While President Trump’s announcement has dominated the headlines, legal experts are questioning how such a ban would be implemented. Because the right to buy and sell property is a fundamental part of the U.S. legal system, a total ban on a specific class of buyer could face immediate constitutional challenges.
To “codify” the ban, as the President suggested, would require an Act of Congress. This means the proposal must survive the legislative process, where definitions of “large institutional investor” will be fiercely debated. Does a “large” investor own 100 homes or 1,000? Will “mom and pop” landlords with 10 properties be accidentally caught in the net?
Furthermore, there are questions regarding the Commerce Clause and whether the federal government has the authority to regulate local real estate transactions in this manner. Most property law is handled at the state level, which could lead to a patchwork of different rules across the country.
The administration may look to use the Department of Housing and Urban Development (HUD) or the Federal Housing Finance Agency (FHFA) to implement “First Look” programs, which give individual buyers a 30-day window to bid on homes before they are opened to investors.
As the “Builder-in-Chief” moves forward, the battle will likely move from the social media feed to the courtroom.
