalition partners. We work with other organizations to join the fight around the country defending private property rights, housing matters, federal court, or whether it's an amicus brief. And, there is a great bit of debate on how to pronounce that. So if I'm saying it wrong, don't sue me. But those coalition efforts have also helped to bring down the overall costs and to expand the influence that we have over public policy arguments by representing diverse interests, but those who are also aligned in protecting private property and our members and the customers they serve.

Patrick Newton (04:13): And we filed these briefs on cases where we were like, listen, this is what a million and a half REALTORS® across the country are weighing in on this court case because it affects our business and it affects our industry. And there is a lot of private property rights restrictions kind of exploding nationwide. And now that we know a little bit of the process that you just explained, I kind of want to tick through some of these cases that we've gotten involved with. And I want to start with the big one. And this happened almost right after I came to NAR about five years ago, the eviction moratorium. So, taking us back to the pandemic era, the Centers for Disease Control used their public health powers to issue a nationwide eviction moratorium during the pandemic. And this was a real hardship on a lot of housing providers. So tell us a little bit about this case.

Shannon McGahn (05:02): Oh, this is the one where we really understood the need to act quickly in order to defend our members and housing providers around the country. It was a very difficult time during the pandemic and everyone understood that we needed to put very serious policies in place to protect everyone so they can stay home, stop the spread, and still be able to keep the economy going. So, things like the CARES Act and the PPP program, and unemployment assistance that our members had access to and making sure that real estate is an essential service. All of those things were happening at that time. But then when the Centers for Disease Control issued this eviction moratorium saying that housing providers have to completely stop any eviction proceedings, if there's anything that's Covid related there, this is something that could potentially be abused, but also you are not understanding how that impacts housing providers.

(05:48): And so those who, especially mom and pop folks, we have about a third of our members who own rental property and who service housing providers themselves or help manage that rental property. So, what the CDC was essentially declaring is that all of those fees, the mortgage that is paid, the insurance that is paid, any of the utilities that are being paid, the property taxes, all on that property, those all still have to be paid without access to PPP loans or any of the other Cares Act benefits. And if you're not getting paid by your tenant, you can't evict that tenant. And if you did have perhaps a lease was ending and you had intended to move in or to have family move in, that all of that would've been interrupted and have major economic consequences. And the purpose is good that we wanted to make sure that people weren't being separated from their home during this time.

(06:32): But at the same time, we were out there fighting for nationwide rental assistance, which would help solve the problem. And we were successful in getting 50 billion of rental assistance so that we could ensure that people can still pay their rent and stay in their home. And that all of those costs are not going to go directly to the housing provider who in many cases is not a big corporation. It's not somebody who has an insurance fund for this, but someone that fund is coming as their retirement or as part of their ability to pay for that home.

Patrick Newton (07:00): And I got some fresh numbers on that right from my research team, but about 46% of the rental housing units in the US are considered small rental properties. And so you hear these nightmare scenarios about housing providers not getting paid.

Shannon McGahn (07:11): Oh, I've heard stories about someone saying, oh, well they sublet the house because they weren't going to be removed from the house, so they sublet it and they were making money off of that property. Others who said that tenants purchased a car during that time. And so there's always going to be instances where things are abused. And as much as the underlying effort was for the right cause, and we understood that, it was our argument that the way to make sure we're solving this problem is through rental assistance. So, the conversations that we have, gosh, during the pandemic, it was on a daily basis, if not more, but the conversations that we consistently have with our state and local associations and leadership, and they were hearing directly from their members or other housing providers. So, we were able to work with the Georgia and the Alabama associations and other property providers to end up before the DC Circuit Court of Appeals and all the way to the Supreme Court twice.

(08:02): So, the Supreme Court ruled that the federal moratorium was unconstitutional. That is something that Congress would have to give the CDC the authority to do that the CDC didn't already have it. And that was a landmark decision that established a legal precedent. That's been the basis for many other recent challenges on the federal administrative overreach, including West Virginia versus EPA and others. So, many of the and the legal community talk about that case as something that moved the needle. And, we were proud to be a part of it, but we were equally, if not more importantly, proud to be supportive of the policies that actually did help people stay in their homes and to make ends meet during that very difficult time.

Patrick Newton (08:39): Well, moving on to another issue that we've got involved with in the courts, and that's rent control. This is something that a lot of folks are passionate about this issue for good reason, we fight rent control ordinances, price controls, where they pop up around the country because they harm the supply of affordable housing. And, that's what the research shows. You can look at multiple case studies in cities around the country that have tried this. And, so, as the country's largest private property rights organization, we are out front on this issue.

Shannon McGahn (09:09): Oh, absolutely. And we have all types of resources available to you, our dear listeners, on rent control efforts throughout the country, what NAR and many of our state associations are doing to help educate on this and to make sure that folks who understand a very well-intentioned to bring down the cost of housing so that we have the ability for more people to afford housing and rental housing is an important component of that. Not everyone is in a position to purchase a home at every time, and we want to make sure that the entire real estate ecosystem is healthy, but in more cases than not, and we have all of these, the data and the research and reports to show it, these efforts tend to backfire and they harm the people that they're intended to help locking up housing, preventing more housing from being developed. And developers are then reluctant to build where they know they're going to be rent controls on new buildings because they may not be able to actually get the value out of the property that they're putting into it.

(10:01): And it decreases the supply of low to mid-range housing units. So, the way that our efforts have been designed is to protect the most vulnerable by supporting targeted assistance to renters and housing providers when there is a gap between areas where you see rising wages and rising rent. But the long-term solution, as we have stated for several years now, is to increase supply at all levels where five and a half million units short if not more now of a healthy real estate economy and increasing that supply is going to do more to bring down those housing costs than to put in these restrictions on rents and on what housing providers can do with their property. So, we spearheaded an amicus brief to support a Supreme Court review of two cases challenging New York's rent stabilization law in those ones. Those are all on our website too.

(10:50): We have that available to you. And they are explained to the court that those burdens imposed on property owners are part of a trend of government encroachment on private property rights. And it often falls hardest on those individual mom and pop property owners who don't have the same corporate resources and that with these rent control laws that they're exacerbating housing supply and affordability problems and making housing less available. So, we had many of our friends join us in this regard, the National Apartment Association, the Home Builders and Mortgage Bankers, and the Supreme Court did not move on that one, but they did leave the door open for some potential future court action. And also it became something that we can use to talk to more of our coalition partners and to help educate the larger community. I also want to point out that the American Property Owners Alliance, which is run by Colin Allen, executive director, who was a longtime NAR staffer, A POA, works directly with NAR to be the voice of the consumer with more than 10 million property owners as part of their communications efforts. And this is something that A POA has had a lot of conversations with housing providers and with tenants on what is it that they're looking for in rent control measures. And there's great material available on their website as well.

Patrick Newton (12:01): I feel like a judge. It's like next case. All right, next up we're going to talk about unconstitutional takings. I actually love this. We've had some huge wins in the past couple of months on this, and this is something like a five-year-old should be able to understand. The takings clause of the constitution basically says private property cannot be taken for public use without just compensation. It seems so simple. Yet all across the country, local governments, state governments try to push their limits on this. And, so we've had a couple of cases that we've gotten involved with. So tell us about those.

Shannon McGahn (12:34): Oh, that's exactly right. It seems very simple, but something that still has to go through the courts more often than it should. So NAR along with the American Property Owners Alliance and several other folks, the REALTORS® land Institute, the California Association of REALTORS® filed an amicus brief in sheets versus the county of El Dorado, California. This was a very interesting case from 2016 lawsuit where a California landowner, George Sheets after laws through his county government required him to pay more than $23,000 for a trafficked impact study when he tried to obtain a permit to build an 1800 square foot manufactured home on his property. So, those fees were implemented to help pay for roadwork and infrastructure in the community and Sheets and his lawyers said that that's unconstitutional and that it violates the takings clause that Patrick, that you so artfully explained, which bars the government from taking that private property rights.

(13:26): And they took it all the way to the Supreme Court. So, this started back in 2016 lawsuit. I think his development started way before then. They took it all the way to the Supreme Court and won. And this is one of those cases where it's not just, oh, I'll win Supreme Court nine justices. It was the entire court unanimous that counties can't extract those type of fees to help pay for their policies and their programs and others that are not directly related to private property. So, that was a big win there coming out of California. And then we also had another

Patrick Newton (13:55): A Texas case, right?

Shannon McGahn (13:56): A Texas case. Yeah, I mean two big states, two big associations here and in Texas. And NAR joined the Texas REALTORS® and the American Property Owners Alliance again to support a property owner whose land regularly flooded after a state construction project on a nearby highway was developed and then making his land flood. So, in this

Patrick Newton (14:16): Repeatedly.

Shannon McGahn (14:17): Repeatedly, it's a bit of a problem. And so in this one, they brought this suing the state along with 120, I think others. And there were a lot of these cases that were all combined there. But in this ruling, the Supreme Court said, Texas law provides plaintiff here with a cause of action for compensation which he can pursue. You developed this, you made my property flood.

Patrick Newton (14:37): I remember I wrote the press release on this one when the ruling came down and it was a bit of a technical ruling. Both these cases that you were talking about, I believe were unanimous rulings, which is not a very frequent thing on the Supreme Court. Both times they were just kind of like, yeah, this is obvious.

Shannon McGahn (14:51): Most Supreme Court, they are going to be technical. I think a lot of people think the Supreme Court takes something up and it's just like yay or nay. It's not a vote like how Congress would handle something or it's not a veto like the President would handle. They're going through case law that goes back hundreds of years and looking at very specific issues here. But what those specific issues often do or what those rulings can open up other arguments and of course can provide relief for people who are seeking it. So, in both of those, they were costly, burdensome requirements that were imposed on property owners, land use permits, those types of things that may artificially increase the cost of real estate, the more it costs to develop. Just heard a statistic coming from the National Association of Home Builders that before the shovel even hits the ground, that it's about $90,000 of regulatory fees that go into building a new property that's $90,000 of unaffordability when we're trying to build more affordable homes. And so all of these types of things can also impact that. And that's why it's important that when we see that things are not fair and that they might be violating the Constitution and other laws that we're there to defend it.

Patrick Newton (15:57): Speaking of going to the Supreme Court, like a tar, this is my next one. There's my third one, but so the next case, this will tug at your heart stream. So, this is an issue called equity theft. I think a lot of you may have heard of this, it's against the law in some states and others it isn't. But this is a case that went before the Supreme Court where we had a woman whose home was taken from her to pay taxes, and then the government kept the proceeds of the sale. And that's surprisingly more common than you'd think.

Shannon McGahn (16:28): It's oh, a 94-year-old woman in Minnesota who got absolutely no compensation at all when the government said, you owe money and property taxes, we are going to seize your home and sell it in order to pay those property taxes. And oh, by the way, the extra equity that you had in the home that should then go back to her, we're taking that too. That's quite the punishment for not paying and there's no just compensation in a situation like that. So, we submitted an amicus brief to the Supreme Court in defense of this woman on this surplus equity case along with the American Property Owners Alliance and the Minnesota REALTORS® arguing that the state statute is unconstitutional because it's the taking of private property under the Fifth Amendment. And we urged the Supreme Court to reject state foreclosure statutes so that we could uphold these constitutionally protected private property rights. So another unanimous decision coming from the Supreme Court on this one in favor of the homeowner and her entitlement to that equity that was taken. So, NAR has since been supporting state efforts to correct laws that contradict the Supreme Court's rulings here.

Patrick Newton (17:30): I love this because the decision from the Supreme Court, the quote says, the taxpayer must render unto Caesar what is Caesar's? But no more.

Shannon McGahn (17:38): You said reading Supreme Court decisions isn't flying.

Patrick Newton (17:40): I know sometimes they actually get a little cheeky sometimes in their opinions, but that's another one of those cases where if organizations like NAR weren't throwing their weight behind some of these cases, they might not make it to the top court.

Shannon McGahn (17:52): And there's also, it's still legal in roughly a dozen states that will authorize either a municipality or a state to take possession of a home. And so these are areas where this is not just the legal advocacy, but we are also working with our state and local associations on what type of legislative or regulatory advocacy we can do there too.

Patrick Newton (18:09): Well, another issue we got involved in has to do with the Consumer Financial Protection Bureau. This is a bureau. I was actually a Hill staffer when this was passed into law years ago, but this bureau, whether you support it or not, and it's creation and its mission and all of the rulings that come out of the bureau, there is a quirk on how it's funded that some people found to be unconstitutional. In short, that bureau is kind of quirky because it was created to have sort of a single director that has a lot of power to issue rules around Congress. And then it also has a dedicated funding stream from the Federal Reserve. So, it doesn't have to go through the appropriations process. Shannon McGahn (18:45): But Congress created that dedicated funding stream. So, it's kind of this chicken or the egg type situation. Patrick Newton (18:51): So tell us a little bit about why we decided to get involved in that case.

Shannon McGahn (18:54): Oh sure. It's another one with our coalition partners and friends over at the Home Builders and the Mortgage Bankers Association, where we worked with them on an amicus brief to the Supreme Court to defend consumer protections and the mortgage market with some pending litigation on the future of the Consumer Financial Protection Bureau. I was working at the financial services committee when that was created, and this has been long argued on the funding mechanism and since the financial crisis in 2010. So, this made it all the way to the court, and it was in May of this year, the Supreme Court issued a seven to two ruling agreeing with NA's position on there holding that Congress had the statutory authority to allow the CFPB to get its funding from the Federal Reserve System's earning so that it is constitutional recognizing that that is an important debate that's out there. Is it Amiki? Amichi? urged the court to avoid

Patrick Newton (19:47): Sounds like a singer.

Shannon McGahn (19:48): Exactly. That's where I did not go to law school, but that urged the court to avoid a broader decision in the case, examining the whole constitutionality because of the disruption that it could have in the nation's housing, in real estate markets, and the importance of protecting consumers in the broader economy. So, a seven to two ruling agreeing with NAR's position there.

Patrick Newton (20:08): Okay, well we got to sound super smart there for a minute, talking like we're lawyers playing lawyers, but we're starting to run out of time, so it's closing time, which means usually we get to hear some fun behind the scenes scoop from Shannon. But I'm going to hijack closing time this month, Shannon, because I have a fun announcement to make that we just learned that you have been named Housing Wire's Woman of the Year, ufta! That was the Golden Girls joke. No, but actually that's not what it's called. It's called the Housing.

Shannon McGahn (20:35): I think it's one of many women.

Patrick Newton (20:38): It's called the Housing Wire Woman of Influence. So, for 2024. So, congratulations Shannon. I just came out like a day or two ago.

Shannon McGahn (20:45): Well, I am honored to be represented on that list with so many other influential women and we work in an entire industry of influential women where 60 plus percent of REALTORS® are women who are working to make a better life. And I feel like this is something that we're seeing day in and day out where folks are like, oh, we have all of these great organizations and women are being honored and recognized, and I am happy to be part of it. But also understand that there are plenty of folks, women, men, everyone who is working within our organization who make me look really good. And Patrick, you are one of them, if not the top one. So, I appreciate the support as I get seen as a Women of the Year.

Patrick Newton (21:24): Well, there's a lot of fans of you in this building, in this industry, and it's well-deserved fandom, so you're our fearless leader, so we'll follow you anywhere, but I'm glad Housing Wire acknowledged that. Shannon McGahn (21:36): Yes, thank you Housing Wire and Teamwork makes a dream work and honored for this. But we also just finished up a very busy and active month because June is homeownership month.

Patrick Newton (21:47): Yes. This was going to be your closing time announcement. We just launched this awesome new webpage on nar.realtor/homeownershipmonth with all these resources and things for Homeownership month, which is June of every year.

Shannon McGahn (21:59): June of every year. And that says also include included talking points on Capitol Hill communications throughout the DC advocacy community. We've done ads in Axios and Washington Post and Politico so far this year. And, so we are just consistently getting the message out that Homeownership is great for individuals to earn, to earn wealth, generational wealth, and also for the entire real estate economy. Where it represents fifth of the whole economy is real estate, about 20%. So, check out all of our home ownership month materials and it

Patrick Newton (22:30): It has a toolkit. I don't know what that is, but it has one.

Shannon McGahn (22:32): There's a toolkit in there.

Patrick Newton (22:33): Alright, well thanks everyone for listening. Next month we're going to show some love to our commercial members, so that'll be a fun episode.

Shannon McGahn (22:39): Love talking commercial real estate. This is going to be right in time before the C5 summit, so Oh, cool. Stay tuned.

Patrick Newton (22:45): Alright, so that's the scoop. Thank you to everyone listening to this podcast. Please be sure to subscribe and share wherever you get your podcast. And meet us right back here for more advocacy scoop next time.

Announcer (22:57): REALTORS® are members of the National Association of REALTORS®.