Supreme Court Limits Federal Power, Affecting Real Estate!

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Bill Rapp, Commercial Mortgage Broker
July 01, 2024•3 min read

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The recent Supreme Court decision to overturn the decades-old precedent allowing federal agencies to interpret vague laws marks a significant shift in regulatory power. This ruling opens the door for businesses to more easily challenge regulations they find unfavorable.

In a 6-3 decision, the Court overturned the 1984 Chevron v. Natural Resources Defense Council case, thereby limiting the regulatory powers of numerous federal agencies overseeing sectors such as the environment, public health, and employment. Legal experts suggest that this decision will have profound effects on commercial real estate, a sector deeply intertwined with various laws and regulations.

Impact on Commercial Real Estate

Lynn Calkins, a partner at Holland & Knight who leads the firm’s Chevron deference working group, highlighted the extensive reach of federal regulations in real estate. She emphasized the need for property owners to reassess their operations to identify areas regulated by federal agencies.

The Chevron precedent had mandated courts to defer to federal agencies on how to implement legislation passed by Congress. This deference has played a role in tens of thousands of cases over the past four decades. The precedent was contested in cases involving National Marine Fisheries Service regulations on overfishing, leading to the Supreme Court's recent decision.

Department of Housing and Urban Development (HUD) and Fair Housing Act

Calkins pointed out that one of the most significant impacts of the ruling could be on the Department of Housing and Urban Development's (HUD) interpretation of the 1968 Fair Housing Act. Given the Act’s broad and vague language, HUD has historically exercised considerable discretion in its regulations and guidance. The new ruling raises questions about the continued validity of these policies.

Political and Legal Repercussions

The Chevron ruling has been a focal point for conservatives, who argue that it allowed federal agencies to impose varying rules with each new administration. Geoffrey Manne, president of the International Center for Law & Economics, praised the decision, stating it promotes legal stability and shifts the responsibility of legislative clarity back to Congress.

The Supreme Court’s conservative majority, led by Chief Justice John Roberts, argued that the Chevron doctrine disrupted the separation of powers by enhancing executive agency authority at the expense of judicial power. The dissenting liberal justices contended that the majority overstepped by assuming that judges are better equipped than specialized agency experts to interpret complex regulations.

Broader Implications

Rafe Petersen, an environmental policy expert at Holland & Knight, noted that laws related to climate change, resiliency, and environmental justice could also face challenges under the new ruling. Zoning rules, while not federal laws, could be contested based on local interpretations of statutes.

Calkins and Petersen foresee an increase in legal challenges from businesses against federal regulations. This ruling could level the playing field, allowing businesses to present objective arguments without the presumption of agency deference.

In conclusion, the Supreme Court's decision to limit federal agency power is poised to reshape the regulatory landscape, particularly impacting commercial real estate. Property owners and businesses should stay vigilant and prepared for the changing legal environment.

Should you need an experienced Commercial Real Estate Mortgage Broker, please feel free to contact me at 281-222-0433.

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Supreme Court rulingfederal agency powerChevron deferencecommercial real estateDepartment of Housing and Urban Development (HUD)regulatory impactFair Housing Actlegal stabilityenvironmental policyzoning laws
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Bill Rapp - Commercial & Residential Mortgage Broker

Whether you're a first-time homebuyer, a seasoned investor, or a business owner with ambitious plans, securing the right financing is crucial. At Medallion Funds, we take the guesswork out of mortgages, offering a comprehensive suite of residential and commercial loan options to fit your unique needs. Looking for Your Dream Home? We understand the excitement and challenges of navigating the residential real estate market. Our experienced mortgage brokers will guide you through every step, from pre-qualification to closing. We offer a variety of loan programs to suit your financial situation, including: • Fixed-rate mortgages: Offering stability with predictable monthly payments. • Adjustable-rate mortgages (ARMs): Providing competitive rates for a set period. • FHA loans: Making homeownership accessible with lower down payments. • VA loans: Rewarding veterans with attractive rates and flexible terms. Investing in Your Business Future? Growth often requires capital, and we can help you unlock the potential of your commercial property. Our brokers specialize in a wide range of commercial loan options, including: • Purchase loans: Financing the acquisition of new buildings or land. • Construction loans: Facilitating the development of your project. • Refinance loans: Restructuring your existing mortgage for better terms. • SBA loans: Providing access to government-backed financing for qualified businesses. The Medallion Funds Difference: We go beyond simply finding a loan. We take the time to understand your goals and develop a personalized strategy. Here's what sets us apart: • Expertise: Our brokers have a deep understanding of both residential and commercial lending. • Competitive Rates: We leverage our strong lender relationships to secure the best possible terms. • Streamlined Process: We handle the paperwork, keeping you informed every step of the way. • Exceptional Service: We're committed to providing you with a positive and stress-free experience. Ready to Take the First Step? Contact Medallion Funds today for a free consultation. Let's discuss your financing needs and help you achieve your dreams!

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