Landlords want to be paid for pandemic losses and hope to reach a deal with the Trump administration – Image for illustrative purposes only (Image credits: Unsplash)
Five years after a federal eviction moratorium upended the rental industry, property owners across the U.S. continue to grapple with the financial fallout. A group of more than 1,500 landlords who sued the government over uncollected rent during the COVID-19 crisis recently won a legal victory on appeal. Now, they are negotiating a potential settlement with the Justice Department under the Trump administration, aiming to recover up to $1.5 billion in compensation.
The Moratorium’s Origin and Legal Battle
The Centers for Disease Control and Prevention imposed the nationwide eviction ban in September 2020, extending it until July 2021. This measure prevented landlords from removing nonpaying tenants amid widespread job losses from the pandemic. Property owners argued that the policy amounted to a taking of their property without just compensation, violating the Fifth Amendment.
The plaintiffs initially lost in the Court of Federal Claims in 2022 but prevailed on appeal. Their lawsuit highlighted losses ranging from thousands to $14.5 million for individual owners, with the total industry impact estimated at $57 billion during the moratorium’s duration. Settlement talks with the Justice Department began following the appellate win, focusing on a fraction of those damages.
Landlords Detail Devastating Business Impacts
Matthew Haines, a Texas landlord with three rental communities totaling 240 units, faced over $1 million in losses from unpaid rent. He described the moratorium as the most severe threat in his 30 years in real estate, forcing deficits in cash flow that strained operations. Many owners like Haines took on debt, delayed maintenance, laid off staff, or even sold properties to survive.
Liz Leone, who manages 52 apartments in Las Vegas, lost more than $250,000 and borrowed $60,000 from the Small Business Administration to cover essentials like taxes and utilities. A National Rental Home Council survey after the ban ended revealed that half of small landlords dealt with missed rent payments, while a third considered exiting the business. “It was terrifying,” Haines said of the sudden cash crunch.
Creighton Magid, a lawyer for the plaintiffs, emphasized that public health measures, though well-intentioned, should not shift financial burdens onto private owners without government support. State and local moratoriums, which persisted longer in 43 states and numerous cities, compounded these challenges due to broader regulatory authority.
Tenant Advocates Highlight Housing Stability Gains
Supporters of the policy pointed to its role in preventing widespread homelessness during the crisis. A study in JAMA Network Open found that state eviction bans reduced potential homelessness increases from 20% to 11% in a typical state by 2022. Tenants like Dulcee Barnes in Miami credited the moratorium with providing essential breathing room after job losses left her two months behind on rent.
Housing groups also noted $46.5 billion in federal emergency rental assistance distributed nationwide. However, landlords contended that these funds fell short, hampered by bureaucratic delays, uneven state implementation, and instances where tenants allegedly exploited the ban. Programs in states like Arkansas and Nebraska rejected portions of the aid, leaving gaps in coverage.
Lingering Ripples in Today’s Rental Market
Even after the Supreme Court ended the federal moratorium for lacking congressional backing, its effects persist. Landlords report heightened caution in tenant screening, longer eviction processes, and a reluctance to rent to higher-risk applicants, including some low-income households. Rick Jones of Management Services Corporation in Virginia, which lost over $230,000, observed rising fraud in applications, reinforcing a preference for vacancies over problematic tenants.
Haines has tightened his criteria, turning away applicants he might have previously considered. This shift contributes to tighter housing availability and potentially higher costs for renters. Industry observers note growing numbers of small owners leaving the market altogether.
Potential Outcomes of a Trump-Era Deal
A successful settlement could provide partial relief to affected landlords while signaling government accountability for emergency policies. For renters, the implications remain uncertain – recovered funds might stabilize small operations, but they could also influence future pricing or availability amid ongoing housing pressures. The Justice Department has declined to comment on the ongoing litigation.
Landlords like Haines view the effort as more than financial recovery; it represents a stand against unilateral regulatory overreach. As negotiations progress under the current administration, the case underscores enduring debates over balancing public health, property rights, and housing affordability in post-pandemic America.
