Landlords across the United States, barred from evicting tenants during the COVID-19 pandemic, are now in settlement discussions with the Department of Justice (DOJ) to recover up to $1.5 billion in losses. The federal eviction moratorium, implemented by the Centers for Disease Control and Prevention (CDC) in September 2020 and lasting through July 2021, was among the pandemic's most contentious policies. A federal lawsuit filed by over 1,500 property owners argues the moratorium violated the Fifth Amendment by unlawfully denying them compensation.
Impact on Landlords
Matthew Haines, a Texas landlord who owns three rental communities with 240 units, lost over $1 million due to unpaid rent during the moratorium. 'It’s important for us to stand up when a group like the CDC unilaterally, functionally, decides that they have a right to oversee our business,' Haines said. The lawsuit claims landlords lost $57 billion collectively, with more than 10 million delinquent renters in the first four months of the moratorium. Many landlords were forced to take on debt, lay off staff, delay repairs, and even sell their properties.
Legal Battle
The plaintiffs initially lost in the Court of Federal Claims in 2022 but won on appeal. Creighton Magid, a lawyer representing the landlords, stated, 'Public health measures like this, they may be well intentioned. But when the government imposes this type of moratorium, the financial burden should be borne by the government, not individual property owners.' The Justice Department declined to comment on the ongoing litigation.
'What I hope that we will accomplish and, to some extent, we already have, is vindication for ourselves,' Haines said. 'But what’s more important to me is that hopefully my investors will recover some of that money that they should have had coming in over the last six years.'
Long-Term Effects
The moratorium's effects linger, with landlords reporting longer delays for evictions, tighter screening for riskier tenants, and a growing number of owners exiting the rental business altogether. Liz Leone, a landlord with 52 apartments in Las Vegas, lost over $250,000 and almost went out of business. 'It was terrifying,' Haines recalled. 'We knew almost immediately that we were going to a massive deficit in cash flow that we probably weren’t going to be able to cover.' Tenant advocates argue the moratorium was a lifesaver, keeping millions housed and slowing the spread of COVID-19, noting landlords received tens of billions in rental assistance.