The Eviction Moratorium: The Financial Impact on Landowners

When the COVID-19 pandemic began, the American government and the CDC issued an eviction moratorium which temporarily barred landlords from removing non-paying tenants. Although intended for the public good, it caused financial and legal difficulties for property owners, including the loss of value and rental payments.

Property owners lost valuable income and control over their properties. Recent court rulings, though, indicate that the eviction moratorium could be determined to have been a “taking” of property owners’ properties. As eminent domain attorneys, versed in what constitutes a “taking,”, we’ll break down these legal developments and what they could mean for you.

What Is the COVID Eviction Moratorium After July 2021?

The eviction moratorium, introduced in 2020, was an effort to protect tenants during the pandemic’s social and economic upheaval. It stated that for a specific period, any landlord or owner was prohibited from evicting a tenant for non-payment of rent.

While the moratorium stopped after July 2021, the decision’s ripple effects are still being felt by property owners.

The Fifth Amendment: Its Legal Structure and Impact on Property Owners

The government’s decision to enact an eviction moratorium conflicted with several statutes provided in the Fifth Amendment.

• Since property ownership includes the right to maintain or eliminate tenant relationships, landlords still retain legal rights to evict tenants.
• Any government interference with a landlord’s eviction process is considered an undertaking, as shown in the Supreme Court’s ruling of Cedar Point Nursery v. Hassid (2021).
• Since the eviction moratorium allowed tenants to stay for months without payment, landlords lost the ability to alienate their own property (e.g. rent, sell, demolish, etc).

The Economic Burden on Landlords and the Government’s Role

The eviction moratorium left a serious financial burden on landlords since they couldn’t collect rent, yet were still expected to pay mortgages, maintenance, and property taxes. Small property owners were the hardest hit, as they had limited budgets and fewer tenants.

The Takings Clause under the Fifth Amendment states that any public property used for public benefit must come with just compensation. Despite the introduction of federal rent assistance programs, most landlords never received reimbursement for lost rent.

Since government action was directly responsible for landlords’ lost income, arguably the government could be required to provide compensation for this lost income.

Court Rulings and What They Mean for Landlords’ Rights

The Federal Court of Claims has seen legal action developing for the past four years to achieve a favorable ruling for landlords. Firstly, the National Apartment Association filed a lawsuit in 2021 claiming the eviction moratorium conflicted with the Fifth Amendment.

The Court of Federal Claims dismissed the lawsuit, stating that rental assistance programs and lack of Congressional authorization ensured the moratorium was not legally considered a taking.

However, the Federal Circuit would reverse the dismissal in 2024 under further scrutiny of the CDC’s requirements for the eviction moratorium. They stated that the government’s adoption of a policy in good faith under a federal statute, even if later found to be unlawful, still constitutes authorization for takings purposes.

Since the CDC’s order could still be considered an official government act, this detail opens up more possibilities for landlords to file a valid takings claim under the Tucker Act. This act controls actions against the federal government for takings with a case limitation of six years.

Regulatory Taking vs Physical Taking: The Key Differences

A regulatory taking limits property use and generally doesn’t offer compensation, while a physical taking forces the use of private property with automatic compensation. Since the eviction moratorium closely resembled the ruling in Cedar Point Nursery vs Hassid (2021), the Federal Circuit has a strong case for irregular enforcement of a physical taking.

Have you experienced financial or legal issues from this moratorium? Talking with our eminent domain attorneys is your first step toward receiving fair compensation.

Protect Your Rights with Eminent Domain Law Attorneys

When you’re struggling to keep track of the legal changes and fine details surrounding your case, we’re here to help. Our project portfolio is filled with our work representing over 2,000 clients facing eminent domain cases.

If you’re wondering whether you’re owed compensation, contact us for a free case review.