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New York City’s Community Opportunity to Purchase Act ("COPA"), recently passed by the City Council (31-10), creates a real property disposition process whereby owners of certain multifamily buildings are mandated to first notify the New York City Department of Housing Preservation and Development ("HPD"), and then offer a Right of First Refusal (ROFR), to a an HPD “qualified entity,” before selling their property.

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Per the legislation, a “qualified entity,” is defined as “a not-for-profit entity…or any joint venture that includes at least 1 not-for-profit entity certified by [HPD].” Owners who run afoul of COPA’s sale procedures may be assessed substantial penalties.

COPA’s purpose is to preserve affordability, prevent displacement, and stabilize distressed assets by granting these “qualified entities” an early and preferential opportunity to buy covered properties before they are sold to ready, willing, and able buyers on the open market.

As with similar tenant-driven community opportunity-to-purchase regimes elsewhere in the country, COPA has already sparked considerable debate over its constitutional soundness. This article analyzes COPA’s key provisions and analyzes its principal constitutional legal challenges.

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&nbsp;First, the scope of covered COPA properties is specifically targeted. The enacted measure applies to residential buildings with four or more units that meet the defined criteria for physical distress (i.e., significant hazardous violations, participation in designated enforcement programs, or unpaid municipal charges above specified thresholds). Smaller properties—one- to three-unit buildings and owner-occupied buildings with five or fewer units—are exempt.&nbsp;&nbsp;

Second, the law creates a structured transfer mechanism. Owners intending to sell a covered building must notify HPD and a list of “qualified entities” established by HPD. Qualified entities include nonprofit affordable-housing developers and community land trusts (“CLTs”) with demonstrated financial and operational capacity to acquire and preserve affordability, as well as joint ventures in which a certified nonprofit partner retains a leading role.

&nbsp;Third, following notice, qualified entities are given time-limited purchase preferences. A qualified entity must express interest within 25 days and then have a fixed window of 80 days to make a&nbsp;bona fide&nbsp;market offer. If the owner rejects the offer and later receives an acceptable third-party offer, the first qualified entity that made an offer has a limited ROFR to match the third-party offer on identical price and terms within 15 days.

The statute does not require acceptance of below-market bids, nor does it set any price controls. There are also civil penalties baked into COPA for noncompliance. COPA creates a specific private right of action for qualified entities to sue noncompliant owners and provides for the recovery of fees and costs to boot.

Lastly, the law vests exclusively with HPD full rulemaking authority to define qualifying criteria, administer the registry of qualified entities, delineate covered-property distress triggers, and enforce compliance. This structure is similar to HPD-administered acquisition and enforcement initiatives, such as the City’s Third Party Transfer (TPT) Program, a program long mired in extensive fraud involving high ranking HPD officials engaging in pay-for-play kickbacks with developers.

Procedurally, COPA was approved by the City Council at its Dec. 18, 2025, stated meeting (31–10, with three absent councilmembers and seven abstentions). On Dec. 31, 2025, outgoing Mayor Adams vetoed COPA. Under the City Charter, once the veto message is formally received at the Council’s next stated meeting, the council has 30 days to vote on an override which requires a two‑thirds vote of all council members (i.e., 34 votes out of 51 total councilmembers in favor).

Given that COPA did not initially secure a veto‑proof majority and that the expected incoming Speaker, Julie Menin, abstained on the original vote, the outlook for an override is uncertain. If an override is unsuccessful, the Council will invariably pursue re‑passage or a revised measure in the new session given the initial majority vote coupled with Mayor Mamdani’s explicit support for COPA, a key part of his affordability campaign.

Ultimately, COPA’s constitutionality turns on whether its ROFR transfer mechanisms delay the transfer of real property without just compensation, amounts to a taking, violates due process or equal protection, and impermissibly impairs contracts or exceeds municipal home-rule authority.

Regulatory Takings Verses Per Se Takings

Any takings analysis must begin with<a href="https://www.westlaw.com/Link/Document/FullText?findType=Y&amp;serNum=1992066501&amp;pubNum=0000708&amp;originatingDoc=I8856ac80a3c111ec9fafd6fb1790df1a&amp;refType=RP&amp;originationContext=document&amp;vr=3.0&amp;rs=cblt1.0&amp;transitionType=DocumentItem&amp;contextData=(sc.Default)">&nbsp;Yee v. City of Escondido, 503 U.S. 519, 112 S.Ct. 1522, 118 L.Ed.2d 153 (1992)</a>, where the Supreme Court of the United States (SCOTUS) held that “[w]hen a landowner decides to rent his land to tenants, the government may place ceilings on the rents the landowner can charge, or require the landowner to accept tenants he does not like, without automatically having to pay compensation.”<a href="https://www.westlaw.com/Link/Document/FullText?findType=Y&amp;serNum=1992066501&amp;pubNum=0000708&amp;originatingDoc=I8856ac80a3c111ec9fafd6fb1790df1a&amp;refType=RP&amp;fi=co_pp_sp_708_529&amp;originationContext=document&amp;vr=3.0&amp;rs=cblt1.0&amp;transitionType=DocumentItem&amp;contextData=(sc.Default)#co_pp_sp_708_529">&nbsp;Id.&nbsp;at 529, 112 S.Ct. 1522</a>&nbsp;(citations omitted).

In&nbsp;Yee, SCOTUS rejected the owners’ physical-invasion argument concerning the City of Escondido’s rent-control ordinance (and a state statute) that prevented owners of mobile-home rental properties from selecting who their tenants would be.

Based upon&nbsp;Yee&nbsp;and its progeny, the bulk of New York’s Housing Stability and Tenant Protection Act of 2019 (“HSTPA”)—effectively rendering the City’s remaining approximately 1 million rent regulated apartments in regulated status in perpetuity—was found to be constitutionally firm. (Note: Author Massimo F. D’Angelo foreshadowed that the main body of the HSTPA would be upheld on constitutional grounds in his NYJL article entitled<a href="https://www.law.com/newyorklawjournal/2019/10/02/can-new-rent-laws-pass-constitutional-muster/">&nbsp;Can New Rent Laws Pass Constitutional Muster?| Law.com</a>.&nbsp;See&nbsp;Community Housing Improvement Program v. City of New York,&nbsp;492 F. Supp. 3d 33 (E.D.N.Y. 2020),&nbsp;aff’d, 59 F. 4th 540 (2d Cir. 2023),&nbsp;cert denied, 144 S. Ct. 264 (2023)).&nbsp;&nbsp;

However, although the Legislature possesses great due deference in connection with the regulation of property within the confines of its state, particularly in the landlord tenant sphere, its regulatory powers over private property rights are not limitless.&nbsp;&nbsp;&nbsp;

The New York Court of Appeals (“COA”) ruled that “the State may not, under the guise of regulation…deprive the owner of the reasonable income productive or other private use of [their] property,” and that “such an exercise of the police power would be void as violative of the due process clauses of the State and Federal Constitutions.<a href="https://1.next.westlaw.com/Document/I29564922d8d311d9a489ee624f1f6e1a/View/FullText.html?originationContext=docHeader&amp;contextData=(sc.UserEnteredCitation)&amp;transitionType=Document&amp;needToInjectTerms=False&amp;userEnteredCitation=350+N.E.2d+381+(1976)&amp;docSource=39a691eab2c645cfb122cd2e788329de&amp;ppcid=04fc56d394f44beb90a25232fc07ffc9">&nbsp;Fred F. French Investing Co., Inc. v. City of New York</a>, 39 N.Y.2d 587 [1976];&nbsp;see also<a href="https://1.next.westlaw.com/Link/Document/FullText?findType=L&amp;pubNum=1000300&amp;cite=NYCNART1S6&amp;originatingDoc=I29564922d8d311d9a489ee624f1f6e1a&amp;refType=LQ&amp;originationContext=document&amp;transitionType=DocumentItem&amp;ppcid=04fc56d394f44beb90a25232fc07ffc9&amp;contextData=(sc.UserEnteredCitation)">&nbsp;N.Y.Const., art. I, s 6</a>;&nbsp;<a href="https://1.next.westlaw.com/Link/Document/FullText?findType=L&amp;pubNum=1000546&amp;cite=USCOAMENDXIV&amp;originatingDoc=I29564922d8d311d9a489ee624f1f6e1a&amp;refType=LQ&amp;originationContext=document&amp;transitionType=DocumentItem&amp;ppcid=04fc56d394f44beb90a25232fc07ffc9&amp;contextData=(sc.UserEnteredCitation)">U.S.Const., 14th</a>&nbsp;Amdt.,&nbsp;<a href="https://1.next.westlaw.com/Link/Document/FullText?findType=L&amp;pubNum=1000546&amp;cite=USCOAMENDXIVS1&amp;originatingDoc=I29564922d8d311d9a489ee624f1f6e1a&amp;refType=LQ&amp;originationContext=document&amp;transitionType=DocumentItem&amp;ppcid=04fc56d394f44beb90a25232fc07ffc9&amp;contextData=(sc.UserEnteredCitation)">s 1</a>).

In&nbsp;Keystone Assoc. v. State of New York, 19 N.Y.2d 78 [1966], the owner of an Opera House who intended to demolish its building and to erect an office tower was prohibited by the Legislature from demolishing the structure in order to give a private corporation time to gather funds to save the historic Opera House from demolition.

The COA in&nbsp;Keystone Assoc.&nbsp;concluded that the subject statute delaying the owner’s use of the property amounted to a “condemnation statute” and thus the Legislature appropriated private property without just compensation.

Similarly, in&nbsp;Charles v. Diamond, 41 N.Y.2d 318 [1976], a case brought by an owner against village and state officials because the village had unreasonably delayed making improvements to its sewer system to permit the owner to connect his apartment development to the sewer system, the COA found the delay substantial, resulting in significant economic injury to owner.&nbsp;&nbsp;

Historically,&nbsp;per se&nbsp;takings have been found where the government mandates physical access or occupation by third parties, as in&nbsp;Loretto v. Teleprompter Manhattan CATV Corp.,&nbsp;458 U.S. 419 (1982)&nbsp;(small cable boxes required by statute deemed a&nbsp;per se&nbsp;taking) and&nbsp;Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021) (granting union organizers access to private property deemed a&nbsp;per se&nbsp;taking under the Fifth and Fourteenth Amendments by appropriating without compensation).

By contrast, land-use and housing regulations that impact how an owner may use or dispose of property are evaluated&nbsp;ad hoc&nbsp;under the multi-factor&nbsp;Penn Central, 438 U.S. 104 (1978) framework. That analysis considers the economic impact of the regulation, interference with reasonable investment-backed expectations, and the character of the governmental action. The salient holdings reinforce that regulatory conditioning of property uses or transactions—absent mandated access or permanent physical invasion—typically proceeds under the&nbsp;Penn Central&nbsp;balancing test.

While New York courts generally uphold reasonable ROFR in private contracts (by condominiums and cooperative boards), blanket government mandated ROFRs in connection with private-to-private transactions are strictly scrutinized and may be found to be an illegal restraint on the alienation of real property. Whether a restraint on the disposition of property is unreasonable is a question of fact depending upon its purpose, duration and, where applicable, the designated method for fixing the purchase price.&nbsp;Symphony Space Inc. v. Pergola Properties, Inc.,&nbsp;88 N.Y.2d 466 [1996].

Utilizing the&nbsp;Penn Central&nbsp;test, courts weigh the severity and duration of economic burden, whether owners could reasonably have expected to operate free of targeted housing regulations, and whether the government action is “a public program adjusting the benefits and burdens of economic life to promote the common good.”

Economic and social welfare regulations are reviewed under rational-basis scrutiny. The question is whether COPA is reasonably related to legitimate goals such as preventing displacement, preserving affordable housing, and stabilizing distressed assets.

Recent case law illustrates both sides of the due process and Contracts Clause analysis. In&nbsp;Melendez v. City of New York, 16 F.4th 992 (2d Cir. 2021), the Second Circuit allowed Contracts Clause claims to proceed against a pandemic-era guaranty cancellation law where plaintiffs plausibly alleged severe impairment not justified by the legislative record. Author Massimo F. D’Angelo predicted that the NYC Guaranty Cancellation Law would be found to be unconstitutional in his NYLJ article entitled<a href="https://www.law.com/newyorklawjournal/2020/05/26/covid-19-relief-legislation-tests-constitutional-limits/">&nbsp;COVID-19 Relief Legislation Tests Constitutional Limits| Law.com</a>.

Because COPA does not classify based on suspect or quasi-suspect traits, rational-basis review applies. New York courts and federal courts routinely uphold economic classifications drawn to advance legitimate objectives. COPA’s preference for vetted nonprofits or nonprofit-led joint ventures aligns with its remedial objectives: such entities have missions and structures geared toward long-term affordability, and the law conditions eligibility on demonstrable capacity and compliance. That tailoring could provide a rational basis for the classification.

The Contracts Clause (see&nbsp;Article I, Section 10, Clause 1 of the U.S. Constitution) prohibits substantial impairments of existing contracts unless reasonable and necessary to serve an important public purpose. Since COPA operates prospectively, it does not invalidate executed purchase agreements. The procedural notice windows and matching rights attach to covered properties when owners decide to sell; they do not forbid sales, impose price regulation, or nullify existing bargains. While the COPA timing mechanics may be material, courts examining comparable housing laws have distinguished between incidental, prospective burdens and substantial impairments of existing, vested contractual expectations. Tailored, prospective procedural conditions designed to advance pressing public objectives ordinarily pass muster.

New York’s Constitution and Municipal Home Rule Law authorize New York City to legislate for the protection of its citizenry’s health, safety, and welfare, including housing, absent express state preemption or direct conflict. Courts assess preemption by asking whether the State has clearly evinced an intent to occupy the field or whether local law irreconcilably conflicts with state law. COPA neither intrudes upon a field comprehensively occupied by state statute nor conflicts with specific state provisions governing conveyances; rather, it adds a localized, procedural overlay to certain sales to advance municipal housing objectives.

Washington, D.C. has administered for decades a Tenant Opportunity to Purchase Act (TOPA), which affords tenants an early opportunity to acquire their buildings and has been upheld on constitutional grounds. San Francisco’s COPA, enacted in 2019 – which also provides a ROFR—extends a similar priority to certified nonprofits and has, to date, not been legally tested. New York courts have long sustained robust municipal regulation of housing conditions, preservation, and tenant protection within the police power as we observed with HSTPA.

Opponents will argue COPA “commandeers” a stick in the owner’s bundle of rights—the right to freely dispose of property—by unilaterally vesting a ROFR-like prerogative in third parties without compensation. They will characterize that ROFR as a valuable property interest and contend its imposition constitutes either a&nbsp;per se&nbsp;taking (as a compelled transfer of a discrete property interest), or, alternatively, a regulatory taking given the transactional delay, deal risk, and chilling effects.

They may analogize exaction cases such as&nbsp;Nollan v. California Coastal Commission,&nbsp;483 U.S. 825 (1987),&nbsp;Dolan v. City of Tigard,&nbsp;512 U.S. 374 (1994), and their extension to legislative conditions in&nbsp;Sheetz v. County of Eldorado,&nbsp;601 U.S. 267 (2024), and argue that conditioning a sale on granting a ROFR is an unconstitutional condition untethered to any specific development impact.

Owners will argue, among other things, that COPA is an unlawful restraint on the alienation of their real property as it impedes their ability to effectuate a transfer on their desired timeline, causing them substantial economic harm, all while they must pay common carrying charges. (mortgage payments, title and general liability insurance, and loss of maximum profits due to fluctuations in market conditions, etc.).

On due process and equal protection, critics will urge that COPA’s class-based preferences are arbitrary, privileging non-profits (and non-profit-led ventures) over for-profit purchasers and small owners without adequate justification, while burdening transaction timelines and depressing bid competition.

They may also argue that HPD’s regulatory discretion—e.g., to define “distress” criteria or expand qualified entities—creates vagueness or invites arbitrary enforcement. Contracts Clause arguments will emphasize that even short windows can be outcome-determinative in tight markets, thereby imposing significant impairments on owners’ preexisting autonomy to negotiate and consummate sales with buyers of their choice.

Finally, challengers will underscore policy experience in jurisdictions like D.C., arguing that right-of-first-refusal schemes can slow sales, deter investment, amplify holding costs, and reduce property values, thereby undermining the asserted public purposes. They will contend that, however laudable the objectives, coercively vesting ROFR rights in favored private parties is not a permissible means.

The most serious constitutional challenge is the Takings Clause theory that COPA appropriates, without compensation, a discrete property interest (ROFR) and thereby effects a&nbsp;per se&nbsp;taking. However, COPA imposes a temporary, procedural preference to receive and match&nbsp;bona fide&nbsp;market offers for certain covered properties designated based on distress or expiring affordability. Owners retain full title, can ultimately refuse nonprofit offers, and can consummate sales at market price to any purchaser if the statutory preference is not exercised.

The City will argue that investment-backed expectations in New York’s heavily regulated housing market—especially for distressed, code-deficient, or covenant-expiring buildings—are not reasonably anchored in an expectation of wholly unencumbered alienation. Thus, due process and equal protection challenges face a steeper hill on rational-basis review, favoring the City’s affordability mission.&nbsp;&nbsp;

New York City’s COPA represents a targeted, procedural intervention at the point of sale for a specified class of distressed or covenant-expiring multifamily buildings. While it is carefully designed to advance concededly legitimate municipal interests—preserving affordability, preventing displacement, and stabilizing buildings at risk—through minimally invasive, time-limited transactional preferences, there is no provision in the legislation providing for compensation.

And although COPA does not compel physical occupation or dictate sub-market conveyances, with owners retaining the right to command market price and to consummate sales with private buyers if qualified entities cannot meet the terms, owners may be delayed in consummating their deals, resulting in substantial economic harm without any entitlement to receive just compensation.

Under established takings jurisprudence, COPA is best assessed under the&nbsp;Penn Central&nbsp;regulatory takings framework, where its limited economic impact, congruence with reasonable expectations in a heavily regulated housing sphere, and public-minded character weigh in favor of constitutionality. Substantive due process and equal protection challenges are unlikely to succeed under rational-basis review, and Contracts Clause claims are weakened by the law’s prospective application.

In short, whether COPA can pass constitutional muster will be a much closer call in comparison to the HSTPA, the main body of which was found to be constitutionally sound.

"Can COPA Pass Constitutional Muster?" by Massimo F. D'Angelo and William M. Pekarsky was published in the <a href="https://www.law.com/newyorklawjournal/2026/01/20/can-copa-pass-constitutional-muster/" target="_blank" rel="noreferrer noopener">New York Law Journal</a> on January 20, 2026.

Reprinted with permission from the January 20, 2026,&nbsp;edition of the&nbsp;New York Law Journal&nbsp;© 2026 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.

Can COPA Pass Constitutional Muster?

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Can COPA Pass Constitutional Muster?

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