Landlords sue to recover pandemic-era losses blocked by eviction moratorium

Summary elaboration

Landlords across the country who say a federal eviction moratorium kept them from collecting rent and forced financial losses during the pandemic have pushed their case into settlement talks with the Justice Department, after winning an appeal. The plaintiffs argue that the Centers for Disease Control and Prevention exceeded its authority when it put the eviction restrictions in place, a measure they say lasted from September 2020 through July 2021 and became a flashpoint during the public health emergency.

Matthew Haines, a 57-year-old Texas property owner, filed the suit as part of a group seeking compensation for what the plaintiffs describe as losses tied to the moratorium, which barred evictions for tenants who failed to pay rent. Haines said he learned he could not evict nonpaying tenants just months after the pandemic began, and he told The Associated Press that the restrictions cost him and his investors more than $1 million.

Haines said he is now seeking relief not only for himself but for his investors as part of what the landlords characterize as a broader fight over whether the government should bear the financial burden of the policy. “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. “What I hope that we will accomplish and, to some extent, we already have, is vindication for ourselves,” he added. “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.”

According to the lawsuit described by the plaintiffs, Haines is among more than 1,500 property owners who filed suit arguing that the moratorium violated the Fifth Amendment by unlawfully denying them compensation. The plaintiffs’ cases initially failed in the Court of Federal Claims in 2022, but they later won on appeal and moved into settlement discussions, they said. Plaintiffs and their attorneys told AP they are hoping to recoup as much as $1.5 billion—framing that as only a fraction of what the industry lost.

In their filing and statements, landlords pointed to the broader spread of eviction bans beyond the federal action as well, saying state and local measures extended restrictions after the federal moratorium ended. The plaintiffs also argue that the federal ban left them unable to collect rent, pushing many toward debt, layoffs, delayed repairs and, in some cases, property sales. They said some impacts have endured through changes in eviction timing and more cautious screening practices for tenants they consider higher risk.

Tenant advocates, however, dispute that landlords’ experiences should be the primary frame for accountability. Eric Dunn, director of litigation at the tenant-rights nonprofit National Housing Law Project, disputed that landlords suffered significant losses and argued landlords were able to collect rent and even sell their properties during the moratorium. He also pointed to federal emergency rental assistance, saying the Eviction Lab at Princeton University found it was largely targeted to areas where landlords filed the most evictions before the pandemic, and he said the assistance undercut the argument that landlords were left uncompensated.

Public health advocates also argue the moratorium prevented homelessness. Kathryn Leifheit, an assistant professor at the UCLA Fielding School of Public Health and lead author of a study published in April in the medical journal JAMA Network Open, said eviction bans were “a powerful intervention to keep people in their homes.” Leifheit said her study found homelessness rose 11% in a typical state in 2022 and would have increased 20% without state eviction moratoriums. Dulcee Barnes, a 28-year-old in Miami who told AP she and her roommates lost restaurant jobs during the pandemic, said she and her roommates were two months behind on rent and would have been evicted without the moratorium, calling it a source of “breathing room” that removed the fear of losing housing quickly.

The landlords argue that rental assistance did not fully make them whole and that programs were slow to be implemented or were too burdened by administrative hurdles. They say states were late to spend funds and, in some cases such as Arkansas and Nebraska, did not accept all federal funding. Landlords also said some tenants took advantage of the moratorium. Liz Leone, a Las Vegas landlord who said she lost over $250,000 and borrowed $60,000 from the federal Small Business Administration to stay afloat, said she struggled to pay it back and said she could see tenants who lived rent-free, including “buying cars.”

The lawsuit also intersects with the way the pandemic-era eviction restrictions reshaped landlord behavior well after the federal ban ended. Although the moratorium ended five years ago, landlords told AP they still adjust their practices. Rick Jones, vice chairman of Management Services Corporation, which owns 4,000 apartment units in Virginia and is party to the lawsuit, said applicants increasingly attempt fraud by fabricating employment records and payroll checks, and he said the company lost more than $230,000 in unpaid rent during the pandemic. Jones also said his company has found it “more important to keep that unit vacant than to put a bad resident in.”

Haines said he has increased tenant screenings and has turned away some low-income applicants since the pandemic. He said evicting tenants can take months longer than it did before the moratorium, adding to his caution about taking on new tenants. “It’s done more harm,” he said, referring to what landlords say the moratorium did to low-income people they might have otherwise leased to, and he described his belief that the risk now outweighs the chance to rent.

The Justice Department, in response to Associated Press questions, said it does not comment on ongoing litigation. The landlords’ push for compensation comes after the Supreme Court ruled that the CDC lacked authority to impose the ban without congressional authorization, ending a policy that had become one of the pandemic’s most divisive interventions.