## Facts

- The Pennsylvania Rent Withholding Act authorizes a city to certify a dwelling as “unfit for human habitation,” suspends tenants’ duty to pay rent to the landlord, and requires rent payments to be deposited into escrow.
- If the dwelling is recertified fit within six months, escrowed funds are payable to the landlord; if not, funds may be returned to tenants (or used for repairs or landlord-obligated utilities).
- The Act also bars eviction of tenants during the rent-suspension period.
- Peter, Eugene, and Helen DePaul owned a nine-unit apartment building in Philadelphia.
- On or about April 4, 1968, the City of Philadelphia certified the building “unfit for human habitation.”
- Starting April 27, 1968, tenants withheld rent from the landlords and paid it to Samuel Kauffman as the designated escrow agent.
- The landlords alleged they sought financing to make repairs but could not secure loan processing before the six-month period expired.
- The landlords filed an equity action seeking a declaration that the Act was unconstitutional and an injunction preventing Kauffman from returning escrowed rents to tenants.

## Issues

1. Whether the Rent Withholding Act is a valid exercise of the Commonwealth’s police power to protect public health and safety.
2. Whether diverting rents into escrow and potentially returning them to tenants after six months effects an unconstitutional taking without just compensation.
3. Whether the Act violates due process by suspending rent rights based on an administrative certification of unfitness.
4. Whether suspending rent payments to landlords and barring eviction during the suspension period unconstitutionally impairs landlord-tenant contracts.

## Decision

- The Supreme Court of Pennsylvania affirmed the order sustaining the demurrer and upheld the Act.
- The court held the Act is a valid exercise of the police power aimed at abating unsafe and unsanitary housing conditions.
- The court rejected the takings claim, concluding the statute regulates rent entitlement based on habitability obligations and does not appropriate rents for the state.
- The court found no due process violation because the certification rests on code standards, the withholding is time-limited, landlords have an opportunity to cure, and judicial review is available.
- The court rejected the contract-impairment challenge, holding the temporary redirection of rent to escrow and limited anti-eviction provision are reasonable means to serve a legitimate public purpose.

## Legal Principles

- A state may condition a landlord’s entitlement to rent on compliance with minimum habitability and housing-code requirements as a police-power measure to protect health and safety.
- Rent-withholding and escrow schemes tied to abatement of unlawful housing conditions are regulatory measures and do not constitute compensable takings when they operate as conditional, time-limited restrictions rather than state appropriation.
- Due process is satisfied where administrative determinations apply objective code standards, the deprivation is temporary with an opportunity to cure, and courts remain available to review and enforce rights.
- Contract rights in the landlord-tenant context may be reasonably restricted to serve significant public objectives, including remedies directed at substandard housing.

## Conclusion

The Pennsylvania Supreme Court upheld the Rent Withholding Act against multiple constitutional attacks, concluding that temporarily diverting rents to escrow and limiting eviction while a dwelling is certified unfit are reasonable, procedurally adequate regulations to compel correction of hazardous housing conditions.


DePaul v. Kauffman, 272 A.2d 500 (Pa. 1971)