In a one-word answer, “yes;” the CDC eviction moratorium was ruled unconstitutional on May 5, 2021 by a District of Columbia, District Judge. Unfortunately, that is not the end of the story. Approximately two weeks after the judge struck down the CDC moratorium, she granted a stay of her order, meaning that the CDC moratorium will continue to be enforced until it expires or until it is ruled unconstitutional by an appellate court. The ruling, and decision to stay the ruling, are both legally fascinating and important for investors to understand.

Since the moratoriums started in March, 2020, we have repeatedly heard people argue that such orders are unconstitutional. However, just because people think something is unconstitutional doesn’t mean you can ignore the law; the law must be found unconstitutional by a court or you risk penalties under the law.

In this case, the CDC based its moratorium from a 1944 law that allows it to take action to stop communicable diseases from spreading across states and into the country from other countries. The language says, for purposes of carrying out and enforcing such regulations, the Secretary is authorized to “provide for such inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings, and other measures, as in his judgment may be necessary.” Until a few months ago, no one would have thought this extended to controlling evictions in the 50 states.

In her May 5, 2021 Order, the district court judge unequivocally wrote that “The national eviction moratorium satisfies none of these textual limitations. Plainly, imposing a moratorium on evictions is different in nature than “inspecting, fumigating, disinfecting, sanitizing, . . . exterminating or destroying,” 42 U.S.C. § 264(a), a potential source of infection.” These short two sentences summarize the arguments that owners have made since September – the CDC should not, and does not, have the legal authority to deprive property owners of their rights. Remember, to allow a resident to not pay rent and stay in a property, constitutes a delay of the owner’s contractual rights and state law rights, and is an interference by the federal government in a state issue.

The Court further held that, “ORDERED that the nationwide eviction moratorium issued by the Centers for Disease Control and Prevention, and currently in effect at 86 Fed. Reg. 16,731, is VACATED.” Owners rejoiced immediately, thinking that the CDC order had expired. However, the District Court held its order and allowed the government to seek an injunction.

After full briefing, the District Court reiterated that it thinks the CDC does not have authority to enter such a moratorium, but because it was such a novel issue, it would stay its ruling until the matter was reviewed by an appellate court. In other words, even though it is unconstitutional, the Court won’t strike it down until it has been reviewed on appeal.

This was disappointing to many owners, especially because the CDC order is set to expire at the end of June. It is still very important that this case proceed to completion (even if the order first expires) so property owners in the country do get a ruling on this issue, so it doesn’t happen again. However, remember that this ruling only analyzes the CDC’s authority. Even if this is struck down, its possible that the federal legislature or another agency may enter a new moratorium. Stay tuned…

by Mark Zinman, Zona Law Group