Landlords now have the opportunity to pursue legal action against the federal government for violating the Fifth Amendment’s takings clause by imposing a moratorium on evictions. This decision was made by a federal appeals court in a recent 2-1 ruling on August 7th.
The lawsuit was filed by owners of residential rental properties who suffered financial losses due to the eviction moratorium put in place by the U.S. Centers for Disease Control & Prevention to combat the spread of COVID-19. The moratorium prevented evictions for tenants who were unable to pay rent due to economic hardships.
Even though the U.S. Supreme Court had previously blocked the eviction moratorium in August 2021, there was no takings claim involved in that case. However, the property owners in this new lawsuit argued that they were entitled to compensation under the takings clause because the moratorium essentially amounted to a physical taking of their rental properties for public use.
The federal government, on the other hand, claimed that a takings claim cannot arise from unauthorized government actions and that the moratorium did not physically take property but rather regulated the landlord-tenant relationship. However, the Federal Circuit disagreed with the government’s arguments and ruled in favor of the landlords.
According to the appeals court, even actions that are considered unlawful can be authorized if they were done within the scope of a government agent’s duties in good faith implementation of a congressional act. Additionally, the court determined that the eviction moratorium did qualify as a physical taking based on a previous Supreme Court decision in Cedar Point Nursery v. Hassid.
This ruling by the Federal Circuit in the case of Darby Development Co. v. United States could potentially set an important precedent regarding takings claims in similar situations. It highlights the complex legal issues surrounding government actions during times of crisis and the rights of property owners.
Overall, this decision opens up the possibility for landlords to seek compensation for losses incurred during the eviction moratorium, emphasizing the importance of upholding property rights and the Fifth Amendment’s takings clause.
