WILL EVICTION MORATORIUM LEAD TO A CLAIM FOR DAMAGES? 

WILL EVICTION MORATORIUM LEAD TO A CLAIM FOR DAMAGES? 

By Mark Zinman, Zona Law Group 

Any investor that has been in the real estate game for a few years will remember that in 2020, for the first time ever, we saw federal and state governments enter blanket eviction moratoriums.  While some states previously had moratoriums for specific things (e.g. no lock-outs during winter months in Chicago), this was the first time we had seen such a moratorium in Arizona and across the entire country.  During that time, we put out podcasts, newsletters and sent countless emails advising clients how to comply with the changing laws. In each such communication, clients would repeatedly ask how such action was even legal.  While there were challenges against the law, the most important part at that time, was making sure we advised clients, so they could stay out of trouble.  While we informed clients about challenges they had to the moratoriums, the main focus was on compliance.  That has now changed since the moratoriums have all expired. 

A federal court of appeals recently ruled that owners are entitled to proceed with their case against the federal government relating to the CDC eviction moratorium. If ultimately successful, this could lead to a multibillion dollar lawsuit wherein owners collect the damages they sustained when they were unable to evict non-paying residents and were unable to get possession of their property. 

The basis of the lawsuit is as follows: "The 5th Amendment of the United States Constitution protects United States citizens’ rights to personal property among other things. Included in the 5th Amendment is the “Takings Clause”. The Takings Clause states that private property cannot be taken for public use without just compensation. It is considered a basic liberty and a primary limitation on the government’s ability to restrict private property use."  The argument is that the moratorium denied owners the right to use their property, by housing non-paying residents against the will of the owner.   

We are far away from an ultimate ruling in the case, but this is an important step forward. It's possible the US government may appeal the ruling to the Supreme Court, and even if they don't, the parties still have to return to the trial level to litigate the case.   

We are not involved in the case, and are merely reporting what we have learned.  If readers want further information, they should go to cdcevictionlawsuit.com.   Further, if owners are interested in joining as a Plaintiff to the lawsuit, the National Apartment Association is reporting that this must be done by August 2025. Interested parties can learn more here.  We do not know the deadline, and any reader must be proactive if they wish to get involved.