Landlords sue federal gov’t over rental losses during CDC eviction ban

National Apartment Association estimates federal rent relief will fall short by $27B

NAA president Robert Pinnegar (iStock, NAA)
NAA president Robert Pinnegar (iStock, NAA)

In three days, the federal ban on evictions is set to expire, allowing landlords in most states to take non-paying tenants to court.

But property owners say they deserve more than the freedom to join a backlogged docket. They want money.

The National Apartment Association, a landlord group, filed a lawsuit in federal claims court Tuesday demanding that the federal government compensate housing providers who have “suffered severe economic losses” during the eviction moratorium imposed by the Centers for Disease Control since September.

The complaint estimates that landlords are grappling with $26.6 billion in debt that will not be covered by the $50 billion in federal rental assistance funds — a mere 6.5 percent of which had been distributed as of last week — and argues that the CDC’s eviction ban violated the constitutional rights of landlords.

The suit alleges the moratorium infringed upon housing providers’ right to access the courts, freedom to enter into contracts without government interference and the right to demand compensation when property is seized through government action.

John McDermott, one of the attorneys representing the plaintiffs on the case, said the Supreme Court case Cedar Point Nursery v. Hassid, decided last month, sets a precedent for the NAA filing. The judge in that case ruled that physical entry onto a property — in this instance, for a few hours — was a physical taking for which owners must be compensated.

NAA’s suit aims to apply that ruling to the eviction ban.

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“What happens if somebody’s on your property for months?” said Jay Martin, executive director of the Community Housing Improvement Program, an organization representing New York City property owners.

“If government is instituting the policy which allows someone to stay without paying, then government accepts the responsibility of paying on behalf of the tenant.”

In the Cedar Point case, the judge kicked the decision on what to award in damages down to a lower court, which has yet to rule. Plaintiffs’ attorney McDermott said how much to award is usually “what is at issue.”

Property owners in states and cities with their own eviction bans, such as California, Illinois and New York, cannot participate in NAA’s suit.

However, Martin said he would not be surprised if New York landlords filed a similar action in the event that the state’s emergency rental assistance program proves insufficient in covering arrears. The program is one of the latest in the country to launch, and thus far has reportedly distributed a measly $117,000.

“There will definitely be owners who are not completely made whole,” said Martin. “And there is probably interest from the real estate industry to launch a lawsuit that would demand some sort of compensation for being forced to house people throughout the pandemic.”